Trader's Manual for Least Developed Countries - Cambodia

ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC

TRADERS’ MANUAL FOR LEAST DEVELOPED COUNTRIES

CAMBODIA

UNITED NATIONS

ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC

TRADERS’ MANUAL FOR LEAST DEVELOPED COUNTRIES

CAMBODIA

UNITED NATIONS New York, 2004

i

ESCAP WORKS TOWARDS REDUCING POVERTY AND MANAGING GLOBALIZATION

ST/ESCAP/2320

The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries.

Mention of firm names and commercial products does not imply the endorsement of

the United Nations. This publication has been issued without formal editing.

ii

PREFACE

In today’s world, characterized by increasing economic integration and globalization, transparency and access to trade rules and procedures is becoming more important, particularly for the small and medium-sized enterprises in the least developed countries.

It is important that information on Asian and Pacific least developed countries, concerning their market potential, trade regimes, import procedures and other trade-related issues, be available. The Economic and Social Commission for Asia and the Pacific (ESCAP), has been addressing this need on a priority basis and disseminating information through its trade information service network, TISNET, and in publications and handbooks for the past two decades.

The ESCAP series of traders’ manuals for Asian and Pacific countries has been acknowledged as a very useful source of information. In this context, ESCAP has concentrated its efforts on publishing and updating the traders’ manual for the least developed countries of the ESCAP region.

In order to reach a greater audience through the Internet, this publication will be available only in electronic version. This will allow more freedom for regular updates in due course.

This first online edition provides updated information on the business and investment climate in Cambodia.

The ESCAP secretariat has received information and support from various agencies in Cambodia for which it is very grateful. The secretariat wishes to acknowledge, with appreciation, the cooperation received from the General Department of Trade, Foreign Trade Department, Bureau of Coordination and International Organizations, ASEAN and International Organizations Department and the Export Promotion Department at the Ministry of Commerce; the Cambodia Investment Board at the Council for Development of Cambodia; the Industrial Affairs Department at the Ministry of Industry, Mines and Energy; the National Bank of Cambodia; the Customs and Excise Department at the Ministry of Economy and Finance; the Ministry of Tourism; the Cambodia Chamber of Commerce; the Cambodia Development Resource Institute and the ACLEDA Bank.

We hope that this edition will be useful to both exporters and importers of Cambodian merchandise, as well as to investors.

iv

CONTENTS Page PREFACE ……………………………………………………………………………… ii ABBREVIATIONS ……………………………………………………………………. v

Part One GLOBAL COUNTRY PRESENTATION ………….……… 1 Chapter I. BASIC COUNTRY DATA ……………………………………………………. 1 II. MACROECONOMIC CLIMATE …………………………………………… 6

Part Two SELLING TO CAMBODIA ………………………… 11 I. IMPORT POLICY, REGULATIONS AND PROCEDURES ……………… 11 II. TARIFF SCHEDULE - CUSTOMS …………………………………………. 14 III. FOREIGN EXCHANGE REGIME ………………………………………….. 16 IV. DOCUMENTS ………………………………………………………………… 18 V. MARKETING AND DISTRIBUTION ……………………………………… 18 VI. GOVERNMENT PROCUREMENT AND STATE TRADING

ORGANIZATIONS …………………………………………………………… 20 VII. PRINCIPAL IMPORT ITEMS ………………………………………………. 22

Part Three BUYING FROM CAMBODIA ……………………….. 24 I. EXPORT POLICY, REGULATIONS AND PROCEDURES ……………… 24 II. EXPORT CHARGES …………………………………………………………. 27 III. SETTLEMENT OF BILLS, LETTERS OF CREDIT ……………………… 28 IV. DOCUMENTS, INCLUDING INSURANCE ……………………………….. 28 V. STATE MONOPOLY IN EXPORTS ………………………………………... 28 VI. PRINCIPAL EXPORTS ………………………………….…………………... 29

Part Four INVESTING IN CAMBODIA ……………………… 31 I. FOREIGN INVESTMENT POLICY AND REGULATIONS ……………... 31 II. INVESTMENT PROCEDURES ……………………………………………... 32 III. INVESTMENT INCENTIVES ……………………………………………….. 34 IV. TAXATION ……………………………………………………………………. 38 V. FOREIGN EXCHANGE ……………………………………………………… 40 VI. LABOUR ISSUES …………………………………………………………….. 41 VII. DISPUTE SETTLEMENT …………………………………………………… 42 VIII. CAPITAL MARKET …………………………………………………………. 43 IX. PROTECTION OF PROPERTY RIGHTS …………………………………. 43

Part Five TIPS FOR VISITORS TO CAMBODIA ………………… 45

ANNEX

Integrated Internet links listed in this document ………………………………………… 47

ABBREVIATIONS ADB Asian Development Bank AFTA ASEAN free trade area AH Asian Highway ASEAN Association of Southeast Asian Nations BCC business cooperation contract BOT build-operate-transfer CAMCONTROL Cambodia Import-Export Inspection and Fraud Repression Department CCCI Cambodia Chamber of Commerce and Industry CDC Council for the Development of Cambodia CEPT common effective preferential tariff CIB Cambodia Investment Board c.i.f. cost, insurance and freight DFDL Dirksen Flipse Doran & Le (Cambodia) Co. Ltd. EIU Economist Intelligence Unit ELVIS electronic visas information system EU European Union FDI foreign direct investment f.o.b. free on board GDP gross domestic product GTC Green Trade Company GSP generalized system of preferences ICSID International Centre for Settlement of Investment Disputes KAFIMEX Kampuchea Fish Import and Export Company LDC least developed country MAFF Ministry of Agriculture, Forestry and Fisheries MIME Ministry of Industry, Mines and Energy MFN most-favoured nation MOC Ministry of Commerce NBC National Bank of Cambodia OTEXA Office of Textiles and Apparel QIP qualified investment project RNK National Radio of Cambodia SARS severe acute respiratory syndrome SAPTA SAARC Preferential Trading Arrangement SGS Société Générale de Surveillance SMEs small and medium-sized enterprises SPZ special promotion zone STO State trading organization TRIPS Trade-Related Aspects of Intellectual Property Rights TVK National Television of Cambodia UNDP United Nations Development Programme VAT value added tax WHO World Health Organization WIPO World Intellectual Property Organization WTO World Trade Organization

v

Traders’ Manual for Least Developed Countries: CAMBODIA _______________________________________________________________________________________________________

_______________________________________________________________________________________________________

Part one GLOBAL COUNTRY PRESENTATION

I. BASIC COUNTRY DATA

Location: Between 100 57’N and 160 08’N latitudes, and between 1010 4,7’E and

1060 10’E longitudes. Altitude between 305 and 1,848 metres. Area: 181,035 sq km Land boundaries: Total of 2,572 km (Thailand 803 km, Lao People’s Democratic Republic

541 km and Viet Nam 1,228 km) Population: 13.4 million (2002 ESCAP estimates)

Female: 51.4 per cent Male: 48.6 per cent

Population density: 59.1 inhabitants per sq km Urban population 10-15 per cent

Capital: Phnom Penh Administrative Division: 20 provinces, 3 municipalities, 172 districts and 1,547 communes. Time zone: Add seven hours to Greenwich Mean Time Principal languages: Khmer (Official language)

English widely understood as well as French Principal religions: Buddhism (95 per cent) Information technology: 7.44 Internet users per 10,000 inhabitants

0.15 estimated PCs per 100 inhabitants Education and literacy: Bhutan's literacy rate stands at 68.7 per cent.

Female: 58.0 per cent Male: 81.8 per cent

Currency: Riel (CR) Measures: Metric system Business hours: Cambodia works five days a week from Monday to Friday. Business

hours are from 0900 to 1700 hours Holidays: 9 January: National day

12-15 April: Cambodian new year 1 May: Labour day 9 November: Independence day

Telecommunications: In 2001, Internet host per 10,000 inhabitants: 0.46, Internet users per 10,000 inhabitants: 7.44; estimated PCs per 100 inhabitants: 0.15

Credit cards: VISA, MasterCard, American Express Airlines: Cambodia Airways Airports: Phnom Penh and Siem Reap have international airports Railway network: Two lines:

Phnom Penh to Poipet: 385 km Phnom Penh to Sihanoukville: 263 km

Road network: National roads: 4,200 km (only 12 per cent are paved) Provincial roads: 3,600 km Rural roads: 28,500 km.

Shipping: 435 km of coastline Khompong Som (Sihanoukville) Koh Kong

Exchange rate: US$ 1 = 3,900 CR

Part One: Global Country Presentation 1 of 48


_______________________________________________________________________________________________________

A. Geography and climate

Cambodia is roughly rectangular in shape. The land extends approximately 580 km

east-west and 450 km at its broadest north-south. The country is bordered by Thailand in the west, Lao People’s Democratic Republic in the north, Viet Nam in the east and by the Gulf of Thailand in the south. The 435 km of coastline is very often filled with mangrove.

The country is divided into two dominant topographical regions. One is formed by the Mekong River, which rises in Tibet, flows through Cambodia about 486 km and continues to the South China Sea via southern Viet Nam. The other region is formed by the Tonle Sap and the Bassac river systems, located in the central part of Cambodia. The Tonle Sap is the natural flood retention basin of the Mekong River system. When the Mekong River swells during the monsoon season, the floodwater reverse the flow of the Tonle Sap River and increase the size of the lake from about 2,600 km2 to 10,000 km2. After the monsoon, the flow reverses and water flows out of the engorged lake. The Tonle Sap River is the unique river with return in the world.

The Tonle Sap and Mekong Basin areas consist mainly of plains with an elevation of less than 100 meters. The Cardamon Mountains in the southwest have the highest point, Phnom Aoral (1,813 m), are oriented northwest-southeast. The Dangrek Mountains in the north are the prolongation of the Korat plateau in Thailand. At the east part of Cambodia near the border with Viet Nam I are the Ratanakiri plateau and the Chlong highlands.

Cambodia’s climate is dominated by the monsoons. The northeast monsoon, which is cool and dry, blows from November to April. The southwestern monsoon brings winds, humidity and heavy rains from May to October. January is the coldest month and April is the warmest. An average annual temperature is around 25°C.

B. History

Since the early 9th century, the Khmer civilization was very well known through the centralize empire based at Angkor. In 1431, Angkor was taken over by the Kingdom of Sukothai. By the end of the 18th century, the territory of the old Angkorian Empire had been greatly reduced. In the 19th century the kingdom came under threat of its neighbouring countries. In 1887, Cambodia was incorporated to the French Indochina Union.

Cambodia gained its independence from the French in 1954. In 1972 the monarchy

was abolished and the Khmer Republic proclaimed. The Khmer rouge took over Phnom Penh on 17 April 1975. In 1976, the Khmer Rouge regime renamed the country Democratic Kampuchea and proclaimed a peasant revolutionary State. In December 1978, Viet Nam invaded Cambodia and installed a new Government.

In the early 1990s, United Nations Security Council began to negotiate a settlement

between Viet Nam and Cambodia which paved the way for the Paris Peace Agreement of October 1991. The United Nations Transitional Authority in Cambodia (UNTAC) was approved by the United Nations Security Council in February 1992 and the first free elections took place in May 1993. Since then, a new constitution was approved and several rounds of elections have taken place.



_______________________________________________________________________________________________________

C. Population

The average population growth rate of Cambodia is around 2.3 per cent per year according to the last nationwide census. In 2001, 43 per cent of the population was under the age of 14. Women largely outnumber men, in particular in the 40’s age group, due to the long conflict situation. Around 85-90 per cent of the population lives in rural areas. The population is concentrated in the cultivated central plain. Meanwhile the mountainous regions and the widespread malaria areas are less populated. Kompong Cham and Battambang are the two main cities after Phnom Penh, capital city, which has a population estimated of around one million. Sihanoukville is the only deepwater port.

The population is composed of about 90 per cent of Khmer ethnic origin. The two

other main ethnic groups are Vietnamese and Chinese. There is also a small Cham population and some highland ethnic groups.

D. Languages and communication

Khmer is the country official language and is spoken by over 95 per cent of the population. French is also spoken but mostly by older people while English is now more commonly spoken by the young generation.

There are several Khmer language newspapers. The Cambodia Daily and the Phnom Penh Post are the two English newspapers while Cambodge Soir is the French language newspaper.

The National Television of Cambodia (TVK) is broadcasting daily information in

national and international languages along with some cultural programmes. The Radio National of Kampuchea (RNK) is broadcasting daily information by radio AM, FM and SW in national and international languages. The Radio and Television 3 is broadcasting in Phnom Penh, Battambang, Siem Reap, Ratanakiri, Pursat and Sihanoukville. Cambodia Television Station Channel 9 is a private sector company. Apsara Radio and TV Channel 11 are broadcasting all over the country and are also private sector companies. Bayon Radio and Television, a private sector company, has three relay stations in Kampong Cham, Siem Reap and Sihanoukville.

E. Economy

The UNDP’s Human Development index which integrates longevity and health, knowledge and standard of living in its measures of development, ranked Cambodia the 130th out of 175 countries in 2002. Cambodia is classified as least developed country (LDC).

Before the country plunged into civil wars in the 1970s, most of the labour force in Cambodia was engaged in agriculture, the country was self-sufficient in food and produced exportable surpluses of its main crops such as rice and corn. By mid-1990s, Cambodia re-gained its self-sufficiency in rice production and began exporting small quantities of rice. Thanks to massive foreign assistance, the country’s infrastructure is improving gradually. By the end of the 1990s, the country started the garment processing industries.

Cambodia is a free market economy and acceded to WTO in September 2003.


http://www.camnet.com.kh/cambodia.daily/

http://www.phnompenhpost.com/


http://www.tvk.gov.kh/english/default.html

http://www.tv3.com.kh/

http://www.tv9.com.kh/profile.html

http://www.apsaratv.com.kh/pro_tv9.htm

http://www.bayontv.com.kh/



_______________________________________________________________________________________________________

F. Government (political structure)

Since 1993, Cambodia is a constitutional monarchy. King Norodom Sihanouk is the head of State and responsible for appointing the Prime Minister. The 61 members Senate is the upper house of Parliament. Its role is to scrutinize laws passed by the National Assembly. The National Assembly has 122 members who are elected for a five-year term. Legislation can be passed only by an absolute majority of all members of Parliament and constitutional changes require the support of a two-thirds majority. Cambodia’s legal system stems from the Constitution of 1993 and is organized in the following way.

