|
|
 |
|
Viewing report
|
|
|
|
Executive Report on Strategies in Cambodia
ICON Group International, June 2007, Pages: 388
How to Strategically Evaluate Cambodia
Perhaps the most efficient way of evaluating Cambodia is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries
Demand/Market Potential Driven Firm
Relative Accessibility
Accessibility/Supply Averse Firm
Relative Accessibility
In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities.
Latent Demand and Accessibility in Cambodia
This report provides an extremely detailed overview of factors driving latent demand and accessibility in Cambodia. Latent demand is largely driven by economic fundamentals. But, latent demand only represents half of the picture. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks.
Chapter 2 deals with macro-accessibility. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Cambodia:
Openness to Trade in Cambodia
Openness to Direct Investment in Cambodia
Local Marketing and Entry Strategy Alternatives
Local Human Resources
Local Risks
Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are also covered in Chapter 2, which is presented from the perspective of an American firm, though it is equally applicable to most firms entering Cambodia. This chapter has been authored by local offices of the U.S. Government. I have included a number of edits to clarify the provided information as it relates to the general strategic framework.
In Chapter 3, I summarize the economic potential for Cambodia over the next five years for hundreds of industries, categories, and products. The goal of this chapter is to report my findings on the real economic potential, or latent demand, represented by Cambodia when defined as an area of dominant influence. The data presented are the result of various spatial econometric and time-series forecasting models which, for each category presented, are applied to forecast and allocate latent demand across all countries of the world and major distribution centers or centers of dominant influence within each country. This is accomplished knowing that economic fundamentals (e.g. income) generally vary from one country to another within a given country over time. In this chapter, I report the allocation for each category for Cambodia as an area of dominant influence in Asia and, potentially, the world.
The report concludes with trade indicators for Cambodia. Often, the amount of trade flowing into and out of a country is a strong indicator of trading partners, trade openness, and related latent demand. Trade indicators are purely statistical in nature. Although international trade is not a direct measure of latent demand, it does provide an indicator of general market conditions with respect to trade flows and trade openness in Cambodia.
As a whole, this report presents a strategic assessment of Cambodia by considering an extremely broad set of factors affecting both latent demand and accessibility, as outlined in the following chapters.
MACRO-ACCESSIBILITY IN CAMBODIA
Economic Fundamentals and Dynamics
Cambodia is a developing country with a market economy. GDP in 1999 was 11.96 trillion Cambodian riel (about $3.1 billion), or $268 per capita, among the lowest levels in the world. Informal estimates in terms of purchasing power parity put the standard of living in the range of $1500 per year. Once one of south east Asia’s most stable and prosperous countries, Cambodia’s social and economic institutions were severely disrupted by the agrarian collectivist policies of the Khmer Rouge regime from 1975-79, and the period of communist central planning that followed under the Vietnamese-backed People’s Republic of Kampuchea. The Cambodian government officially adopted market economics in 1989, but it was not until after the 1991 Paris Peace accords, which led to the re-establishment of the constitutional monarchy in 1993, that the economy began to grow.
Cambodia and the U.S. have full and expanding trade relations. The U.S. lifted the embargo on trade with Cambodia on January 2, 1992. After legislative action by Congress in September 1996, Normal Trade Relations (NTR) were established between the U.S. and Cambodia in October 1996 upon the signing of a comprehensive Agreement on Trade Relations and Intellectual Property Rights Protection. President Clinton subsequently designated Cambodia as a Least Developed Beneficiary Developing Country under the U.S. Generalized System of Preferences (GSP) program on May 30, 1997. Cambodia and the U.S. signed a three-year bilateral textile agreement on January 21, 1999 that sets export limitations on 12 categories of textile and apparel products. This textile agreement is likely to slow the growth of Cambodian apparel exports to the United States. U.S. exports to Cambodia are likely to remain modest for the near term.
Cambodia is a member of ASEAN and the Asian Free Trade Area. Cambodia has begun the process of accession to the WTO.
