Investment Laws

INFORMATION ON CAMBODIA INVESTMENTS

POLICIES TOWARDS FOREIGN DIRECT INVESTMENT

1.    GOVERNMENT ATTITUDES

Private sector investment will become increasingly important for the country as the private sector assumes its position as the main engine for economic growth in Cambodia. To this end, the Royal Government of Cambodia sees private sector investment as integral to the development of a fully democratic and prosperous Cambodia in the years ahead.

The government is fully aware that if the country is to achieve its developmental goals, it cannot rely on foreign aid and assistance indefinitely, and that real economic growth and development lie in the private sector. Consequently, a program of reform is now being undertaken by the government in order to create a conducive environment for private sector investment. In 1994, the Law on Investment of the Kingdom of Cambodia was passed with the aim of streamlining the foreign investment regime and providing generous and competitive concessions for direct private sector investment. The Law on Investment also created the Council for the Development of Cambodia (CDC), a one-stop service Organization for investment in Cambodia. The CDC, through the executive arm of the Cambodian Investment Board (CIB), is now responsible for the processing of applications for investment projects and is required to give a decision within 45 days of submission. As such, the government is fully committed to the speeding-up of new investment-project approvals by making the CDC a truly effective and well-disposed one-stop service.

2.    SUMMARY OF FOREIGN INVESTMENT POLICY

In order to attract FDI, the government has strengthened the country's legal framework, bolstered its institutions and liberalized the relevant regulations, in ways that are conducive to private sector investment and business activities in Cambodia. The 1994 Law on Investment provides similar treatment to foreign and domestic investors alike, with the exception of the issue of land ownership, as set forth in Cambodia's constitution. Even in this area, the regulations are generous, with foreign investors able to lease land for a period of up to 70 years, with the possibility of renewal thereafter.

The government provides investors with a guarantee neither to nationalise foreign-owned assets, nor to establish price controls on goods produced and services rendered by investors, and to grant them the right to freely repatriate capital, interest and other financial obligations. Investors can set up 100% foreign-owned investment projects and employ skilled workers from overseas, in cases where these workers cannot be found in the domestic labour force. In addition, the Law on Investment and its related Sub-Decree grant generous incentives to investors, especially those concerned in investment projects geared towards exports.

Attention is also accorded to private investment in Build-Operate-Transfer (BOT) projects, and private investment in infrastructure, including public utilities such as electricity, water supply and telecommunications. In order to facilitate investors in their applications for investment approval, the government has established an institution to oversee investment policy and strategy called the Council for the Development of Cambodia (CDC). The CDC, being the highest decision-making level of the government on private (CIB) and public (CRDB) investments, is chaired by the prime minister and composed of senior ministers from related government ministries. The Cambodian Investment Board (CIB), the operational arm of the CDC, has been designated as the etat major and one-stop service of the government, responsible for the evaluation of investment proposals and projects from all investors, both individual and corporate.

Cambodia has obtained "Generalized System of Preferences (GSP)" and "Most Favored Nation (MFN)" status from its major trading partners, including the European Union, the USA, Japan, Canada and Australia. Apart from facilitation and support at the national level, attention is also being given by the government to opening up access to international sources of finance for private sector investment. Cambodia is already a member of the IFC and MIGA, and is currently applying for membership to the ICSID (International Center for Settlement of Investment Disputes). It has also signed agreements with the ADB, providing private sector investors with the opportunity to obtain funding for their investment projects from this international financing institution.