Table 1. Hierarchy and definition of Cambodian main legal norms

Constitution Supreme Norm of the Cambodian Legal Hierarchy. Adopted by the Constituent Assembly and promulgated by the King.

Constitutional Law Revision or Amendment of the Constitution, voted by the National Assembly with a majority of two-thirds of all its members.

Kram (Law)

Designates either the Promulgated Law or the Act of Promulgation of a Law by the King. Signed by the King or, in his absence, by the acting Chief of State, and countersigned by the Prime Minister and the concerned Minister.

Kret (Decree)

Highest Norm that may be enacted by the Executive Power, within the framework of its Regulatory Power. Signed by the King or, in his absence, by the Acting Chief of State, and generally countersigned by the Prime Minister and the concerned Minister.

Anukret (Sub-Decree)

Regulation adopted by the Prime Minister and countersigned by the interested Minister.

Prakas (Regulation)

Regulation adopted by a concerned Minister (or the Governor of the National Bank for banking issues)

Sarachor (Circular)

Ministerial implementing measure

Source: Cambodia Council of Jurists .

G. Natural resources

Cambodia’s main natural resources are rainforests, water and minerals. The

rainforests areas used to cover around 70 per cent of the territory in the 1960s. During the long period of wars and political instability, uncontrolled logging took place decimating the country’s forests resources. The Mekong River and the Tonle Sap basin are the most fertile regions and represent around 20 per cent of Cambodia’s total area. The coastline in the Gulf of Thailand is well known for its mangrove. Mineral resources are concentrated in the province of Battambang and contain limited quantities of zircon, sapphire and ruby.

H. Human resources

According to the labour force survey of Cambodia in 2001, the distribution of employed persons of 10 years old and over by type of primary occupation is 67.0 per cent for


http://www.bigpond.com.kh/Council_of_Jurists/Constit/cons001g.htm

http://www.bigpond.com.kh/Council_of_Jurists/z/Typolg.htm


_______________________________________________________________________________________________________

skilled agricultural and fishery workers (occupying 67.8 per cent of the total male employed population and 66.2 per cent of the female). In two areas of the service sector, the proportion of employed female is higher than male. One is shop and market sales which occupies 13.8 per cent of the total female employed population and 6.2 per cent of the male. Another one is craft and related trades, occupying 6.1 per cent of total male employed population and 9.5 per cent of the female.

The higher education system of Cambodia is composed of five universities. Four are located in Phnom Penh. Institute of Technology, National Institute of Management, Faculty of Law and Economic Sciences, and the Faculty of Pedagogy. The fifth, Moyarishi Vedic University, is located in the province.

I. Participation in regional and multilateral agreements

Cambodia is a member of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), the United Nations Development Programme (UNDP), the United Nations Conference on Trade and Development (UNCTAD), the United Nations Educational, Scientific and Cultural Organization (UNESCO), the Food and Agriculture Organization of the United Nations (FAO), the International Fund for Agricultural Development (IFAD), the International Telecommunication Union (ITU), the World Intellectual Property Organization (WIPO), the World Health Organization (WHO) and the World Tourism Organization (WTO).

Cambodia’s accession into the World Trade Organization (WTO) was approved on

11 September 2003 as the 147th member and became the first least developed country to access WTO since its creation in 1995.

Cambodia is also a member of the Asian Development Bank (ADB), the International

Bank for Reconstruction and Development (IBRD), the International Monetary Fund (IMF), the International Development Association (IDA), the Multilateral Insurance Guarantee Agency (MIGA), the International Civil Aviation Organization (ICAO), the International Standards Organization (ISO), the International Maritime Organization (IMO), the Mekong River Commission (MRC), the World Customs Organization (WCO) and the Paris Convention for the Protection of Industrial Property Rights.

Cambodia’s participation in sub-regional trade cooperation includes its membership to the ASEAN and ASEAN Free Trade Area (AFTA). The country is also engaged in bilateral trade-related agreements as listed in table 2.

Table 2. Trade agreements

Country Type of agreement Date of agreement Brunei Darussalam Trade 19 August 2000

Canada Memorandum of Understanding (MOU) on LDC initiation

21 January 2003

China Trade 19 July 1996

European Union Trade in textiles products 3 February 1999

India Trade 6 November 2002

Indonesia Trade 18 February 1997


http://www.unescap.org/

http://www.wto.org/

http://www.mrcmekong.org/


http://www.saarc-sec.org/economic/sapta/sapta.html

http://www.moc.gov.kh/Trade_Agreement/brunei_aug19-00.htm

http://www.moc.gov.kh/Trade_Agreement/canada_21jan03.htm

http://www.moc.gov.kh/laws_regulation/treaties/textile_agree_chi_96.htm

http://trade-info.cec.eu.int/doclib/docs/2003/april/tradoc_111331.pdf

http://www.moc.gov.kh/Trade_Agreement/india_06nov02.htm

http://www.moc.gov.kh/Trade_Agreement/indonesia_feb18-97.htm


_______________________________________________________________________________________________________

Country Type of agreement Date of agreement Lao People’s Democratic Republic Trade 25 May 1998

Malaysia Trade 4 February 1999

Philippines Economic and trade relations MOU 17 December 1995

Republic of Korea Trade 6 November 2002

Thailand Trade, economic and technical cooperation 20 September 1996

Thailand MOU on intellectual property cooperation 5 March 1997

Thailand MOU on joint committee on trade 22 May 2000

United States of America Textiles 20 January 1999

Viet Nam Trade 24 March 1998

Viet Nam Transit 7 September 2000

Viet Nam Commercial transaction in border areas 26 November 2001

Source: Ministry of Commerce.

II. MACROECONOMIC CLIMATE

A. Gross domestic product

Since its re-emergence into the world’s economy in the late 1990s, Cambodia has taken several steps forward to improve the country’s economy. The annual gross domestic product (GDP) growth rate has picked up since 1998. However, GDP’s growth slipped from 6.3 per cent in 2001 to 4.5 per cent in 2002, mainly due to the impact of a regional outbreak of the Severe Acute Respiratory Syndrome (SARS) in the tourism industry.

According to the Asian Development Bank (ADB), agriculture accounted for around

38 per cent of Cambodia’s GDP in 2001. The importance of this sector has slipped in recent years as it accounted for 48 per cent in 1997. In 2001, the industry sector represented 19 per cent of GDP from a previous 12 per cent in 1997. The industry sector growth has been led mainly by the development of garment manufactures, a sector highly dependent on market changes and access arrangements. Under WTO rules, garment quotas have to be eliminated in 2005.

The tourism sector is currently one of the driving forces of Cambodia’s growth.

However, the sector has its own constraints as it is highly concentrated around Siem Reap and Phnom Penh with weak linkages to the rest of the economy.

In order to tackle poverty, the Government is committed to maintain economic stability in the coming years through economic reform. Reforms in the banking sector started in 2000, after the adoption of the Banking and Financial Institutions Law in 1999. Land reform remains crucial as only 10 per cent of rural households hold legal land titles. Reform in trade has made significant progress as Cambodia prepared and gained entry to the WTO in September 2003.


http://www.moc.gov.kh/Trade_Agreement/lao_may25-98.htm

http://www.moc.gov.kh/Trade_Agreement/malasia_feb04-99.htm

http://www.moc.gov.kh/Trade_Agreement/cambodia-philippines_dec17-95.htm

http://www.moc.gov.kh/Trade_Agreement/korea_06nov02.htm

http://www.moc.gov.kh/Trade_Agreement/thailand_sep20-96.htm

http://www.moc.gov.kh/Trade_Agreement/thai_march05-97.htm

http://www.moc.gov.kh/Trade_Agreement/thailand_may22-00.htm

http://web.ita.doc.gov/Otexa/OTEXAGRE.NSF/main-view

http://www.moc.gov.kh/Trade_Agreement/cambodia-vietnam_march24-98.htm

http://www.moc.gov.kh/Trade_Agreement/trasit_of_goods_vn_sep07-00.htm

http://www.moc.gov.kh/Trade_Agreement/vietnam_nov26-01.htm

http://www.moc.gov.kh/

http://www.bigpond.com.kh/Council_of_Jurists/Banque/KRM19_11_13E.htm


_______________________________________________________________________________________________________

Chart 1. Cambodia GDP structure in 1997

Total GDP at current market price: 9,513.5 Bn Riels

Finance7%

Public administration

3%Others

4%Transport and

communications 6%

Trade 16%

Electricity, gas and water

0%

Construction 4% Manufacturing

12%Mining

0%

Agriculture 48%

Source: Asian Development Bank, Key Indicators, May 2003.

Chart 2. Cambodia GDP structure in 2002 Total GDP at current market price: 14,705 Bn Riels

Transport and communications

7%

Trade 15%

Electricity, gas and water

1%

Construction 7% Manufacturing

19%

Mining 0%

Agriculture 35%

Finance7%

Public administration

3%

Others6%

Source: Asian Development Bank, Key Indicators, May 2003

B. Main economic sectors

Although the role of agriculture has been reduced over the years, it remains a major

part of Cambodia’s economy employing a great majority of the workforce in the countryside. Thanks to its potential in fisheries and livestock, the country is seeking to boost agricultural and food products as potential exports, along with garments. Forests are considered the most valuable resource of the country. However, in the last 30 years forest cover has drastically declined despite Government’s efforts to clamp down on illegal logging.

During the period from 1996 to 1999, manufacturing sector’s steady growth averaged

13.5 per cent per year, led by textile production which grew 64.3 per cent. The main force of growth in the manufacturing sector has been textiles and garments, as well as food processing. Garments and textiles are growing fast due to Cambodia’s access to the markets of the European Union (EU) and the United States of America through Generalized Systems of Preference (GSP) and Most Favoured Nation (MFN) status. However, although garment



_______________________________________________________________________________________________________

exports made up nearly 78 per cent of exports in 2001, Cambodia’s garment sector is facing competition with exports from China and Viet Nam.

By end of 2000, there were 25,791 companies in manufacturing, accounting for the

majority of all business enterprises in the country. About two-thirds of manufacturing companies are in the form of small and medium-sized enterprises (SMEs), and food processing is a major business of SMEs.

Although resourceful in minerals, Cambodia’s mining sector contributed only 0.1 per cent to real GDP in 2001. Foreign investors have expressed interests in mining of gold and gems, however it is still at an early phase. Exploration of oil and gas has also been discussed with foreign companies. Construction business has started to pick up again since stability was re-gained after 1998. In 2001, the construction sector accounted for 4.2 per cent of GDP. The increase in tourism has contributed directly to the growth of the construction sector, as it has meant building hotels and importing construction materials.

Since Cambodia re-emerged in the 1990s, tourism started to recover again at a growth

rate of 30 per cent per year, becoming one of the main sources of foreign currency. In 2001, it was estimated that tourism contributed nearly to 7 per cent of GDP in foreign currency. The policy of “open air” - which allows foreign airlines to fly directly to the Angkor Wat temple complex and less restricted regulations on tour operators - has encouraged the development of tourism. However, the sector has been seriously affected Lately by the global concerns about SARS and the war of terrorism, especially after the bombing of Bali in October 2002. The Government is seeking ways to increase the inflow of tourists with recent proposals to allow the use of the Chinese currency in Cambodia in order to attract more visitors from China.

Foreign investment in tourism sector is also being sought, especially in three areas. the Angkor Wat complex in Siem Reap, the beach town of Sihanoukville and the eco-tourism in Ratanakiri province.

C. International trade

Cambodia had established trade with foreign countries since the 1960s, mainly exporting agricultural products such as rice, rubber and corn. Trading activities came to an end during the Khmer Rouge regime in the 1970s. Free-market oriented trade regime began in late 1980s with the abolishment of the state monopoly for foreign trade and the adoption of foreign investment law in 1989. Since 1993, trade policies have been greatly liberalized and Cambodia became a member of WTO in September 2003.

Cambodia became a member of the Association of Southeast Asian Nations (ASEAN) in 1999 which requires the implementation of trade liberalization and tariff reduction towards an integrated economy under the ASEAN Free Trade Area (AFTA). Under this agreement, Cambodia commits to bind tariffs for intra-ASEAN trade to zero and 5 per cent by the year 2010.

Cambodia’s main export is garment, followed by logs and timbers, rubber, rice and fish. Main destinations by order of importance are the European Union, United States of America, Japan and ASEAN members such as Thailand, Viet Nam and Malaysia.


http://www.aseansec.org/home.htm

http://www.aseansec.org/2002_cept_bycountry.htm


_______________________________________________________________________________________________________

0

500

1,000

1,500

2,000 Millions

US$

1995 1996 1997 1998 1999 2000 2001

Chart 3: Total foreign trade

Exports, f.o.b. Imports, c.i.f. Source: Based on the data from the Ministry of Commerce

D. Foreign investment

The Cambodia Investment Board (CIB)/Council for the Development of Cambodia (CDB) is the central authority approving any foreign investment project. The current foreign investment legislation encourages investment, both domestic and foreign, in the following sectors. export-oriented projects, tourism, agro-industry, construction, infrastructure, energy and mining. Since mid-1990s, garment and textile production have attracted the bulk of foreign investment, mainly from Asia.

As of January 2002, top foreign investors in Cambodia are Malaysia; Taiwan Province of China; United States of America; China; and Hong Kong, China. Foreign investment is also encouraged in the area of tourism, as Cambodia’s tourism infrastructure is relatively weak.

In order to boost investment, a Law on Industrial and Export Processing Zones has been proposed and awaiting adoption. It is expected that the establishment of export processing zones near the coastal and border areas will ease the transport issues for businesses. New amendments to the Law on Investment of August 1994 were made in 2002 and are waiting for adoption and enactment.