Government Intervention Risks
Cambodia has a free market economy. It has eliminated most non-tariff barriers to trade and screens investments only to award investment incentives. Cambodia’s legal structure and government policies are intended to promote exports and attract investment.
Even in the communist era, the state-owned industrial base was never extensive, and the government began to sell and lease government assets as early as 1989. Under the terms of a privatization agreement worked out with the IMF in 1994, a few additional state-owned enterprises were sold and many more were leased. The role of state-owned enterprises in the economy is not significant today.
Since its establishment in 1993, the Royal Government of Cambodia has adopted a budget statute and significantly increased the transparency of government budget operations. On the other hand, more than 30 years of conflict have left Cambodia with a government budget heavily skewed toward defense and security expenditures, which together accounted for 42.7% percent of government spending in 1999. Freeing budget resources to address poverty reduction is the overriding goal of the government’s reform program, and the government has committed to significantly increase spending on the priority social sectors of health, education, agriculture, and rural development. However, line ministries complain that budgetary disbursements in these sectors lagged significantly in 1999, especially at the provincial level.
Balance of Payments Issues
The Cambodian government follows a market-oriented exchange rate policy. The National Bank of Cambodia (NBC) performs periodic foreign exchange auctions. Since the first auction in 1993, the spread between the official and free market rates has been kept to no more than 2 percent.
Infrastructure Development
The river port of Phnom Penh has been upgraded, and Japan has provided assistance to improve the cargo terminal at the deepwater port of Sihanoukville.
Reliable fixed line and mobile telephone service are available in Phnom Penh and most provincial cities, but is expensive compared to other countries in the region. Fixed-line service is provided by the Ministry of Posts and Telecommunications, where as three cellular and one wireless local loop systems compete for mobile service. There is one international gateway, the operation of which MPTC has licensed to Telstra of Australia.
MPTC maintains a monopoly on Internet service in Cambodia, which it has licensed to two operators; its own subsidiary, Camnet, and a Bigpond, a joint venture with Telstra. The cost of Internet service has fallen to about $3 per hour, but still remains far above the means of most Cambodians. The potential for e-commerce in Cambodia is further constrained by the relative unreliability of the postal system, and fact that few Cambodians have credit cards.
Political Risks
The Kingdom of Cambodia is a constitutional monarchy with a market economy. Cambodia’s constitution was adopted in 1993 and provides for a constitutional monarchy and for separation of powers between the executive, legislative and judicial branches of government. King Norodom Sihanouk is Cambodia’s constitutional monarch. According to the Constitution, he reigns, but does not govern. Norodom Sihanouk was Cambodia’s constitutional monarch from the time Cambodia became independent from France in 1953 to the republican coup of 1970. Sihanouk was also nominal head of state during the notorious Khmer Rouge regime, 1975-79.
The current system of government emerged from the Paris Peace Accords in 1991, in which four warring factions agreed to put aside hostilities and allow the United Nations to set up a transitional authority (UNTAC) in Cambodia which would administer the country until Cambodia could draft a new constitution and hold democratic elections. The elections took place in 1993, resulting in a coalition government between the royalist FUNCINPEC Party of Prince Norodom Ranariddh, and the Cambodian People’s Party (CPP) lead by Hun Sen, which had ruled Cambodia since 1979.
In March 1999, Cambodia created a Senate with two members appointed by the King, and 59 others appointed by the various parties in proportion to their representation in the National Assembly.
Cambodia is divided administratively into 20 provinces (Khaet) and 4 municipalties (Krong). Each province is divided into districts (Srok), and further into over 1600 communes (Khum) nationwide. Provincial and district leaders are appointed by the central government, and are currently split between the two coalition parties. Commune leaders are mainly the same individuals who the CPP appointed in the 1980s.
The United States of America has full diplomatic relations with Cambodia and normal trade relations. Cambodia received MFN status from the U.S. under the terms of a 1996 agreement on Trade and Intellectual Property Rights, and received GSP benefits from the U.S. in 1997. Cambodia signed a ground-breaking textile agreement with the United States in 1999, which offers increased textile quota if the U.S. determines that Cambodia is in substantial compliance with internationally recognized core labor standards. Cambodia has begun the process of accession to the WTO, and is a member of the Asean Free Trade Area.