TRANSPARENCY

1.    INVESTMENT LAWS (SUMMARIES)

Law on Investment of the Kingdom of Cambodia, 4 August 1994:

·         Sub-Decree on the Organisation and Functioning of the Council for the Development of Cambodia (CDC) 26 June 1995

·         Sub-Decree No. 048 ANKR-KB on the amendment of the Sub-Decree on the Organisation and Functioning of the CDC, 21 May 1999

·         Sub-Decree on the Implementation of the Law on Investment of the Kingdom of Cambodia, 29 December 1997

·         Sub-Decree No. 053 ANKR-KB on the amendment of the Sub-Decree on the Implementation of the Law on Investment of the Kingdom of Cambodia, 11 June 1999

Sectors in which investment is strongly encouraged:

1.    Pioneer and/ or high-technology industries,

2.    Job creation,

3.    Export-oriented industries,

4.    Tourism industry,

5.    Agro-industry and processing industry,

6.    Infrastructure and energy,

7.    Provincial and rural development,

8.    Environmental protection, and

9.    Investment in the Special Promotion Zone (SPZ)

According to Sub-Decree No. 053 ANKR BK, 11 June 1999:

·         Investment capital should be in excess of US$1,000,000 for any national or foreign investment project

·         Investment sectors in which special incentives do not apply include the telecommunication sector, and the exploitation of natural resources, with the exception of oil and natural gas exploration

·         All fuels, lubricants and other petroleum-based products used as raw materials or intermediate goods are not eligible for exemptions from import duties.

NATIONAL TREATMENT

1.    SECTORS SUBJECT TO EXCEPTIONS TO NATIONAL TREATMENT

The following sectors are subject to local equity participation: Gemstones, clay bricks both hollow and solid, tiles, rice milling, wood and stone carving, and silk-wear.

2.    LIMITATIONS ON FOREIGN FIRMS' ACCESS TO FINANCING

There is no limitation on foreign firms' access to sources of finance on the basis of their nationality.

AREAS OF INVESTMENT

LIST OF SUGGESTED AREAS OF INVESTMENT

Crop Production
- Paddy farming greater than 1,000 ha.
- All types of cash crops greater than 500 ha.
- Vegetables greater than 50 ha.

Livestock Production
- Livestock more than 1,000 heads
- Dairy farming more than 100 heads
- Poultry & eggs for 10,000 heads

Fisheries
- Hatcheries more than 2 ha.
- Shrimp farming and other aqua-culture production greater than 10 ha.

Manufacture and Processing of Food & Related Products
Investment Capital Greater Than 500,000 USD
- Beverages
- Fats & oils
- Sugar confectionery
- Meat products
- Dairy products
- Preserved fruits and vegetables
- Grain mill products
- Bakery products
- Animal feed products

Manufacture of Textile Mill Products
Investment Capital Greater Than 1,000,000 USD
- Weaving mill cotton, wool and man-made material
- Narrow fabric mills
- Floor covering mills
- Knitting mills

Manufacture of Apparel and Other Textiles
Investment Capital Greater Than 500,000 USD
- Manufacture of Furniture & Fixtures

Investment Capital Greater Than 500,000 USD
- Household furniture
- Office furniture
- Building partitions and fixtures

Manufacture of Paper & Allied Products
Investment Capital Greater Than 1,000,000 USD
- Tree plantations for paper and pulp mills
- Paper production
- Paperboard mills
- Paperboard containers

Manufacture of Chemicals & Allied Products
Investment A Capital Greater Than 500,000 USD
- All types of chemicals including agricultural chemicals
- Plastics and other synthetics
- Drugs
- Cleaning products
- Paint & allied products

Manufacture of Rubber & Miscellaneous Plastics
Investment Capital Greater Than 500,000 USD

Manufacture of Leather & Other Products
Investment Capital Greater Than 500,000 USD

Manufacture of Fabricated Metal Products
Investment Capital Greater Than 500,000 USD

Manufacture of Electrical and Electronic Equipment
Investment Capital Greater Than 500,000 USD

Manufacture of Transportation Equipment
- Automobiles and spare parts
- Aircraft and spare parts
- Constructions and _means of water transports
- Equipments and means of rail transports
- Bicycles and motorcycles

Highway & Bridge Construction

Exploitation of minerals, ore, coal, oil and natural gas

Production of machineries and industrial equipment
Investment Capital Greater Than 1,000,000 USD

Production of consumption goods

Hotel construction
Three stars classification or higher

Medical complex of International standards, Educational facilities International standards, Vocational training centers

Physical infrastructure facilities to support the tourism and cultural sectors

Production and exploitation activities to protect the environment