Table 3. Investment projects approved by sector (Fixed assets, in millions of US$)

Sector 1996 1999 2000

Agriculture 120.4 63.8 9.8 Agriculture 24.6 22.1 3.8 Agro-industry 28.6 21.6 5.9 Plantation 67.2 20.2 0.0

Industries 522.1 161.5 109.4 Garments 46.6 66.6 81.5 Textiles 8.7 57.8 4.1 Shoes 8.7 11.4 2.1

Tourism 115.0 171.8 79.8 Services 111.0 50.8 70.3 Total 842.4 447.9 269.2

Source: Cambodian Investment Board.


http://www.cambodiainvestment.gov.kh/default.asp



_______________________________________________________________________________________________________

E. Labour issues

Cambodia has a fairly young population. In 2001, 43 per cent of the population was

under the age of 14 which would lead to high population growth rate in the future. According to the 1998 census, the total labour force participation rate is 55.5 per cent (56.5 per cent for male and 54.6 for female), while the total unemployment rate is 5.3 per cent (4.7 per cent for male and 5.9 for female). Almost 87 per cent of the labour force is concentrated in rural areas, mainly working as farmers. Only 48 per cent of those over 25 years of age have completed primary education while there is a lack of educational opportunities. All of this has resulted in shortages of skilled labour, and has become one of the major issues for both investors and Government.

In 1997, the new Labour Law replaced the 1992 one stipulating the rights to form unions, to strike and to bargain collectively. This Labour Law in general meets international standards as well as the requirements for the United States MFN and GSP status. Employment of foreign skills is considered more liberal than in other countries in the region.

Cambodian Government encourages the official export of labour services to improve the living conditions of people, enhance professional skills, absorb unemployed and underemployed labour, and raise State revenue. Major labour exports have been made to Greece (around 1,200 workers) and Malaysia (approximately 1,000 workers), mainly in the fields of construction, manufacturing and domestic services. Unofficial labour migration has occurred mostly to neighbouring countries, affecting a total amount estimated of 100,000 workers.

Although the country encourages labour export, one major constraint is low level of education of the labour force. Thus, foreign workers are imported to work in Cambodia due to shortage of local skills. Vietnamese labourers can be found in several sectors such as trading, wood processing and construction. References for part one: Global Country Presentation ADB, Asian Development Outlook 2003 http://www.adb.org ADB, Annual Report 2002, Cambodia Cambodia Investment Guide 2002, DFDL/Mekong Law Group. Economist Intelligence Unit, Country Profile 2003 – Cambodia Economist Intelligence Unit, Country Report August 2003 – Cambodia IMF Cambodia Letter of Intent, Memorandum of Economic and Financial Policies, 17

January 2003 http://www.imf.org/External/NP/LOI/2003/khm/01/index.htm IMF Country report No. 03/59, March 2003, Cambodia: selected Issues and Statistics

Appendix Ministry of Commerce http://www.moc.gov.kh/ Ministry of Education, Youth and Sport http://www.moeys.gov.kh/ Trade Policy and Industrial Sector Development in Cambodia, presented by H.E. Mr. Sok

Siphana, Secretary of State for Commerce at the Workshop on International Trade and the WTO Agreements for Cambodia, Seoul, Republic of Korea, 16-22 March, 2003.

WTO Diagnostic Trade Integration Study for Cambodia, August 2002, WT/IFSC/W/12/Add.2


http://www.adb.org/

http://www.adb.org/Documents/Reports/Annual_Report/2002/CAM.asp

http://www.imf.org/External/NP/LOI/2003/khm/01/index.htm


http://www.moeys.gov.kh/


_______________________________________________________________________________________________________

Part two SELLING TO CAMBODIA

I. IMPORT POLICY, REGULATIONS AND PROCEDURES

A. General

The Law on Commercial Regulations and Commercial Register, 1995, and its 1999

Amendments, stipulate that trading entities including merchants and companies have to register at least 15 days prior to the commencement of commercial operations at the provincial or municipal commerce office, or other places as determined by the Ministry of Commerce.1 The registration fee is about US$ 70 for both national and foreign companies.

Any trading companies of Cambodian or foreign nationalities, registered with the Ministry of Commerce, are allowed to freely engage in import-export activities. Investment companies can only conduct import-export business within the scope of their investment licence.2 State trading companies still continue to operate, however, they have to compete with other private companies in the same market.

B. Import approval

No approval is required to import goods into Cambodia, but the importer has to be registered with the Ministry of Commerce. Only goods that are classified as prohibited or restricted goods to import need permission from the relevant ministries. (See table 4 for restricted items and table 5 for prohibited items). All goods imported have to be reported to the customs office.

C. Licensing, quotas and prohibitions

In general, the limited licensing system in place is for protection of human health, consumer interests, national security and protection of the environment. All firms properly registered with the Ministry of Commerce are allowed to engage into import activities of all types of goods except military equipment and narcotic drugs, for which the only legal importer is the Government. However only licensed concessionaires, foreign or domestic, can operate trade in forestry products.

Import licences are required for some goods from the Ministry of Commerce, but also from relevant government agencies depending on the nature of goods as listed in table 4.3

Import licences issued by the Ministry of Health are valid for six months and

extendable upon request. Licences for agricultural inputs are valid for one year and also extendable. Licences for pharmaceutical products and agricultural inputs are issued free-of-charge, however, for each pharmaceutical product registered with the Ministry of Health is subject to a one-time fee of US$200 and US$30 for each agricultural input registered at the Ministry of Agriculture, Forestry and Fisheries.

1 http://www.moc.gov.kh/laws_regulation/part7_eco_dev/rkm95_law_commercial_reg.htm

and http://www.moc.gov.kh/laws_regulation/kram-Comm_amd.htm2 http://www.moc.gov.kh/laws_regulation/prk-moc-trading.htm 3 http://www.camnet.com.kh/customs/

Part Two: Selling to Cambodia 11 of 48

http://www.bigpond.com.kh/Council_of_Jurists/Commerce/com002g.htm

http://www.moc.gov.kh/laws_regulation/part7_eco_dev/rkm95_law_commercial_reg.htm

http://www.moc.gov.kh/laws_regulation/kram-Comm_amd.htm

http://www.moc.gov.kh/laws_regulation/prk-moc-trading.htm

http://www.camnet.com.kh/customs/


_______________________________________________________________________________________________________

Application for other import licences requires a fee of 15,000 Riels and is valid for three months. Upon request, it can be extended for an additional two months. The licence application process is usually completed within seven days.

Quantitative restrictions are applied only to pesticides imports due to safety requirements and storage facilities.

As per WTO membership agreement, no later than 1 June 2005, Cambodia will

eliminate quantitative restrictions on imports of fertilizers, pesticides and other agricultural inputs. Cambodia will also establish a WTO-consistent method of registration and review of imported agricultural chemicals.

Table 4. Products subject to import licensing

Product Measure Concerned agency Agricultural inputs (pesticides and fertilizers) Licence Ministry of Agriculture,

Forestry and Fisheries Artificial sweeteners Licence Ministry of Health Cultural items Licence/permit Ministry of Culture Cultural items above US$10,000 Automatic licence Central Bank of Cambodia Gold bars, silver, precious stones and articles thereof Licence Central Bank of Cambodia Live animals Permit Ministry of Agriculture,

Forestry and Fisheries Pharmaceuticals and medical materials Licence Ministry of Health Vehicles, aircraft and parts, ships and boats, and other machinery for military purposes

Licence Ministry of National Defence

Wood products Licence/permit Ministry of Agriculture, Forestry and Fisheries

Source: WTO Diagnostic Trade Integration Study for Cambodia, August 2002, WT/IFSC/W/12/Add.1,

page 33.

Among the products prohibited to import into Cambodia, there are, however, selected ones that may be imported under special circumstances and require ministerial authorization for import (see table 5).

Table 5. Products subject to import prohibition

Product Measure Concerned agency Armaments and ammunitions Prohibited, except for military

procurement Ministry of Defence/ Internal Affairs

Firecrackers Prohibited, except for special occasions Ministry of Defence/ Internal Affairs

Illicit drugs Prohibited Live pigs and pig meat Prohibited Ministry of Agriculture Printed materials Prohibited if deemed to have negative

impact on society Ministry of Education/ Culture

Right hand drive vehicles Prohibited Used motorcycle tyres Prohibited Ministry of Environment Used footwear and leather bags Prohibited Ministry of Environment

Source: WTO Diagnostic Trade Integration Study for Cambodia, August 2002, WT/IFSC/W/12/Add.1, page 33.



_______________________________________________________________________________________________________

D. Import requirements For imports of agricultural inputs and pharmaceutical products, Cambodia requires a

Certificate of Good Manufacturing Practice in accordance with WHO Standard Guidelines.

Imports of live animals and animal sub-products require a health certificate and sanitary and phytosanitary inspection. Imports of some agricultural goods including fruit and vegetables, citrus and rose plants and seed, baled cotton and seeds, and onion seeds require a phytosanitary certificate.

E. Packing and labelling requirements

In 2000, the Law on the Management of Quality and Safety of Products and Services was adopted. Manufacturers and service providers are required to have product labels in Khmer language detailing ingredients, composition, users’ guidelines, manufacturing date and expiration date along with other requirements which guarantee the safety and health of consumers prior to their commercialization. Also, foodstuff labelling must indicate clearly name of goods, producer name and address, source, quantity, batch number, production and expiration dates, ingredients and directions for use if necessary.

The Ministry of Commerce is responsible for inspecting the implementation of these regulations and repressing frauds and violations.

F. Inspections

The Annex to the Prakas of Regulations on the Implementation of Pre-shipment Inspection Services by the Ministry of Economy and Finance stipulates the rules and regulations of the pre-shipment inspection.

Cambodia Import Export Inspection and Fraud Repression Department (Camcontrol) is the agency in charge of inspections of import/export goods, quality control, execution of regulations concerning quality, safety and trademarks of food and consumer goods except medicines, medical equipment and cosmetic products. Areas of operation include marine-related issues, petroleum products, agricultural products and lost adjustment services.

The Government signed a contract with the Société Générale de Surveillance (SGS), a Swiss company, to conduct all pre-shipment of imported goods into Cambodia. Imported goods with declared value of US$ 5,000 or more must be reported to local office of SGS. Inspection of the shipment will be conducted by the local office which then forwards the report and all documents to SGS Cambodia. The importer will present the SGS documents to relevant customs office and pay due taxes upon the arrival of the goods in Cambodia. [Sources. Cambodia Investment Guide 2002 - DFDL/Mekong Law Group.]

The current pre-shipment contract between the Cambodian Government and SGS is applied to shipments valued at US$ 4,000 or more free on board (f.o.b.). Goods worth less than US$ 4,000 are valued by the Cambodian Customs and Excise Department. Valuation is based on procedures consistent with WTO requirements. Pre-shipment inspection is exempted for the categories listed in box 1.


http://www.moc.gov.kh/laws_regulation/rkm0600-01-product_safety.htm

http://www.moc.gov.kh/laws_regulation/New_Update/PSI Regulations Annex.pdf

http://www.camcontrol.gov.kh/


_______________________________________________________________________________________________________

Box 1. Goods exempted for pre-shipment inspection

• Precious stones and precious metals; • Objects of art; • Explosives and pyrotechnic products; • Ammunition, weapons and implements of war; • Live animals; • Current newspapers and periodicals; • Household and personal effects; • Parcel post or commercial samples; • Gifts from foreign Governments or international organizations to foundations, charities and

recognized humanitarian organizations; • Gifts and supplies to diplomatic and consular missions and to agencies related to any United Nations

Organization imported for their own needs; • Grants in kind; • Goods imported for government use under government order; • Scrap metals; • Cigarettes; and • Temporary admitted goods (inward processing for export)

Source: WTO Report of the Working Party on the Accession of Cambodia, 15 August 200, WT/ACC/KHM/21, paragraph 101.

Pre-shipment inspection fees can amount up to 0.80 per cent of f.o.b. value of the

goods, except for bulk petroleum products at US$ 0.30 per metric ton. Failure to comply with the pre-shipment inspection results in a penalty of 7 per cent of the cost, insurance and freight (c.i.f.) value.

G. Customs valuation

At present, Cambodia is in a transitional period regarding the phasing out of its minimum customs value. The Draft Customs Law was approved by the Council of Ministers and shall be adopted by July 2004 by the National Assembly. Currently Cambodia is using a reference price database as guide for appraising value declaration, except for some products subject to minimum customs values. The Draft Customs Law stipulates that the customs valuation of imported goods is based on the transaction value which is the price paid for goods when sold for export to Cambodia.

II. TARIFF SCHEDULE - CUSTOMS

A. General

The Law on Import and Export Duties, 1989, provides the legal basis for the implementation of customs tariffs. The Cambodian Customs and Excise Department is responsible for the imposition and surveillance of import tariff schedules. Contact point. Cambodian Customs and Excise Department

6 Norodom Boulevard Phnom Penh Cambodia E-mail: [email protected]: http.//www.camnet.com.kh/customs/


http://www.moc.gov.kh/laws_regulation/draft_laws-comment/Draft_LawsUpdate/Draft Law on Customs-15August02.pdf

http://www.camnet.com.kh/customs/LAW89.htm

mailto:[email protected]



_______________________________________________________________________________________________________

B. Classification

Cambodia is a member of the World Customs Organization and applies the eight-digit

tariff nomenclature based on the harmonised system (HS). The seventh and eighth digits are harmonised to ASEAN practice.

C. Customs duties

There are five major duty rates for imported goods, excluding vehicles, which enjoy

special rates as follows. • 0 per cent for goods that government policy provides not to collect duties; • 7 per cent for primary products and raw materials; • 15 per cent for machinery and equipment; • 35 per cent for finished products and government protected goods; • 50 per cent for luxurious goods.

Under the Cambodia-US Agreement related to trade in cotton, wool, man-made fibre,

non-vegetable fibre and silk blend textile and textile products, Cambodia offers preferential tariff rates to imports textile and apparel products of United States-origin.

D. ASEAN Free Trade Area (AFTA)

In 1999, Cambodia joined AFTA that promotes intraregional trade among ASEAN members.4 The backbone of AFTA is tariff reduction through the mechanism of the common effective preferential tariff (CEPT). Under CEPT, tariffs on goods traded within the ASEAN region, which meet a 40 per cent ASEAN content requirement, will be reduced to 0-5 per cent by the year 2010 for Cambodia. By 2010-2015, the ASEAN countries have agreed to enact zero tariff rates on virtually all imports from the four newer ASEAN members, including Cambodia. Under CEPT, goods are classified in four categories:

1. Inclusion List (IL): goods that will have zero or 5 per cent tariff rate by the deadline for each country.

2. Exclusion List (EL): sensitive goods that are temporarily excluded from the Inclusion List, and will be subject to zero or 5 per cent tariff rates within the following seven years. For Cambodia, 2007 is the deadline to transfer the items under the Exclusion List into the Inclusion List.