The Cambodian government has adopted a free market, pro-investment economic policy. The state role in the economy is minimal and the government offers significant incentives to attract foreign investors. The government has recently begun regular consultations with the business community. However, significant gaps in the legal system, the weakness of key financial institutions such as the banking sector, and problems of non-transparency and corruption continue to deter investment. One notable exception has been the garment industry, which has attracted over 160 new factories since 1994 and now accounts for over 90 percent of Cambodia’s exports. This industry was drawn to Cambodia by the availability of textile quota for the U.S. market, and Cambodia has not yet repeated this degree of success in any other industrial sector.
Marketing Strategies
Direct Marketing Options
Cambodians value quality and reasonably priced U.S. consumer goods. A wide variety of U.S goods, often purchased through U.S. wholesale outlets and shipped for resale in Cambodia are available in Cambodian markets. There is little direct marketing of U.S. products in Cambodia, and little e-commerce.
Despite Cambodia’s low population base, a key investment attraction is Cambodia’s strategic regional location within the Mekong region. There is significant cross border trade between Cambodia and its neighbors, Thailand, Vietnam and Laos. Cambodia is a member of Asean, which has over 225 million consumers, and is on track to join the Asean Free Trade Area.
Distribution Channel Options
There are three widely used distribution channels. Wholesalers import goods and then sell the goods to retailers. In some cases, the wholesalers provide delivery service, credit and warranties to small shops or stands in the local markets. Some sellers reach consumers through their own retail shops or via vans which travel throughout the country. Finally, sellers who have no retail shops sell directly to customers by advertising in newspapers, and on radio and television.
Agents and Distributors
Many Cambodian firms wish to become agents or distributors of U.S. companies, since U.S. goods and services are well received here. The U.S. Embassy in Phnom Penh can help companies identify agents, distributors and partners.
Cambodia has no Company Law, but draft legislation defines a general partnership as a contract between two or more partners for the purpose of undertaking certain commercial activities. A general partnership automatically exists any time two or more persons act together to pursue the same commercial interest. A sole proprietorship is defined as a an enterprise wholly owned by a single natural person. It is possible to register a sole proprietorship at the Ministry of Commerce (which currently acts as a registrar of companies) but it is not possible to register a general partnership in the absence of a duly enacted companies law.
Franchising Activities
Cambodia has no special laws regulating franchises.
Joint Ventures and Licensing Options
Joint ventures are common, but no special laws apply. Joint ventures with the government exist; the government contributes a 51 percent share, generally, in real estate while the foreign joint venture partner, with 49 percent share, brings cash or equipment to the deal. The government percentage fluctuates widely and 51% is not the general rule.
Creating a Sales Office
The Council for the Development of Cambodia (CDC) approves applications for investment incentives pursuant to the Investment Law promulgated august 4, 1994. The Cambodian Investment Board (CIB), a division of the CDC, is responsible for accepting and reviewing investment applications.
Investors seeking incentives should file an application with the CIB. Included should be an application fee, a feasibility study, and the annual report of the shareholder company. From the date of submission of the application, the CIB has 29 days to decide whether to approve incentive. Upon receipt of an agreement in principle from the CIB, the investor prepares registration forms for filing with the Ministry of Commerce. The Ministry of Commerce issues the formal business license. Twenty-five percent of the company’s registered paid-up capital must be deposited in a company bank account 30 days from the date of the agreement in principle and such a deposit is required prior to the Ministry of Commerce issuing a business license.
Investors not seeking incentives or not establishing companies in promoted sectors fall outside of the jurisdiction of the CDC , and must register companies solely with the Ministry of Commerce. The promoted sectors included manufacturing, infrastructure development, hotels (international standard) and environmental protection activities. U.S.-trained attorneys who wish to establish offices in Cambodia are required by terms of the bar statute, passed in June 1995, to affiliate with an attorney licensed in Cambodia.