3. Sensitive List (SL): goods that are given a longer time frame to transfer to the Inclusion List (2017 for Cambodia), including unprocessed agricultural products.

4. General Exceptions List (GEL): goods that are not subject to tariff reduction or elimination for reasons of national security, human, animal and plant life and health, including articles of artistic, historic and archaeological values.

The Inclusion List of Cambodia consists of 3,114 tariff lines (around 46 per cent of

total tariff lines). In 2000, the first year of implementation, about 945 tariff lines with tariff rates of 50, 35 and 15 per cent had preferential rates (or CEPT rates) of 35, 20, 10 and 7 per

4 ASEAN member countries are: Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam.




_______________________________________________________________________________________________________

cent, respectively. Import duties on products in the Inclusion Lists of Cambodia shall be eliminated not later than 1 January 2015. Flexibility, however, will be allowed for import duties on some sensitive products which will be eliminated not later than 1 January 2018. The full 2002 CEPT package for Cambodia is available at: http.//www.aseansec.org/2002_cept_bycountry.htm

E. Taxes and surcharges

The Cambodia Import-Export Inspection and Fraud Repression Department (CAMCONTROL) collects a fee of 0.1 per cent on the value of all imported goods. There are no charges other than regular customs duties, except in the case of petrol and diesel, where Cambodia imposes a charge of US$ 0.02 per litre for petrol, and US$ 0.04 for diesel.

Value added tax (VAT) is applied on imports from all sources on c.i.f. value including customs duties and excise taxes whenever applicable. A fee of 15,000 Riels (approximately US$ 4) is charged per import declaration.

III. FOREIGN EXCHANGE REGIME

A. General

Cambodia’s banking system was reformed in 1989 with the introduction of a two-tier system: the central bank and commercial banks. The National Bank of Cambodia (NBC) is the central bank in charge of formulating and implementing Cambodia’s monetary policy. Private commercial banks have been established as limited liability companies. Foreign banks have also been allowed to participate in the market, usually under joint venture arrangements with the National Bank. [Source: IMF Country Report, March 2003]

There are two exchange rates: official and market rate. The official rate is adjusted daily by NBC to keep the spread between the two rates less than one per cent. The official rate applies mainly to transactions made by the Government and State-owned enterprises, whereas the market rate is frequently used in exchange transactions.

B. Currency convertibility

The foreign exchange regime was liberalized using the market-based exchange rate. The Riel, the national currency has been determined by the market since 1993, and is freely convertible. Under the Law on Foreign Exchange, 1997, all foreign exchange transactions, including purchases and sales of foreign currency, are permitted through authorized intermediaries without restriction. Transactions in foreign currency worth US$ 10,000 or more have to be declared. Importers are allowed to keep the foreign exchange proceeds from their trading activities.

C. Foreign exchange allocation

According to the Law on Foreign Exchange, 1997, as well as the regulations issued by the National Bank of Cambodia, foreign currencies can be freely purchased through the banking system. The Law on Foreign Exchange specifically States that there are no restrictions on foreign exchange operations, specifically including the purchase and sale of



http://www.moc.gov.kh/laws_regulation/rkm897-03-foreign.htm


_______________________________________________________________________________________________________

foreign exchange and transfers of all other types of international settlements. However, the law requires that only authorized intermediaries perform these transactions. These intermediaries, legally recognized banks in Cambodia, are required to report to the National Bank of Cambodia any transactions in excess of US$ 10,000.

D. Money and finance measures

There are no special requirements for the settlement of trade transactions. An importer has to open an account with a commercial bank.

E. Banking

Under the Banking and Financial Institution Law (1999), all private commercial banks are required to obtain a licence from NBC. Currently, there are 17 banks including one State-owned bank, three foreign bank branches, nine locally incorporated commercial banks and four specialized banks (see box 2).

Box 2. Major commercial banks in Cambodia

Bank

Ownership/statusForeign Trade Bank State-owned Krung Thai Bank Public Co. Ltd. Foreign branch (Thai) Maybank Foreign branch (Malaysian) First Commercial Bank Foreign branch (Taiwan, Province of China) Advanced Bank of Asia Ltd. Private (Korean) Cambodia Asia Bank Private (Malaysian) Cambodia Commercial Bank Private (Thai) Cambodia Mekong Bank Private (Cambodian) Cambodia Public Bank Private (Malaysian) Canadia Bank Ltd. Private (Cambodian/Canadian) Singapore Banking Corp. Private (Singaporean) Union Commercial Bank Private (Hong Kong, China) Vattanac Bank Private (Cambodian) Rural Development Bank Specialized (State-owned) ACLEDA Bank Specialized (Cambodian) Peng Heng SME Bank Specialized (Cambodian/Canadian) Cambodia Agriculture Industrial Specialized Bank Specialized (Cambodian/Japanese)

Source: IMF Country Report, March 2003.

The Law on Banking and Financial Institutions guarantees foreign banks equal rights and obligations to local banks. There is no restriction regarding foreign ownership of banks. There are also a large number of micro finance institutions (around 90) in Cambodia, providing credit and promoting savings among their members.


http://www.moc.gov.kh/laws_regulation/rkm1199-13-bank_financial.htm

http://www.ftbbank.com/

http://www.ccb-cambodia.com/

http://www.canadiabank.net/

http://www.sbc-bank.com/index.htm

http://www.rdb.com.kh/

http://www.acledabank.com.kh/


_______________________________________________________________________________________________________

IV. DOCUMENTS

A. Documents required for imports

Document Number of copies Body concerned

Bill of lading/Airway Bill 3 Shipping company/airline company Certificate of origin 1 Ministry of Commerce Commercial invoice 1 Exporter Customs declaration form 3 Custom Department Import licence 4 Concerned ministries Insurance advice 1 Insurance company Packing list 1 Exporter

Source: http.//www.camnet.com.kh/customs/ .

B. Special requirements

A Certificate of Good Manufacturing Practice is required for imports of agricultural inputs and pharmaceutical products, while a health certificate and sanitary and phytosanitary inspection is needed for imports of live animals and animal sub-products. Imports of some agricultural goods including fruit and vegetables, citrus and rose plants and seed, baled cotton and seeds and onion seeds also require a phytosanitary certificate.

V. MARKETING AND DISTRIBUTION

A. Market regulations

The metric system is commonly used in Cambodia, although some traditional weights and measures are also used. For many products, it is mandatory to have labelling, instructions or warnings in Khmer language.

The Ministry of Health prescribes standards, distribution and labelling requirements for medicines.

B. Product standards

Cambodia joined the International Organization for Standardization (ISO) in January 1995 and ratified the ASEAN Framework Agreement on Mutual Recognition Arrangements.

The Standards Office in the Technical Department of the Ministry of Industry, Mines and Energy is in charge of the overall policy development of standardization and certification. Cambodia is expected to enact a new Law on Industrial Standards in 2004 which will provide for the establishment of a Department of Industrial Standards.

Under the current legislation, imported goods are subject to the same inspection process as domestically-produced goods. Pharmaceutical products are required to undergo laboratory testing in Cambodia for the conformity of the samples prior to registration.




_______________________________________________________________________________________________________

Sanitary and phytosanitary measures are based on the Law on the Management of Quality and Safety of Products and Services (2000) while other sub-decrees concerning each particular sector such as animal and animal products, plant quarantine, food hygiene are currently being drafted.

With regard to Quality control, CAMCONTROL is the national contact point for

Codex Alimentarius. CAMCONTROL focuses its efforts on the enforcement of quality and safety of products and services through the establishment of food standards and specification and labelling requirements.

The Prakas on Measures Against Food Products Devoid of Appropriate Packaging Label issued in 1999 by the Ministry of Commerce requires detailed labelling of food products circulated in Cambodia. Importers or exporters of food products are required to obtain a clearance from the Customs Department that will issue an expiry date certificate see http.//www.moc.gov.kh/laws_regulation/prk335-moc_expiry_date.htm.

C. Port facilities and trading route

Cambodia can be accessed by road, by air, by waterways or by sea. The two major waterways are the Mekong and the Tonle Sap rivers. The Mekong River is an important route for cross-border transportation between Cambodia and Viet Nam as this river runs through Viet Nam before reaching the South China Sea. On the Mekong River, there is also the second main port of Cambodia. Phnom Penh. The main port is Sihanoukville which is the only deepwater seaport of the country.

Cambodia has three main airports at Phnom Penh (Pochentong airport), Sihanoukville and Siem Reap. International airlines fly regularly into Phnom Penh and regional airlines into Siem Reap. There are also eight airports to serve domestic flights.

Road transport carries out around 90 per cent of the total volume of long distance motorized surface transport in Cambodia. The national road network is divided into two classes of roads with a total distance of 4,165 km. The national main roads are numbered RN1 to RN7. The RN1 and RN5 are part of Asian Highway AH1, while RN 4, RN7 and part of RN6 are part of Asian Highway AH11 (map). Asian Highway AH1 starts in Izmir (Turkey) and ends in Tokyo (Japan), while Asian Highway AH11 starts in Vientianne (Lao People’s Democratic Republic) and finishing in Sihanoukville (Cambodia).

In November 2003, three new border points of entry have been opened on the

Cambodian-Thai border under an agreement between the two Governments. The crossings are at Prum (Pailin City)-Ban Pakkard, Duang-Ban Laem, and Choam Anlong Veng-Sa Ngam.

There is also a railway system that runs from Phnom Penh to Poipet along the Thai

border and from Phnom Penh to Sihanoukville. Over the past decades, the railway system has degraded and the Government has planned upgrading projects which are pending international financing.





http://www.camcontrol.gov.kh/food_laws.html


http://www.moc.gov.kh/laws_regulation/prk335-moc_expiry_date.htm


_______________________________________________________________________________________________________

VI. GOVERNMENT PROCUREMENT AND STATE TRADING

ORGANIZATIONS

A. Government procurement

Cambodia’s procurement policies are open and well defined under government regulations. A new government procurement regulation was introduced in 1995 under the Sub-decree 60. Procurement is carried out through either of the following methods.

• International competitive bidding - applied to projects above 200 million Riels for

civil work and 100 million Riels for goods, and open to all bidders through public announcement;

• Domestic competitive bidding - applied to projects below 200 million Riels for civil work and 100 million Riels for goods, and open to all bidders through public announcement;

• International shopping - required to obtain a minimum of three quotations from at least two different countries, and open public competition is not required;

• Domestic canvassing - open competition is not required, foreign bidders could participate; or

• Direct purchase or direct contracting - open competition is not required, foreign bidders could participate.

B. State trading organizations

There are 11 State trading organizations engaged into import and export activities of

rice, rubber, fertilizer, fishery products, pharmaceutical products and agricultural equipment. The State trading organizations operate in full accordance with private business practices.

The Green Trade Company (GTC), established by the Government in 1998, is a merger of three former State-owned companies. Cambodian Food Company, Material and Equipment Company, and Agricultural Product Company. The institution is under the technical supervision of the Ministry of Commerce and under the financial supervision of the Ministry of Economic and Finance. However, GTC is an autonomous body in respect of administration and finance.

The GTC manages Cambodia’s national reserve of rice through sales and purchases at market prices. GTC receives no supports from public funds beside the initial injection of 30 billion Riels by the Government. Since July 2001, GTC has not engaged in rice export activities and has focussed only on domestic rice trade and distribution.

The Agricultural Inputs Company was established in February 1999 and is managed by a board of directors from the Ministry of Agriculture, Forestry and Fisheries, Ministry of Economy and Finance, and Ministry of Commerce. The Company’s main activities are purchases and sales of agricultural products (fertilizers, pesticides, seeds and agricultural equipment), warehousing and managing the distribution of fertilizers and agricultural inputs obtained from foreign donations. The Government plans to divest its share in the Agricultural Inputs Company by 2006.



_______________________________________________________________________________________________________

In the rubber sector, seven State-owned rubber plantations are being considered to become public enterprises. The Government would remain the owner of the real estates while the boards of directors would gain full autonomy in management and operations. The rubber import, export, transport and equipment company is under the technical management of the Ministry of Agriculture, Forestry and Fisheries.

C. Privatization process

The first phase of privatization was carried out from 1991 to 1993 with the intention of attracting foreign investment. The second phase started in 1995. An inter - ministerial committee has been set up to oversee the privatization process under the leadership of the Ministry of Economy and Finance.

As of April 2000, 177 enterprises have been privatized of which five were joint-

ventures, 20 sold off and 152 leased to private investors. Most privatized enterprises are in the manufacturing, agriculture and commerce sectors. A total of seven rubber companies remain State-owned until 2006 and 13 public-service enterprises will remain as State-owned enterprises at the completion of the privatization programme.

Table 6. List of State-owned enterprises (as of March 2003)

Ministry Name of enterprise

State-owned enterprises Ministry of Agriculture, Forestry, and Fisheries Chup Rubber Plantation Company,

Krek Rubber Plantation Company, Memut Rubber Plantation Company, Chamkar Andaung Rubber Plantation Company, Snuol Rubber Plantation Company, Pem Chang Rubber Plantation Company, Boeung Ket Rubber Plantation Company, Agricultural Inputs Company

Ministry of Public Works and Transport Sihanoukville Port, Phnom Penh Port, Kampuchea Shipping Agency and Broker (KAMSAB), Laboratory of Construction, Royal Railway of Cambodia, Neak Loeung Ferry, Prek Kdam Ferry

Phnom Penh Municipality Phnom Penh Water Supply Ministry of Industry, Mines and Energy Electricity of Cambodia (EDC) Ministry of Economy and Finance Rural Development Bank Ministry of Commerce Green Trade Company

Joint-venture enterprises (51 per cent State-participation) Ministry of Commerce Camintel Company,

Cambodia Pharmaceutical Enterprises

Source: WTO Report of the Working Party on the Accession of Cambodia, 15 August 2003, WT/ACC/KHM/21, page 59.


http://www.maff.gov.kh/aboutus.html


_______________________________________________________________________________________________________

Table 7. List of enterprises to remain in State ownership upon completion of privatization programme

Ministry Name of enterprise

Ministry of Commerce Green Trading Company Ministry of Industry, Mines and Energy Electricity of Cambodia (EDC) Office of the Council of Ministers Printing House of the Office of the Council of Ministers Ministry of Economy and Finance Rural Development Bank Ministry of Public Works and Transport

Sihanoukville Port, Phnom Penh Port, Kampuchea Shipping Agency and Broker (KAMSAB), Laboratory of Construction, Royal Railway Station, Neak Loeung Ferry, Prek Tamak Ferry, Prek Kdam Ferry

Ministry of Agriculture, Forestry and Fisheries

Agriculture Inputs Company (Whether the seven rubber State-owned enterprises are to be kept State-owned is being discussed)

Source: WTO Report of the Working Party on the Accession of Cambodia, 15 August 2003,

WT/ACC/KHM/21, page 60.

VII. PRINCIPAL IMPORT ITEMS

Cambodia principal trade partners are mainly from the Asian region, although lately the composition of its imports has shown a tendency to diversify, as listed in tables 8 and 9.

Table 8. Direction of imports (Million of US$)

Country 1998 1999 2000 2001

Singapore 95.0 98.0 106.0 723.4 Thailand 168.5 193.1 221.8 228.0 Hong Kong, China 129.8 183.6 254.3 116.9 Viet Nam 90.7 84.7 91.5 109.5 China 95.7 85.0 112.9 86.9 Taiwan Province of China 126.0 147.6 174.8 78.1 Republic of Korea 67.8 79.0 76.9 49.6 Japan 71.1 73.1 58.4 19.6 Malaysia 46.5 49.3 64.2 19.2 United States of America 38.9 37.6 32.8 16.5 France 40.5 41.5 39.3 12.6 Indonesia 28.0 50.3 68.4 9.9

Source: On the basis of data from the Ministry of Commerce.



_______________________________________________________________________________________________________

Table 9. Composition of imports (Million of US$)

Imports 1998 1999 2000 2001 Man-made staple fibres 50.4 109.9 225.1 279.3 Petroleum products 155.5 159.0 180.0 207.8 Knitted or crocheted fabrics 111.3 122.2 129.5 163.8 Tobacco and manufactured tobacco substitutes 29.2 61.1 76.4 78.7 Nuclear reactors, boilers, machinery and mechanical appliances 87.9 73.2 102.9 71.5 Vehicles and parts 84.3 74.6 72.7 67.3 Electrical machinery and equipment 70.8 67.1 51.5 53.3 Pharmaceuticals products 40.0 44.9 40.1 47.3 Paper and paperboard 25.8 27.7 36.3 41.6 Other made up textile articles 23.6 39.0 47.0 38.0 Salt; sulphur; earths and stone plastering materials, lime and cement 23.6 23.8 30.8 35.2 Articles of apparel and clothing accessories, not knitted or crocheted 9.7 9.3 21.5 34.5 Plastics and articles thereof 17.9 19.3 25.1 28.9 Sugars and sugar confectionary 14.4 23.3 12.3 28.3 Man-made filament 35.1 22.4 16.9 14.5 Cotton 33.9 58.2 19.6 9.4 Others 313.7 292.5 330.1 304.2 Total Imports c.i.f. 1127.1 1,227.5 1,417.8 1,503.6


References for part two: Selling to Cambodia AEAN Homepage, http.//www.aseansec.org/14183.htmCambodia Customs Homepage, http.//www.camnet.com.kh/customs/Cambodia Investment Board, Cambodia Development Council:

http.//www.cambodiainvestment.gov.kh/Information.asp?PageID=Startup+Procedures per cent3AMore

CAMCONTROL, roles and responsibilities http://www.camcontrol.gov.kh/mission2.html Economist Intelligence Unit, Country Profile 2003 – Cambodia Economist Intelligence Unit, Country Report August 2003 – Cambodia IMF Country Report Cambodia, March 2003 Ministry of Commerce, http.//www.moc.gov.kh/depts/green_trade/gb_website.htmMinistry of International Trade and Industry of Malaysia, Home page

http.//www.miti.gov.my/trade/mtmain.htmPhnom Penh Post, Print Edition, 21 November-4 December 2003. UNCTAD, TRAINS, http.//r0.unctad.org/trains/2003 per cent20Cambodia.htm. US-ASEAN Business Council Home page, http.//www.us-asean.org/afta.asp WTO Fact sheet, Cambodia,

http://www.wto.org/english/thewto_e/acc_e/factsheet_cambodge_e.htmWTO Report of the Working Party on the Accession of Cambodia, 15 August 2003,

WT/ACC/KHM/21.


http://www.aseansec.org/14183.htm


http://www.cambodiainvestment.gov.kh/Information.asp?PageID=Startup+Procedures%3AMore

http://www.cambodiainvestment.gov.kh/Information.asp?PageID=Startup+Procedures%3AMore

http://www.camcontrol.gov.kh/mission2.html

http://www.moc.gov.kh/depts/green_trade/gb_website.htm

http://www.miti.gov.my/trade/mtmain.htm

http://r0.unctad.org/trains/2003 Cambodia.htm

http://www.us-asean.org/afta.asp

http://www.wto.org/english/thewto_e/acc_e/factsheet_cambodge_e.htm


_______________________________________________________________________________________________________

Part Three BUYING FROM CAMBODIA

I. EXPORT POLICY, REGULATIONS AND PROCEDURES

A. General

In general, the Government promotes export activities to encourage employment and

generate foreign exchange. Any trading companies of Cambodian or foreign nationalities, registered with the Ministry of Commerce, are allowed to freely engage in import-export activities as stipulated in Law on Commercial Regulations and Commercial Register, 1995. The registration fee costs about US$ 70 for both national and foreign companies.

B. Export approval

In general, no approval is required to exports goods from Cambodia. Most exports only require an export declaration made into 3 copies to accompany with the invoice and packing list. However there are some exceptions such as.

• The export of timber products is controlled and very restricted, therefore an application to export timber has to be filled in and authorized by the First and Second Prime Minister according to the Decision No. 65 on the Annulment the Existing Procedure for Timber Export, June 18 1994;

• The sale and export of solidified rubber should also be authorized by the Government, as stipulated in the Anukret on Conferring the Right to Sell and Export Rubber Products to the Ministry of Agriculture, Forestry and Fisheries, October 13 1994.

Other export restrictions and prohibitions are detailed in the next section.

C. Licensing, quotas and prohibitions

In general, the limited licensing system in place is for protection of Cambodia’s environment, as well as its archaeological and cultural heritage.

Table 10. Products subject to export licensing

Product Measure Concerned agency Articles of processed wood Licence Ministry of Agriculture, Fisheries

and Forestry Fish Export monopoly granted to

State enterprise Ministry of Agriculture, Fisheries and Forestry

Footwear Export licence to EU Ministry of Commerce Live animals Export licence Ministry of Agriculture, Fisheries

and Forestry Pharmaceuticals and medical materials Export licence Ministry of Health Precious stones, raw gold Licence as long as declared

items above US$10,000 Central Bank of Cambodia

Vehicles and machinery for military purposes

Export licence Ministry of National Defence

Weapons, explosives and ammunitions Export licence Ministry of National Defence Source: WTO Diagnostic Trade Integration Study for Cambodia, WT/IFSC/W/12/Add.1, page 36 and

http.//www.wto.org/english/thewto_e/acc_e/factsheet_cambodge_e.htm.

Part Three: Buying from Cambodia 24 of 48

http://www.moc.gov.kh/laws_regulation/part8_sustainable/ssr65_94_annul.htm


http://www.moc.gov.kh/laws_regulation/part8_sustainable/ank63_93_rubber.htm



http://www.wto.org/english/thewto_e/acc_e/factsheet_cambodge_e.htm


_______________________________________________________________________________________________________

Table 11. Products subject to quota

Product Measure Concerned agency Rice Quota Ministry of Agriculture, Fisheries

and Forestry Textiles and garments Export quota to the United States Ministry of Industry, Mines and

Energy/ Ministry of Commerce Textiles and garments Export quota to EU Ministry of Industry, Mines and

Energy/ Ministry of Commerce

Source: WT/IFSC/W/12/Add.1, page 36.

Table 12. Products subject to export prohibitions

Product Measure Concerned agency Cambodian antiques Prohibited Ministry of Culture Illicit drugs Prohibited Ministry of Health Logs and unprocessed timber Prohibited Ministry of Agriculture, Fisheries

and Forestry Printing materials Prohibited if negative impact on

society Ministry of Education, Youth and Sports

Sandal wood Prohibited Ministry of Agriculture, Fisheries and Forestry

Sawn timber Prohibited Ministry of Agriculture, Fisheries and Forestry

Source: WT/IFSC/W/12/Add.1, page 36.

D. Documentary evidence under trade agreements and preferential schemes

Canada

In January 2003, Canada and Cambodia signed a Memorandum of Understanding under the Canadian Least Developed Countries Market Initiative which grants tariff-free and quota-free access for textile and apparel products originating from Cambodia. In order to be eligible for the LDC tariff rates, textile and apparel products originating from Cambodia have to satisfy. (a) rules of origin, (b) certification and (c) direct shipment. The Canada Customs Revenue Agency may also conduct verification of the Rules of Origin by means of a verification visit, letter or questionnaire.

According to the regulations concerning Certificate of Origin, Commercial Invoice and Export Licence for Garments by the Cambodian Ministry of Commerce, textile manufacturers should obtain the following documents from the Ministry.

• Cambodian Certificate of Origin Form A; • Commercial Invoice; and • Export Licence.

European Union (EU)

The EU-Cambodia Textile Trade Agreement signed in 1999, provided Cambodia with unlimited access to the EU market for Cambodian textiles exports and simplifies documentary requirements for such trade, until the expiry of the Agreement at the end of 2002. With Cambodia's entry into ASEAN, EU granted the country the regional cumulation and derogation benefits offered by the EU Preferential Rules of Origin, which has resulted in the EU-Cambodia Textile Trade Agreement being prolonged until the end of 2004.




_______________________________________________________________________________________________________

The EU-Cambodia textile agreement allows quota-free access to the EU market. However, nine categories of the Cambodian textile products must go through double-checking (surveillance) in order to certify Cambodian origin of the products. Details of the agreement are available at the trade section of the European Commission.

Cambodian textile manufacturers need the following documents in order to export to the EU market.

• Exporter registration in Cambodia with the general system of preferences (GSP) Trade Preferences System Department of the Ministry of Commerce;

• Export Licence issued by the Ministry of Commerce; and • Cambodian Certificates of Origin Form A (if raw materials are imported from

ASEAN member countries, a copy of the certificate of origin verifying the origin should be submitted to the Ministry of Commerce).

Application procedure with the Cambodian Ministry of Commerce is detailed in

Prakas No. 1347/MOC/PRK and Prakas No. 3413/MOC. Japan

In December 2002, Japan revised its GSP scheme by expanding its coverage, especially duty-free and quota-free treatment. To receive this preferential tariff treatment Cambodian goods must be accompanied by a GSP Form A issued by Cambodia Trade Preferences System Department.

The GSP Form A is not required for consignments of customs value not exceeding 200,000 Yen or of goods whose origins are evident. The latter are included in the list available from the Japan Ministry of Foreign Affairs.

Japan’s GSP scheme also applies certain origin criteria, rules for transportation (direct consignment) and rules of cumulative origin for certain processed products. The list is available from to the Japan Ministry of Foreign Affairs. United States of America

In 1999, Cambodia and the United States of America signed an agreement relating to trade in cotton, wool, man-made fiber, non-cotton vegetable fiber and silk blend textiles and textiles products. Under this agreement, a quota system for export of garments from Cambodia into the United States was established for 13 broad categories of garments. Details on the broad categories are available at the United States Office of Textiles and Apparel (OTEXA).

The United States-Cambodia textile agreement, 1999, was also the first bilateral textile trade agreement containing a labour provision. It permits an annual quota increase of 14 per cent if the United States finds that Cambodia is in "substantial compliance" with its labour laws and internationally recognized core labour standards. In December 1999, the United States Government offered a 5 per cent increase. And in 2001, the United States eased its quota restrictions by another 9 per cent in addition to the annual increase of 6 per cent. Therefore, the total textile exports from Cambodia for 2002 were 15 per cent higher than in 2001. The new extension covers the period from 31 December 2001 to 31 December 2004.


http://www.moc.gov.kh/laws_regulation/prk1437-99-moc_ci.htm

http://www.moc.gov.kh/laws_regulation/prk3416-99-moc_co.htm

http://www.mofa.go.jp/policy/economy/gsp/


http://otexa.ita.doc.gov/



_______________________________________________________________________________________________________

Textile products of Cambodian origin gain access to the United States market through

the United States GSP. However, this scheme also means the exclusion of these textile products from the list of goods that are subject to low or zero tariff rates.

Textiles exporters should apply to the Ministry of Commerce for the following documents prior to any shipment to the United States.

• Export visa. Under the ELVIS (Electronic Visa Information System) Visa Arrangement between Cambodia and the United States, a "visa" issued by the Government of the country of origin of the textile exported to the United States, describes the shipment, certifies the country of origin, and authorizes the shipment to be charged against any applicable quota.

• A visa is required for each shipment of textiles, except for merchandise imported for the personal use of the importer and not for resale, regardless of value, and properly marked commercial sample shipments valued at US$ 800 or less.

• An “ELVIS transmission” is a message, sent electronically to the United States Customs Service, by the Government of Cambodia or by its representative, which describes the shipment and includes the visa number assigned to the shipment.

D. Other requirements

In Cambodia, laboratory testing of pharmaceutical products is required prior to

registration to check the conformity of the samples.

II. EXPORT CHARGES

There is no export tax as such but garment exports are under the garment visa system put into place by the Ministry of Commerce which decides on the visa.

The following products are subject to 10 per cent export tax payable to the Ministry of Finance:

• Live horses and bovine animals; • Fish: live, fresh, chilled, fillet; • Raw hides, skins and semi processed skins; • Semi processed wood; • Veneer sheets and sheets for plywood and veneer panels; and • Wood cases, boxes, casks, etc.