Selling Strategies
There are no factors or techniques peculiar to this market.
Advertising and Trade Promotion
Although newspaper advertising is most commonly used, radio and television are also effective means of reaching the Cambodian public.
Major Newspapers and Business Journals
Phnom Penh Post (English language)
Address: 10a, street 264, Phnom Penh
Mobile: (855) 15-912-480 or 23-724-107
Fax: (855) 23-426-568
Managing Director: Mr. Michael Hayes
Cambodia Daily (English language)
Address: 50b, street 240, Phnom Penh
Phone: (855) 23-426-602 or 23-360-225
Fax: (855) 23-426-573
Editor-in-chief: Mr. Chris Decherd
Business News (English language)
Address: 209a, street 63, Phnom Penh
Phone: (855) 23-360-031, 17-202-840, 15-912-840, 18-813-111
Fax: (855) 23-360-031
Managing editor: Mr. William Chan.
Cambodge Soir (French language)
Address: 26, street 302, Phnom Penh (P.O. box 627)
Mobile: (855) 18-810-237
Phone: (855) 23-362-654
Fax: (855) 18-810-237
Editor: Mr. Pierre Gillette.
Reasmey Kampuchea (Khmer language)
Address: 476, Preah Monivong Blvd., Phnom Penh
Phone: (855) 23-427-486 or 23-362-472
Fax: (855) 23-362-472
Editor: Mr. Pen Samithy.
Radio Stations
National Radio of Cambodia
Address: 2, street 106, Phnom Penh
Mobile: (855) 18-810-184 or 8110-693
Phone: (855) 23-723-369 or 23-368-140
Fax: (855) 23-427-319
General Director:Mr. Vann Seng Ly
Affiliation: Independent National Radio
Radio Station FM 97 Mhz
Address: 69, street 360, Phnom Penh
Mobile: (855) 17-810-063 or 18-811-979
Fax: (855) 23-427-459
Director General: Mr. Ok Prathna
Affiliation: CPP Party
Radio Station FM 98 Mhz
Address: 169, Czechoslovakia Blvd., Phnom Penh
Phone: (855) 23-366-061 or 062
Fax: (855) 23-366-063 or 064
General Director: Mr. Tha Tana
Affiliation: Royal Cambodian Armed Forces
Radio Station FM 99 Mhz
Address: 41, Street 360, Phnom Penh, Cambodia
Mobile: (855) 17-811-057
Phone: (855) 23-428-099 or 426-749
Fax: (855) 23-426-910
General Director: Mr. Som Chhaya
Affiliation: CPP Party
Phnom Penh municipality radio station FM 103 Mhz
Address: 2, Russia Federation Blvd., Phnom Penh
Mobile: (855) 18-810-025 or 812-389
Phone: (855) 23-366-521 or 724-132
Fax: (855) 23-366--520
General Director: Mr. Khampun Keomany Vong
Affiliation: CPP party
Television Stations
National TV (TVK) of Cambodia
Address: 19, street 242, Phnom Penh
Mobile: (855) 18-810-716 or 18-811-709
Phone: (855) 23-724-149
Fax: (855) 23-426-407
General Director: Mr. Mao Ayuth
Affiliation: Independent National Television
IBC TV Cambodia
Address: 165, Borey Keyla area, Phnom Penh
Phone: (855) 23-366-061 or 062
Fax: (855) 23-366-063
General Director: Mr. Tha Tana
Affiliation: Royal Cambodian Armed Forces
TV9 (Khmer Television 9)
Address: 81, Street 562, Phnom Penh
Mobile: (855) 15-911-762
Fax: (855) 23-368-212
General Director: Mr. Khun Hang
Affiliation: Funcinpec Party
Apsara Television 11
Address: 69, Street 360, Phnom Penh
Mobile: (855) 17-810-063 Or 18-811-979
Fax: (855) 23-427-459
General Director: Mr. Ok Prathna
Affiliation: CPP Party
Phnom Penh Municipality TV-3 Station
Address: 2, Russian Federation Blvd., Phnom Penh
Mobile: (855) 18-810-025 Or 18-812-389
Phone: (855) 23-724-132 Or 23-366-520
Fax: (855) 23-366-520
General Director: Mr. Khampun Keomany Vong
Affiliation: CPP Party
Supplying Customer Service
After-sales service and customer support are important to both current and future sales of products in Cambodia. The limited in-country supply of spare parts for some brands of automobiles has contributed to the failure of those makes to increase market share against brands whose parts are more readily available. The arrival of company certified maintenance facilities for specific product lines, particularly for electronic equipment, indicates that the local market is beginning to evolve away from a “fix it shop” approach to a more formal system of repair.