Additionally, CAMCONTROL charges an inspection fee of 0.1 per cent of export

value while contractors of the Kampuchea Fish Import and Export Company (KAFIMEX) collect a 4 per cent fee on all fish transported in the province. KAFIMEX also collects an export licence fee of US$1 of all live fish export at Pochentong Airport.


http://web.ita.doc.gov/Otexa/OTEXAGRE.NSF/5b1ca13778763be98525647400649053/86b412d87910532285256a300067456d!OpenDocument

http://web.ita.doc.gov/Otexa/OTEXAGRE.NSF/5b1ca13778763be98525647400649053/86b412d87910532285256a300067456d!OpenDocument


_______________________________________________________________________________________________________

Table 13. Export tariffs

HS heading Description of good Export tariff

(per cent ad valorem)

01.02; 01.03 Pure bred breeding bovine animals and swine 10 03.01; 03.02; 03.03; 03.04; 03.05

Live fish, prepared fish and fish products 10

03.06; 03.07 Live crustaceans and molluscs and products thereof 10 12.11; 13.01; 13.02 Cannabis, cannabis resin, extracts and dyes, coca, opium* 50 29.05.50 Halogenated, sulphonated, nitrated or nitrated derivatives

of a cyclic alcohol* 50

29.26 Nitril-function compounds* 50 40.01; 40.04 Natural rubber in primary forms or in plates, sheets or

strips and rubber waste 10

44.02; 44.03; 44.04; 44.05; 44.06; 44.07

Unprocessed and semi-processed wood; wood charcoal 10

44.08.10.00; 44.09 Sawn and shaped wood. Veneer sheets and sheets for plywood; strips for flooring

5

Source: WT/ACC/KHM/21, table 8.

* Categories included for the sake of formal completeness. The products in these

groups require a licence in order to be exported.

III. SETTLEMENT OF BILLS, LETTERS OF CREDIT

The Foreign Trade Bank provides letter of credit to Cambodian importers under the condition of a 20 per cent deposit, a collateral of land or building, and a good credit history. Minimum acceptance fee is 0.1 per cent, however importers are required to pay 0.2 per cent fee due to the perceived country risk.

IV. DOCUMENTS, INCLUDING INSURANCE

Document Number of copies Body concerned Form

number Cost

Bill of lading/Air waybill 8 Shipping company/airline company

Certificate of origin 8 Ministry of Commerce Commercial invoice 8 Exporter Customs declaration form 3 Customs Department 15,000 Riels GSP 4 Ministry of Commerce Form A Insurance certificate 3 Insurance company Packing list 8 Exporter

Source: http.//www.camnet.com.kh/customs/ .




_______________________________________________________________________________________________________

V. STATE MONOPOLY IN EXPORTS Although Cambodia’s economy is liberal, there are a few State-owned trading

companies that hold exclusive rights to some trading activities. Fisheries sector is dominated by the Kampuchea Fish Import and Export Company

(KAMFIMEX). KAMFIMEX holds the exclusive rights to fish exports. Fish for exports should be sold through KAFIMEX which in turn grants licences to five export traders to handle and transport the fish across the border to Thailand’s Aranyaphatet fish market.

According to the Anukret on Conferring the Right to Sell and Export Rubber Products to the Ministry of Agriculture, Forestry and Fisheries on 13 October 1994, Cambodia’s Ministry of Agriculture, Forestry and Fisheries is the only agency in charge of selling and exporting rubber products. The Ministry could use 30 per cent from the proceeds of the sales to import equipment necessary for rubber production.

VI. PRINCIPAL EXPORTS

Cambodia’s main export partner is the United States with which it has the special agreement for garments and textiles.

Table 13. Direction of exports (Million of US$)

Country/area 1998 1999 2000 2001 United States of America 292.5 493.0 739.7 832.1 Hong Kong, China 26.7 37.8 262.2 208.3 United Kingdom 24.8 52.8 81.6 126.3 Germany 71.7 40.0 66.0 98.7 France 12.2 20.5 27.7 35.0 Singapore 132.7 179.6 18.0 28.0 Netherlands 6.7 9.4 20.5 25.7 Viet Nam 41.9 12.7 19.5 21.2 China 42.2 8.8 23.8 16.7 Japan 7.9 9.3 10.7 13.3 Ireland 4.9 10.2 11.6 11.0 Canada 1.9 3.1 4.9 10.4 Malaysia 6.1 6.5 9.8 10.3 Thailand 76.8 18.3 22.9 7.6

Source: On the basis of data from the Ministry of Commerce



_______________________________________________________________________________________________________

Table 14. Composition of exports (Million of US$)

Item 1998 1999 2000 2001 GSP Exports 392.4 564.3 1,012.0 1,141.5 Rubber 26.9 28.1 31.9 23.2 Sawn timber 90.1 73.5 25.3 9.1 Logs 88.0 37.2 7.6 7.4 Other domestic exports 0.1 0.9 3.5 6.1 NR carrier procurements 2.5 2.7 4.2 4.7 Fish products 2.5 3.4 4.5 4.1 Agricultural products 1.4 2.0 2.0 2.0 Total 603.9 712.1 1,091.0 1,198.1 Re-exports 296.0 171.8 169.8 175.6 TOTAL 899.9 883.9 1,260.8 1,373.7


References for part three: Buying from Cambodia Canada Gazette, Part II, 1 January 2003.

http.//canadagazette.gc.ca/partII/2003/20030101/html/index-e.html Ministry of Commerce, Prakas on the Issuance of the Certificate of Origin, Commercial

Invoice and Export Licence for Garments http.//www.moc.gov.kh/laws_regulation/prk1437-99-moc_ci.htm ; Ministry of Commerce, Prakas Amending and Supplementing the Issuance of Certificates of Origin, Commercial Invoice and Export Licence for Garments http.//www.moc.gov.kh/laws_regulation/prk3416-99-moc_co.htmWTO Report of the Working Party on the Accession of Cambodia, 15 August 2003,

WT/ACC/KHM/21. WTO Diagnostic Trade Integration Study for Cambodia, WT/IFSC/W/12, WT/IFSC/W/12/Add.1 and WT/IFSC/W/12/Add.2.


http://canadagazette.gc.ca/partII/2003/20030101/html/index-e.html




_______________________________________________________________________________________________________

Part Four INVESTING IN CAMBODIA

I. FOREIGN INVESTMENT POLICY AND REGULATIONS

The Law on Investment, 1994 of Cambodia establishes an open and liberal

environment for foreign investors. Most sectors of the economy are open to foreign investment, with the exception of the legal and accountancy sectors, as well as certain areas of transport, construction and foreign trade. In 2002, the Council of Ministers approved a Draft Amended Investment Law, which would replace the Investment Law, 1994. The new Draft Investment Law should be adopted shortly.

Foreign investors in Cambodia enjoy national treatment, except in when it comes to

land ownership. According to the Constitution, 1993, only Khmer legal entities and citizens of Khmer nationality have the right to own land. Foreign entities or individuals are allowed to lease land for 70 years renewable. The Government commits not to undertake a nationalization policy, nor to impose price controls on the products or services used by those investors who have received prior approval from the Government.

Cambodia has signed investment promotion and protection agreements with China, Cuba, France, Germany, Malaysia, the Netherlands, the Philippines, the Republic of Korea, Singapore, Switzerland, Thailand and the United States of America. These agreements provide reciprocal national treatment to investors, excluding the benefits deriving from membership in future customs unions or free trade areas and agreements relating to taxation. The agreements preclude expropriations except when undertaken for a lawful or public purpose, in a non-discriminatory manner and accompanied by prompt, adequate and effective compensation at a fair market value of the property prior to expropriation. The investment agreements also guarantee the repatriation of investments and provide for settlement of investment disputes via arbitration.

Between 1994 and 2001, the main investors in Cambodia were Malaysia; Taiwan, Province of China; China; Singapore; Thailand; the United Kingdom; and Hong Kong, China. The list of total cumulative registered investment projects in by country of origin during this period is offered in table 15.

Table 15. Investment projects by country of origin

Country Millions of US$ Percentage Malaysia 1,503 41.8 Cambodia 826 22.4 Taiwan Province of China 310 8.4 China 176 4.7 Singapore 156 4.2 Thailand 131 3.5 United Kingdom. 120 3.2 Hong Kong, China 112 3 Republic of Korea 90 2.4 Canada 52 1.4 Indonesia 48 1.3 Australia 41 1.1 United States of America 38 1

Part Four: Investing in Cambodia 31 of 48

http://www.cambodiainvestment.gov.kh/documents/TCAM3.1.1laws Investment Law.doc

http://www.moc.gov.kh/laws_regulation/draft_laws-comment/Draft_LawsUpdate/Draft Amended Law on Investment.pdf


http://www.bigpond.com.kh/Council_of_Jurists/Treaties/tri007g.htm

http://www.bigpond.com.kh/Council_of_Jurists/Treaties/tri002f.htm


_______________________________________________________________________________________________________

Country Millions of US$ Percentage France 34 0.9 Japan 8 0.2 Other 30 0.8 Total 3,675 100.0

Source: Cambodia Country Commercial Guide, United States Commercial Service.

Between 1994 and 2001, sectors receiving the greater flows of investment capital

were tourism, garment, agriculture and construction services. The list of total cumulative registered investment capital by sector during this period is offered in table 16.

Table 16. Investment capital by sector

Sector Millions of US$ Number of projects Industry 1,489 642

Food Processing 127 44 Garments 363 337 Petroleum 63 13 Wood Processing 250 35 Footwear 37 23

Agriculture 172 80 Services 299 74

Construction 121 12 Telecommunications 94 11

Tourism 1,714 58 Total 3,676 854

Source: Cambodia Country Commercial Guide, United States Commercial Service.

II. INVESTMENT PROCEDURES

The Council for the Development of Cambodia (CDC) is the highest decision-making body of the Government in charge of the promotion and protection of private and public sector investment. The CDC is chaired by the Prime Minister and composed of senior ministers from related government agencies. The Cambodian Investment Board (CIB) is the CDC’s operational arm for private sector investment. The CIB reviews investment applications and grants concessions to investors and investment projects.

Types of investment

The following forms of investment are authorized: • 100 per cent local source of capital; • 100 per cent foreign source of capital; • Joint-ventures, foreign participation cannot be more than 49 per cent; • Build-operate-transfer (BOT). limited to only infrastructure projects (Anukret No.

11/ANK/BK on BOT Contract)5; • Business cooperation contract (BCC); and • Other forms authorized by law.

5 An Anukret is a Sub-decree. For details on the hierarchy and definitions of Cambodian legal norms, see http://www.bigpond.com.kh/Council_of_Jurists/z/Typolg.htm



http://www.moc.gov.kh/laws_regulation/econo_devepment/ank-bot.htm




_______________________________________________________________________________________________________

According to the Anukret No. 80/ANK/BK on Measures Restricting Certain Investment Sector 1999, the following areas of restriction for private investment are listed below.

ISIC code Sector/industry Remarks

(restrictions/requirements) I. Industries closed to both national and foreign investments 3698 Manufacture/processing of cultural items. Subject to prior approval from relevant ministries. 2021 Sawn timber, veneer, plywood, wood-based

products utilizing local logs as raw materials.

No new licence will be issued.

2411 DBSA production: Toxic chemicals effecting health of community and impacting to environment. Production of toxic chemicals or utilization of toxic agents.

Subject to prior approval from the Ministry of health and related ministries. Prohibited in accordance with an international treaty.

2429 Manufacture of psychotropic substance Prohibited for the psychotropic substances listed in table I. Subject to specific details provided by the Ministry of Health and the psychotropic substances listed in tables II and III.

2429 Manufacture/processing of narcotic drugs Prohibited 2927 Manufacture of weapons and ammunitions National defence policy N.A Manufacture of firecracker and fireworks Subject to control N.A Manufacture related to defence and

securities National defence policy

II. Industries closed only to foreign investors, i.e. SMEs, national policies Nil Nil III. Industries open with restriction to foreign investors 1600 Manufacture of cigarette Only of export (100%) 1551 Alcohol Subject to prior approval from relevant ministries 1320 Exploitation of gemstones Subject to local equity participation 2691 Bricks made of clay (hollow, solid) and tile Subject to local equity participation 1531 Rice mill Subject to local equity participation 2029 Manufacturing of wood and stone carving Subject to local equity participation 1711 Silk weaving Subject to local equity participation IV. Manufacturing related services 2210 Publishing 2212 Publishing of newspaper, journals and

periodicals Subject to discussion with the Ministry of Information and Ministry of Culture and Fine Arts

2213 Publishing of record media 2219 Other publishing Foreign equity is restricted to maximum of 49% 2221 Printing 2222 Service activities related to printing 9213 Radio and television activities V. Others NIL

Source. Ministry of Commerce

Any foreign investment in Cambodia requires the approval from CDC. Investment

applications must be submitted to CDC including:

• A completed application form from the CDC duly signed by an authorized representative of the applicant;

• A letter stating the intention of the applicant to invest in Cambodia, with a brief summary/profile of the investors, the investment project, the objectives and any special requests regarding the investment project;


http://www.moc.gov.kh/laws_regulation/econo_devepment/ank80-99-lol_neg-list.htm


http://www.cambodiainvestment.gov.kh/Application.asp


_______________________________________________________________________________________________________

• The constituent documents of the proposed investment enterprise, such as the Memorandum of Association and Articles of Association, in accordance with the existing laws of Cambodia;

• A detailed study of the economic and technical feasibility of the investment enterprise, including an outline of the manufacturing flow process; and

• Details of the qualifications of the applicant, including: - technical capacity, - marketing capacity, - human resources and managerial capacity, and - financial capacity.

Application fees for investment projects are detailed in the Anukret No. 88 on the

Implementation of the Law on Investment 6 as follows.

• If the investment project is less than or equal to US$1 million: - US$ 100 at the time of application submission; and - US$ 500 upon receipt of the investment approval.

• If the project is more than US$1 million: - US$ 200 at the time of application submission; and - US$ 1,000 upon receipt of the investment approval.

III. INVESTMENT INCENTIVES

According to the Investment Law 1994, applications for investment incentives should be submitted to CDC for approval. Investment incentives are as follows.

• A corporate tax rate of 9 per cent (standard corporate tax rate is 20 per cent); • Exemption of corporate tax up to 8 years starting from the year of first profit. If

profits are reinvested in the country, such profits will be exempted from all corporate tax;

• A five-year loss carry forward shall be allowed; • Non-taxation on the distribution of dividends or profits or proceeds of investment,

whether transferred abroad or distributed in the country; • 100 per cent import duty exemption for raw materials and other materials used for

the investment project; • 100 per cent export duty exemption, if any.

These incentives cannot be transferred or assigned to any third party. After submitting its investment application to CDC, the enterprise can file an appeal

to CDC within 25 working days of receipt of notification to revoke or cancel, partially or wholly, privileges and incentives. Private investment in Cambodia receives the incentives in the form of customs duty exemptions (see box 3).

6 The official online version is not complete.


http://www.moc.gov.kh/laws_regulation/econo_devepment/ANK88-CDC.htm



_______________________________________________________________________________________________________

Box 3. Customs duty exemptions

A. Types of investment subject to customs duty exemptions

1. Investment in export-oriented projects with a minimum of 80 per cent of production designated for export.

2. Projects located in a Special Promotion Zone. 3. Tourism industry projects. 4. Projects in labour intensive industries, processing industries and agro-industry. 5. Investment in physical infrastructure and energy industry projects.

In the case of projects within (3), (4) and (5) above, the exemption from customs duties relates to the construction of buildings and factories and the first year of operation only.

B. Types of goods subject to customs duty exemptions 1. Construction materials for the project. 2. Machinery used directly in the production process. 3. Other equipment used directly in the project other than administrative equipment.

transportation and distribution equipment. 4. Spare parts for the machinery and equipment referred to in (2) and (3). 5. Raw materials and intermediate goods used directly in the production process. 6. Packaging equipment.

C. Types of export goods entitled to 100 per cent export tax exemptions Finished products.

Source: Anukret No.88 on the Implementation of the Law on Investment

The following fields of investment are entitled to receive incentives including the

exemption, in whole or in part, of taxes and duties. • Pioneer and/or high technology industries; • Job creation; • Export-oriented (80 per cent of total products); • Tourism industry; • Agro-industry and transformation industry; • Physical infrastructure and energy; • Provincial and rural development; • Environmental protection; and • Investments in a special promotion zone (SPZ) as shall be created by law.

Other areas entitled to receive investment incentives are as follows.

List of suggested areas of investment

1. Crop production

1.1 Paddy farming greater than 1,000 ha 1.2 All types of cash crops greater than 500 ha 1.3 Vegetables greater than 50 ha

2. Livestock production 2.1 Livestock more than 1,000 heads 2.2 Dairy farming more than 100 heads 2.3 Poultry and eggs more than 10,000 heads


http://www.bigpond.com.kh/Council_of_Jurists/Investmt/inv001g.htm


_______________________________________________________________________________________________________

3. Fisheries 3.1 Hatcheries more than 2 ha 3.2 Shrimp farming and other aqua-culture production greater than 10 ha

4. Manufacture and processing of food and related products Investment Capital equivalent to US$ 500,000 and above 4.1 Beverages 4.2 Fats and oils 4.3 Sugar confectionery 4.4 Meat products 4.5 Dairy products 4.6 Preserved fruit and vegetables 4.7 Grain mill products 4.8 Bakery products 4.9 Animal feeding products

5. Manufacture of textile mill products Investment capital equivalent to US$ 1,000,000 and above 5.1 Cotton weaving mill and thread mill 5.2 Embroidery cloth mill 5.3 Floor covering mills 5.4 Other weavings

6. Manufacture of apparel and other textile Investment capital equivalent to US$ 1,000,000 and above

7. Manufacture of furniture and fixtures Investment capital equivalent to US$ 1,000,000 and above 7.1 Household furniture 7.2 Office furniture 7.3 Manufacturing of building partitions and fixtures

8. Manufacture of paper and allied products Investment capital equivalent to US$ 1,000,000 and above 8.1 Tree plantations for paper production and pulp mills 8.2 Paper 8.3 Paperboard mills 8.4 Paperboard containers

9. Manufacture of chemicals and allied products Investment capital equivalent to US$ 1,000,000 and above 9.1 All types of chemicals including agricultural chemicals 9.2 Plastics and other synthetics rubber 9.3 Drugs 9.4 Cleaning products 9.5 Paints and allied products

10. Manufacture of rubber and miscellaneous plastics Investment capital greater than US$ 500,000

11. Manufacture of leather and other products Investment capital greater than US$ 500,000

12. Manufacture of fabricated metal products Investment capital equivalent to US$ 1,000,000 and above

13. Manufacture of electrical and electronic equipment Investment capital greater than US$ 500,000

14. Manufacture of transportation equipment 14.1 Automobiles and spare parts 14.2 Aircraft and spare parts 14.3 Constructions and means of water transports 14.4 Equipment and means of rail transports 14.5 Bicycles and motorcycles



_______________________________________________________________________________________________________

15. Construction of roads and bridges and physical infrastructure construction including electric power and water production 16. Production of machinery and industrial equipment

Investment capital greater than US$ 1,000,000 17. Hotel construction

Three stars or higher 18. Medical complexes of international standards, educational facilities of international standards,

vocational training centres

19. Infrastructure construction for use in the cultural and arts area 20. Production and business activities to protect the environment

21. Infrastructure for investment in the high tech telecommunication sector Sources: Compiled from the Ministry of Commerce and the Cambodia Investment Guide 2002.

In order to promote investment in disadvantaged areas, Cambodia is divided into four regions. Region 4 would be the most disadvantaged and where investment is most encouraged.

Region 1: Phnom Penh, Kandal Province, Siem Reap Province and Sihanoukville. Region 2: Kampong Cham, Kampong Chhnang, Kampong Speu, Kampot, Prey

Veng, Svay Reing and Takeo Province. Region 3: Batambang, Kampong Thom and Pursat Province. Region 4: Banteay Mean Chey, Krachie, Koh Kong, Mondul Kiri, Preah Vihear,

Rattanakiri and Stung Treng Province. It is worth noting that the Government has issued the following list of sectors where investment will not receive incentives.

1. All types of trading activities; 2. All forms of transportation services; 3. Duty-free shops; 4. Restaurants, karaoke, and other night clubs and massage parlours that are not located in

international standard hotels; 5. Business centres; 6. Press related activities and media networks (radio, television, newspaper); 7. Retail and wholesale; 8. Professional services; and 9. Natural resources, except petroleum and natural gas.

Incentives under the Draft Amended Investment Law, 2002

In 2002, the Government drafted an amended the Investment Law which should be

enacted soon and is expected to bring about significant changes in the investment climate of the country. Under the Draft Amended Investment Law, each investment project approved by CDC and granted a Final Registration Certificate is called a qualified investment project (QIP).



_______________________________________________________________________________________________________

The following investment incentives are applied to QIPs on the condition that they obtain a “Compliance Certificate” from CDC on an annual basis:

• A QIP is entitled to exemption from profit tax for a period of three years starting from the first year of profits or three years after the first revenue, plus another period of profit tax exemption as determined in the Financial Management Law.

• Exemption from import duties for construction materials, production equipment and production input materials for Export QIPs and Supporting Industry QIPs.

• Employment of foreign employees where no qualified Cambodians are available. • Transfer of incentives by merger or acquisition. • Exemption from export duties. The new Draft Amended Investment Law cancels the 9 per cent profit tax rate. All

QIPs are subject to the corporate profit tax rate of 20 per cent. For existing QIP granted this tax rate will be entitled to a grace period of five years after the promulgation of the new law, provided the annual submission of the Compliance Certificate. Similarly, an existing QIP entitled to an exemption of tax or profit will be able to continue that exemption upon the annual submission of the Compliance Certificate.

IV. TAXATION

The legal framework regulating taxation in Cambodia includes the Law on Taxation adopted in 1997 and the value added tax (VAT) introduced in 1999. As Cambodia progressively improves its legal environment, amendments to the Law on Taxation, 1997, are expected.

A. Corporate (profit) tax

Tax rates on the annual profit in Cambodia are as follows: • Twenty per cent for the profit realized by a legal person; • Thirty per cent for profit realized under an oil or natural gas production sharing

contract and the exploitation of natural resources including timber, ore, gold, and precious stones;

• Nine per cent for an investment enterprise after the period of tax exemption; and • Zero per cent for an investment enterprise during the period of tax exemption. An advance payment of profit tax at the rate of 1 per cent of the turnover of the

previous month has to be made monthly.

B. Excise tax

Excise tax is applied to both domestically produced goods and imported goods based on ex-factory price and tariff inclusive c.i.f. value respectively. Excise tax ranges from 10 per cent (for soft drinks, beer, wine and spirits, cigarette and other tobacco products, and petrol and lubricating oil) to 5-110 per cent (for automobiles, buses, trucks, motorcycles and spare parts).


http://www.moc.gov.kh/laws_regulation/rkm97_taxation_law.htm


_______________________________________________________________________________________________________

C. Income tax

Income originated from the following sources is subject to a monthly salary tax: • Salary received from Cambodian sources; • Salary received from foreign sources; and • Advanced money, loan or instalment made by the employer to the employee,

which shall be added to the taxable salary of the month in which they are paid out and shall be deducted from salary in the month of any repayment made by the employee.

Taxable parts of the monthly salary Tax rate (%)

From 0 to 500,000 Riels 0 From 500,001 to 1,250,000 Riels 5 From 1,250,001 to 8,500,000 Riels 10 From 8,500,001 to 12,500,000 Riels 15 Over 12,500,000 Riels 20

Source: Law on Taxation .

D. Value added tax (VAT)

VAT was introduced on 1 January 1999 to replace turnover and consumption taxes.

VAT is levied at a single rate of 10 per cent on goods and services and imports from all sources on c.i.f. value, including customs duties and excise taxes when applicable. VAT is not applied to exports.

The following goods and services exempted from VAT: • Public postal services; • Hospital, clinic, medical and dental services, and the sale of medical and dental

goods; • Transportation of passengers by wholly State-owned public transport entities; • Insurance and primary financial services; • Public-interest non-profit activities; • Imported articles for personal use exempt from customs duties; • Goods imported by foreign diplomatic and consular missions, international

organizations and technical cooperation agencies of other Governments for official use;

• Ten categories of agricultural inputs and/or “raw agricultural products” such as fertilizer, plant seeds, veterinary medicines, animal feeds, breeding stock, small tractors and spare parts, and miscellaneous agricultural machinery. Additionally, there is a list of imported agricultural inputs that are exempted from VAT (see table 17).



_______________________________________________________________________________________________________

Table 17. Imported agricultural inputs exempted from VAT

HS classification Product description 0101.11.00; 0102.10.00; 0103.10.00; 0104.10.10; 0104.20.10; 0105.11.10; 0105.12.10; 0105.19.10; 0105.19.30; 0105.92.10; 0105.93.10; 0106.00.10; 0511.10.00; 0710.10.00;

Animal species

1005.10.00; 1006.11.00; 1008.30.00; 12.04; 12.05; 12.06; 1207.20.00; 1207.30.00; 1207.40.00; 1207.50.00; 1207.60.00; 1207.91.00; 12.09; 50.01;

Seeds

23.08; 23.09 except 2309.10.10 and 2309.10.90 Animal feedstuff and supplementary feed

Source: WTO (WT/ACC/KHM/21), table 3.

E. Minimum tax

A minimum tax of 1 per cent of annual turnover is imposed on taxpayers subject to the real regime system of taxation, even if the taxpayer has been granted the status of an investment enterprise.

F. Withholding tax The following three rates of withholding tax are applied according the below listed specifications.

• Fifteen per cent on: - Income received by a physical person from the performance of services

including management, consulting and similar services; and - Royalties for intangibles and interests in minerals, oil or natural gas, and

interest paid to a physical person or an enterprise except interest paid to a domestic bank or savings institution.

• Ten per cent on the income from the rental of movable and immovable property. • Five per cent on interest paid by a domestic bank or savings institution to a

resident physical person having a non-fixed term savings account.

G. Other taxes

Each business enterprise should register annually with the tax authorities and pay a business registration tax of US$300 per year. In the trade and industrial sectors, the maximum business registration tax is 0.1 per cent of the turnover. In the service sector, the maximum rate is 0.25 per cent of the turnover.

A 4 per cent registration tax is also applied to the registration of ownership of immovable and movable assets. Additionally, a 2 per cent tax is applied on unused land.

V. FOREIGN EXCHANGE

The Law on Foreign Exchange, 1997 stipulates that, “there shall be no restrictions on foreign exchange operations through book entry including purchases and sales of foreign exchange on the foreign exchange market, transfers, all kinds of international settlements, and capital flows in foreign or domestic currency, between Cambodia and the rest of the world or between residents and




_______________________________________________________________________________________________________

non-residents. However, such operations shall be undertaken solely through authorized intermediaries.”

There are currently no restrictions on the repatriation of profit or capital derived from investments made in Cambodia, nor on most transfers of funds abroad. The Law on Investment guarantees that investors can freely remit foreign currencies abroad for the purposes of:

• Payment for imported goods and services, and repayment of loans including interests and principals made by foreign banks or institutions;

• Royalties and management fees; • Profits after discharge of obligations due and payment of all relevant taxes and

royalties; and • Repatriation of invested capital on dissolution of an investment project. Any transfer equaling or exceeding US$ 100,000 shall be reported to the Central

Bank.

VI. LABOUR ISSUES As mentioned earlier, Cambodia has a fairly young population. Moreover, the lack of

educational opportunities has resulted in shortages of skilled labour which has become a major issue for both investors and Government.

A. Basic labour requirements

Cambodia’s Labour Law, 1997 , establishes that all employers must make a declaration to the Ministry of Social Affairs, Labour, Vocational Training and Youth Rehabilitation prior to the actual opening of the enterprise or within 30 days after the closing of the enterprise. Enterprises that have at least eight workers must have an internal regulation of the enterprise. Cambodian employees are required to have employment cards.

Cambodia’s Labour Law recognizes that labour contracts can be made in written or verbal forms. A labour contract cannot be for a period longer than two years. It can be renewed one or more times, as long as the renewal does not surpass a maximum duration of two years.

Cambodia’s Labour Law regulates the right to establish labour unions as well as “collective labour agreements”. The Law guarantees the right to strike stipulating that each strike must be preceded by prior notice of at least seven days. This notice must be filed with the enterprise or establishment as well as with the ministry in charge of labour.

The Law requires a minimum wage but it does not set the actual figure of minimum

wage. The maximum working hours are eight hours per day or 48 hours per week. The minimum age for wage employment is set at 15 years. But minors (under 18 years old) cannot be employed in underground mines or quarries, nor perform night work in any enterprise.