Depending on the products and services to be exported, Cambodian agents, distributors and consumers can expect after-sale services from their U.S. suppliers, including product warranty for a specified period, training, advertising and promotion and availability of spare parts. Providing after-sale service could be an effective method of boosting sales and winning customer loyalty.
Intellectual Property Risks
Cambodia has passed a trademark law and patent and copyright legislation. The Ministry of Commerce registers trademarks. The Ministry requires appropriate documentation for registration of a trademark. The Ministry of Industry, Mines, and Energy registers patents and trademarks for locally manufactured goods (thus duplicating the Ministry of Commerce in this regard). The Ministry of Culture and Fine Arts controls copyrights for printed material, music, motion pictures, and videos; the Ministry’s approval is required for production and sale of movies and videos. Enforcement of existing legislation is still weak, although some action has been taken against attempts to import counterfeit goods.
Some effort to combat the availability of illegal optical media has been made, but it has been largely limited to locally produced products. The Cambodian system is designed to wait for victims to ask for assistance. In essence, foreign producers will have to ask for and largely fund themselves a sustained effort by Cambodian authorities for stop the distribution and sale of bootleg materials. Local producers often complain about the difficulty in obtaining cooperation from the authorities without paying money. Corruption and a weak judicial system have made enforcing IPR regulations inconsistent at best.
Hiring Local Counsel
U.S. attorneys affiliated with Cambodian attorneys as required by the bar statute can be contacted through the following entities (listed alphabetically):
Allens Arthur Robinson Group
Contact Person: Ms. Lisa Button
Level 2
11 bis, Street 278
Boeng Keng Kang, Chamcar Monn
Phnom Penh
Tel: (855) 23-215-664
Cabine D’avocat Phnom Penh Law Office
Contact Person: Ms. Klok Kendevy
Address: #91, Preah Norodom Blvd., Phnom Penh
Tel: (855) 15-913-574 Or 18-812-449
Fax: (855) 23-427-983
Cambodia Worldlaw Group
Contact Person: Dr. Nolan Stringfield
Regency Square, Inter-Continental Hotel Complex
298 Mao Tse Tong Boulevard, Suite A-9
Phnom Penh
Tel: (855) 12-815-770
Fax: (855) 23-881-301
Dirksen Flipse Doran & Le
Contact Person: Mr. David D. Doran
Address: #45, Preah Suramarith Blvd., Phnom Penh
Mobile: (855) 15-915-274
Tel: (855) 23-428-726 Or 23-360-545
Fax: (855) 23-428-227
Foreign Investment Legal Consultants, Ltd. (Baker And Mckenzie)
Contact Person: Mr. Matthew W. Minnillo
Address: #212, Preah Norodom Blvd., Phnom Penh
Mobile: (855) 15-917-371
Tel: (855) 23-362-160
Fax: (855) 23-428-674
Sarin & Associates
Contact Person: Mr. Sarin Denora
Address: #3, Street 334, Phnom Penh, Cambodia
Mobile: (855) 15-916-317
Fax & Phone: (855) 23-721-478
Tilleke And Gibbins And Associates, Ltd.
Contact Person: Mr. Bretton G. Sciaroni
Address: #56, Sothiros Blvd., Phnom Penh
Mobile: (855) 18-813-245 Or 18-810-912
Tel: (855) 23-362-670
Fax: (855) 23-362-671
Import and Export Regulation Risks
Trade Barrier Risks
The Cambodian government has eliminated most non-tariff barriers to trade. Import licenses are required for firearms and pharmaceuticals. Export licenses are required for antiquities, rubber and timber. Garment exports require certificates of origin (CO) from the Ministry of Commerce.
Customs Duties
Customs duties have been simplified to a four band system, with rates ranging from 0 to 120 percent, as follows:
Luxury goods, including automobiles, wine, cigarettes, perfume, weapons and cosmetics, carry a tariff of 70 percent.
Finished products, including televisions, radios, cassette players, paints and household furnishings carry a tariff of 35 percent.
Machinery and equipment carry tariffs of 15 percent.
Raw materials, such as cement, iron, tile and brick, and items considered essential to daily life, including meats, fruits, tea, vegetable oil, sugar, soap, shoes, eye glasses, clothing and bicycles, carry a tariff of 7 percent.
The following items are exempt from import duties: agricultural equipment and inputs, school materials and equipment, pharmaceutical products and sporting goods, but importers of these products must still pay value-added tax (VAT) of 10 percent.
Customs Valuation
Cambodia is in the process of re-instituting a system of preshipment inspection through Societe Generale de Surveillance (SGS). (Preshipment inspection was suspended in mid-1999 due to a contractual dispute between SGS and the Cambodian government.) SGS has 1,170 offices in 140 countries. Any imported goods shipped in a container and which cost over $5,000 must undergo pre-shipment inspection. Only cigarettes are exempt from inspection.
SGS Cambodia liaison office
Address: #368, Street 163, Chamkarmon District, Phnom Penh
Contact person: Mr. Roeun Sokol, local representative
Tel: (855) 23-428-727
Fax: (855) 23-428-745
Licenses Required for Imports
Import licenses have been abolished, with the exception of those required for firearms and pharmaceuticals. Firearms licenses may be obtained from the Ministry of Interior and pharmaceutical licenses from the Ministry of Health.
Ministry Of Interior
Address: #275, Preah Norodom Blvd., Phnom Penh, Cambodia
Tel: (855) 23-722-093
Fax: (855) 23-426-585
National Laboratory for Drug Quality Control, Ministry of Health
Address: #36, Pochentong Blvd., Phnom Penh
Contact Person: Mrs. Nam Nivanna, director
Tel: (855) 23-366-381
Fax: (855) 23-426-841
Controls on Exports
The government requires export licenses for logs, sawn timber, precious metals and stones, and antiquities.
Additional Trade Issues
Cambodian customs requires importers and exporters to provide a bill of lading, packing list and invoice for all shipments. Goods shipped through Vietnam via the Mekong River must also have a transit license.
Entering Temporary Imports
Cambodia has not established temporary entry procedures.
Local Standards
Camcontrol, a unit of the Ministry of Commerce, is charged with setting standards. Camcontrol does not currently have a mechanism for industry participation in setting standards. Cambodia passed a new law on product quality in May 2000. The Ministry of Commerce requires foodstuffs to have a label including the following information: name of goods, producer name and address, source, quantity, batch number and production date, expiration date, ingredients, directions for use (if necessary) and license of authorizing institution (if required for local products).
Cambodia Import Export Inspection and Fraud Repression Direction
(Camcontrol), Ministry of Commerce
Address: #50, Street 144, Phnom Penh, Cambodia
Contact Person: Mr. Suth Dara, Director
Tel: (855) 23-300-881
Fax: (855) 23-310-881
Restrictions on Imports
Narcotics, explosive and poisonous chemicals and substances are prohibited imports.
Investment Climate
Cambodia is a developing country with a market economy. Since Cambodia re-established a constitutional monarchy in 1993, the economy has grown rapidly, except for a period between mid-1997 and late 1998, when Cambodia suffered political instability and the spill over effects from the Asian financial crisis. Since early 1999, the Cambodian government has intensified its economic reform program, a process which the international financial institutions and donors participate in and monitor closely.
Openness to Foreign Investment
Cambodia’s 1994 law on investment establishes an open and liberal foreign investment regime, and the council for the development of Cambodia (CDC), Cambodia’s foreign investment approval body, administers an attractive package of investment incentives. All sectors of the economy are open to foreign investment, there are no performance requirements, and no sectors in which foreign investors are denied national treatment. An August 1999 sub-decree provides some restrictions on foreign investment. Publishing, printing, radio and TV activities are limited to 49% foreign equity and there must be an unspecified amount of local equity in gemstone exploitation, brick making, rice mills, wood and stone carving manufacture and silk weaving. While other sectors are eligible for 100% foreign investment, investment incentives vary according to the nature of the investment project.
Article 44 of the constitution provides that only Khmer legal entities and citizens of Khmer nationality have the right to own land. Aside from this, there is little or no discrimination against foreign investors either at the time of initial investment or after investment. Some foreign businesses have reported, however, that they are at a disadvantage vis-à-vis Cambodian or other foreign rivals which engage in acts of corruption or tax evasion, or take advantage of Cambodia’s poorly enforced or non-existent labor, work-place safety, product quality or environmental standards to cut costs.
The privatization of state enterprises is not carried out in a transparent manner. In several instances, the public has learned that enterprises were for sale only after the government has announced a sale to a particular buyer.
Investor rights provided for in the law on investment include:
Investors shall be treated in a non-discriminatory manner, except for land ownership as provided for in the constitution of the Kingdom of Cambodia.
The Royal Government of Cambodia shall not undertake a nationalization policy which adversely affects private properties of investors.
The Royal Government of Cambodia shall not impose price controls on the products or services of an investor who has received prior approval from the government.
The Royal Government of Cambodia, in accordance with relevant laws and regulations, shall permit investors to purchase foreign currencies through the banking system and to remit abroad those currencies as payments for imports, repayments on loans, payments of royalties and management fees, profit remittances and repatriation of capital.
Conversion and Transfer Policies
There are no restrictions on the conversion of capital. The Law on Investment guarantees investors the right to purchase foreign currencies through the banking system and to remit foreign currencies as payments for imports, repayments on loans, payments of royalties and management fees, profit remittances and repatriation of capital. The Foreign Exchange Law does allow the National Bank of Cambodia (the central bank) to implement exchange controls in the event of a crisis, and the law does not define what would constitute a crisis. The U.S. Embassy is not aware of any cases in which investors have encountered obstacles in converting local to foreign currency, or sending capital out of the country.
Expropriation and Compensation
Article 44 of the Cambodian constitution (which restricts land ownership to Cambodian nationals) also states that “the (state’s) right to confiscate properties from any person shall be exercised only in the public interest as provided for under the law and shall require fair and just compensation in advance.” Article 58 states that “the control and use of state properties shall be determined by law.” Under the existing land law, all land is considered state property. The Law on Investment provides that “the Royal Government of Cambodia shall not undertake a nationalization policy which adversely affects private properties of investors.”
The Cambodian government has taken no expropriatory actions in the recent past. There are currently no investment disputes involving the expropriation of property belonging to U.S. citizens.
Dispute Settlement
Cambodia’s legal sys
Customers who bought this item also bought
Cambodia - Telecoms, Mobile, Internet & Forecasts
Prospects for the Textile and Garment Industry in Cambodia
2008 Asia - Telecoms, Mobile and Broadband in Cambodia, Laos and Vietnam
Cambodia - Telecoms Market Overview Statistics & Forecasts
The 2009 Economic and Product Market Databook for Phnom Penh, Cambodia
Cambodia - Telecoms Market Overview, Statistics & Forecasts
The 2009 Import and Export Market for Frozen Fish Excluding Fillets in Cambodia
The 2009 Import and Export Market for Sporting Goods in Cambodia
The 2009 Import and Export Market for Food and Live Animals in Cambodia
The 2009 Import and Export Market for Children's Toys and Indoor Games in Cambodia
The 2009 Import and Export Market for Dried, Dehydrated and, Evaporated Vegetables in Cambodia
The 2009 Import and Export Market for Milled and Semi-Milled Rice in Cambodia
|
|
|
|