Women are entitled to maternity leave of 90 days with half of their regular wages paid by their employers. For one year from the date of the child delivery, women are entitled


http://www.moc.gov.kh/laws_regulation/rkm_labor_law_97.htm


_______________________________________________________________________________________________________

to an extra one-hour break per day for breastfeeding during the regular working hour. Cambodia’s Labour Law also requires that any enterprises employing a minimum of 100 women or girls set up, within their establishments or nearby, a nursing room and a day-care centre. Alternatively, if there is not day-care centre on the premises, women workers can place their children in any day-care centre and the charges must be paid by the employer.

B. Foreign employment

No foreigner can work in Cambodia unless he/she possesses a work permit and an employment card issued by the ministry in charge of labour. Only residents in Cambodia can be employed.

The maximum percentage of foreign employees in each enterprise cannot exceed 10 per cent. Employment of foreigners exceeding the stipulated limit requires authorization from the ministry in charge of labour.

Foreign lawyers are permitted to engage in commercial association with Cambodian lawyers, but they cannot represent clients, conduct activities to attract clients, or publish commercial advertisements.

VII. DISPUTE SETTLEMENT

Whenever possible, disputes relating to encouraged investments in Cambodia or involving foreign national’s rights and obligations protected by law should be settled amicably through consultation between the parties in dispute. Should the parties fail to reach an amicable settlement within two months of the date of first consultation, either party can bring the dispute to the following high level bodies:

• Conciliation before CDC which will provide its opinion; or • Referral of the dispute to the court of Cambodia; or • Referral to international rules to settle the dispute, as agreed by both parties.

The Government is currently applying to become a member of the International

Centre for Settlement of Investment Disputes (ICSID).

As a member of ASEAN, Cambodia obliges to the ASEAN Protocol on Dispute Settlement Mechanism, 1996 which provides procedures on dispute settlement to all Member States. In case the disputing parties fail to reach agreement, the dispute must be referred to the ASEAN Senior Economic Officials Meeting which will set up a panel to hear the dispute.

Upon its accession to WTO in September 2003, Cambodia has agreed to establish before 1 January 2005 a dispute settlement mechanism within the Cambodian Customs Service in order to handle complaints about customs practices from traders and Governments.





_______________________________________________________________________________________________________

VIII. CAPITAL MARKET

There is no capital market in Cambodia. In 1995, a Capital Market Law was drafted but due to the political disturbance in 1997, the initiative was interrupted. Under the Central Banking Law, 1996, the National Bank of Cambodia has the responsibility to establish and oversee financial markets as well as securities operations.

IX. PROTECTION OF PROPERTY RIGHTS

Cambodia is a member of the World Intellectual Property Organization (WIPO) since 1995, and belongs to the Paris Convention for the Protection of Industrial Property Rights since 1998. The Cambodian Government is planning to join the Berne Convention (for copyrights and related rights), and the International Convention for the Protection of New Varieties of Plants (UPOV).

As a member of ASEAN, Cambodia has participated in the ASEAN Framework

Agreement on Intellectual Property Cooperation since 30 April 1999. Beside the multilateral agreements, Cambodia has also entered into bilateral agreements regarding property rights with Thailand and the United States of America.

The Department of Intellectual Property, under the Ministry of Commerce, is responsible for formulating and implementing policies regarding protection of copyrights. Upon Cambodia’s accession to WTO, new legislation has been drafted to conform to the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement, including the Draft Law on Copyright and Related Rights (March 2003), the Law on Marks, Trade Name and Acts of Unfair Competition (February 2002), and the Law on Patents, Utility Models and Industrial Designs (January 2003).

Additional legislation is expected to be adopted in 2004, such as the Law on

Geographical Indications and Layout Design of Integrated Circuits, the Law on Protection of Undisclosed Information and Trade Secrets, and the Law on Plant Variety Protection.

A. Copyright protection

The Draft Law on Copyright and Related Rights, 2002 , provides protection for the lifetime of the author and 50 years after his/her death. The Draft Law also provides protection for compilations of data, computer programmes as literary works, rental rights for computer programmes, and the exclusive rights of a broadcaster to authorize rebroadcast by wireless means.

B. Trademarks

The Law on Marks, Trade Name and Acts of Unfair Competition, 2002 requires that applications for registration of a mark be submitted to the Intellectual Property Division at the Ministry of Commerce. A trademark is protected for 10 years and renewable for successive periods of 10 years indefinitely.


http://www.bigpond.com.kh/Council_of_Jurists/Banque/bk020g.htm

http://www.bigpond.com.kh/Council_of_Jurists/Banque/bk020g.htm

http://www.moc.gov.kh/laws_regulation/New_Update/Law on Copyright-31May 2002.pdf

http://www.globalcompetitionforum.org/regions/asia/Cambodia/02lw-TrademarCompet1.pdf


_______________________________________________________________________________________________________

C. Industrial designs and patents

Under the Draft Law on Patent, Utility Models and Industrial Designs, 2003, registration applications for industrial designs should be submitted to the Ministry of Industry, Mines, and Energy (MIME). Only new designs (designs not disclosed to the public through publication or use prior to the priority date) can be registered. Designs that are contrary to public order or morality cannot be registered. Protection is provided for five years and can be renewed twice.

MIME is also in charge of registration for patents. Patents are granted upon expiration of an 18-months period starting on the priority date and protection is provided for 20 years.

In January 2003, Cambodian Government adopted a new Law on the Management of Pharmaceutical Products to postpone the implementation of pharmaceutical patenting until 2016 citing the Doha Declaration which allows LDC Governments to delay the implementation of pharmaceutical patent protection until 2016. References for part four: Investing in Cambodia Asian Development Bank, Cambodia Financial Sector Blueprint for 2001-2010 (2001)

http.//www.adb.org/Documents/Reports/CAM_Blueprint/ Cambodia E-Government Homepage

http.//www.cambodia.gov.kh/unisql1/egov/english/home.frame.html Cambodia Investment Guide 2002, DFDL/Mekong Law Group (2002) Council for Development of Cambodia/Cambodia Investment Board

http.//www.cambodiainvestment.gov.kh/default.aspEconomist Intelligence Unit, Country Profile, August 2003 Greater Mekong Sub-region Business Forum http.//www.gmsbizforum.com/Legal per cent20and per cent20regulatory(cambodia)/Foreign

per cent20investment/Taxation per cent20..cambodia.htmMédecins Sans Frontières

http.//www.msf.org/content/page.cfm?articleid=2ECD1BDD-94B2-49EB-8EC939E2C87E54C7

Ministry of Commerce www.moc.gov.khUS Commercial Service, Country Commercial Guide for Cambodia FY 2001

http//www.usatrade.gov/website/ccg.nsf/ShowCCG?OpenForm&Country=CAMBODIAWTO Report of the Working Party on the Accession of Cambodia, 15 August 2003 WT/ACC/KHM/21

http://docsonline.wto.org/gen_home.asp?language=1&_=1


http://www.moc.gov.kh/laws_regulation/draft_laws-comment/Draft_LawsUpdate/Draft Patent, Utility Models, IDs Law.pdf

http://www.adb.org/Documents/Reports/CAM_Blueprint/

http://www.cambodia.gov.kh/unisql1/egov/english/home.frame.html


http://www.gmsbizforum.com/Legal and regulatory(cambodia)/Foreign investment/Taxation ..cambodia.htm

http://www.gmsbizforum.com/Legal and regulatory(cambodia)/Foreign investment/Taxation ..cambodia.htm

http://www.msf.org/content/page.cfm?articleid=2ECD1BDD-94B2-49EB-8EC939E2C87E54C7

http://www.msf.org/content/page.cfm?articleid=2ECD1BDD-94B2-49EB-8EC939E2C87E54C7


http://www.usatrade.gov/website/ccg.nsf/ShowCCG?OpenForm&Country=CAMBODIA

http://docsonline.wto.org/gen_home.asp?language=1&_=1


_______________________________________________________________________________________________________

Part Five TIPS FOR VISITORS TO CAMBODIA

Since the Paris Peace Agreement (1991), tourism has restarted in Cambodia. The

Government has adopted a policy to promote all activities related to the development of tourism. The sector is mostly in the hands of private companies while the Government focuses on the infrastructure development.

Visitors to Cambodia may book their travel through one of the registered tour operators in Cambodia or travel on their own. The Open Sky Policy permits international flights to Cambodia’s main airports which has helped increase the number of visitors to the country. Consequently, 12 international airlines are allowed to provide direct flights to and from Cambodia, including Malaysia Airlines, Thai Airways International, Silk Airline (Singapore), Vietnam Airline, Bangkok Airway, Dragon Airline (Hong Kong, China) and Eva Air (Taiwan, Province of China).

There are 11 cities in Asia that have direct international flights to and from Cambodia, including Bangkok, Kuala Lumpur, Shanghai, and Singapore. Within Cambodia, three airlines (Mekong Airlines, Siem Reap Airways and Royal Phnom Penh Airways) serve seven cities/towns throughout the country. The cities/towns with international flights connections are Battambang, Koh Kong, Mondolkiri, Phnom Penh, Rattanakiri, Siem Reap and Stung Treng.

A. Visa and passport

Visitors are required to possess valid passport and visa to enter Cambodia. Children under 14 years old also need visa to travel to Cambodia, but the visa process is free of charge. Visas can be obtained at the Cambodian embassies and consulates or upon arrival at the international airports of Phnom Penh and Siem Reap, and at border check points with Thailand and Viet Nam. If visitors arrive at Cambodia through any other entry point they need to obtain a visa from one of the Cambodian embassies.

According to the Ministry of Tourism, the current fees for visa and related expenses

are: • Visa fee: business visa (US$ 25), tourist visa (US$ 20); • Airport tax: international airport tax (US$ 20), at Siem Reap

(US$ 15); and • Domestic airport tax: US$ 5 A tourist visa is valid for 30 days. For individuals who need to stay longer than the

standard one month, a three-month visa will be granted upon application to the Ministry of Interior and payment of a fee of US$ 60. Individuals with a business licence issued by the Ministry of Commerce may apply for a business visa valid for one year upon payment of a fee of US$ 20.

Part Five: Tips for visitors to Cambodia 45 of 48


_______________________________________________________________________________________________________

B. Entry points

• By air: Siem Reap and Phom Penh. • By sea: Sihanoukville Port (Visa on arrival upon request) • By road: Visitors coming from Thailand, Viet Nam or Lao People’s Democratic

Republic may use one of the following border crossing points. - Bavet (Svay Rieng Province); - Kaam Samnor-Koh Rokar (Kandal-Prey Veng); - Cham Yeam (Koh Kong Province); - Poi Pet (Banteay Meanchhey Province); - O'Smach (Oddar Meanchhey Province); - Phnom Den (Takeo Province). No visa on arrival; and - Dong Krolor (Stung Treng Province). No visa on arrival.

References for part five: Tips for Visitors to Cambodia Cambodia-travel.com

http.//www.cambodia-travel.com/information/cambodia-visa.htmEmbassy of Cambodia, Washington DC (U.S.A.)

http.//www.embassy.org/cambodia/ GoCambodia.com

http.//www.gocambodia.com/travel/travel_guide.asp Greater Mekong Sub-region Business Forum

http.//www.gmsbizforum.com/cambodia/explorer_cambodia.htm Ministry of Tourism

http.//www.mot.gov.kh/US Commercial Service, Country Commercial Guide for Cambodia FY 2001

http//www.usatrade.gov/website/ccg.nsf/ShowCCG?OpenForm&Country=CAMBODIA


http://www.cambodia-travel.com/information/cambodia-visa.htm

http://www.embassy.org/cambodia/

http://www.gocambodia.com/travel/travel_guide.asp

http://www.gmsbizforum.com/cambodia/explorer_cambodia.htm

http://www.mot.gov.kh/

http://www.usatrade.gov/website/ccg.nsf/ShowCCG?OpenForm&Country=CAMBODIA


_______________________________________________________________________________________________________

Annex

INTEGRATED INTERNET LINKS LISTED IN THIS DOCUMENT

Name Internet address ADB annual report 2002 - Cambodia http://www.adb.org/Documents/Reports/Annual_Report/200

2/CAM.asp AFTA http://www.aseansec.org/2002_cept_bycountry.htm Agreement on Promotion and Protection of Investment between Cambodia and Thailand


Amending and Supplementing the Issuance of Certificates of Origin, Commercial Invoices, and Export Licenses for Exported Garments, Prakas No. 3413/MOC


Anukret No. 11/ANK/BK on BOT Contract http://www.moc.gov.kh/laws_regulation/econo_devepment/ank-bot.htm

Anukret No. 63/ANK/BK on Conferring the Right to Sell and Export Rubber Products to the Ministry of Agriculture, Forestry and Fisheries, October 13 1994


Anukret No. 80/ANK/BK on Measures Restricting Certain Investment Sector 1999


Anukret No. 88 on the Implementation of the Law on Investment


Application form from the CDC http://www.cambodiainvestment.gov.kh/Application.asp Apsara Radio and TV Channel 11 http://www.apsaratv.com.kh/pro_tv9.htm ASEAN http://www.aseansec.org/home.htm Asian Highway status map of Cambodia http://www.unescap.org/tctd/ah/cambodia.htm#statusmap Banking and Financial Institution Law http://www.moc.gov.kh/laws_regulation/rkm1199-13-

bank_financial.htm Banking and Financial Institutions Law in 1999


Bayon Radio and Television http://www.bayontv.com.kh Cambodia - United States of America Investment Treaty


Cambodia Commercial Bank http://www.ccb-cambodia.com/ Cambodia Council of Jurists http://www.bigpond.com.kh/Council_of_Jurists/z/Typolg.ht

m Cambodia Daily http://www.camnet.com.kh/cambodia.daily/ Cambodia Investment Board (CIB)/Council for the Development of Cambodia (CDC)


Cambodia-US Agreement http://web.ita.doc.gov/Otexa/OTEXAGRE.NSF/main-view CAMCONTROL http://www.camcontrol.gov.kh/ Canada Bank Ltd. http://www.canadiabank.net/ Constitution, 1993 http://www.bigpond.com.kh/Council_of_Jurists/Constit/con

s001g.htm Council for the Development of Cambodia http://www.cambodiainvestment.gov.kh/default.asp Decision No. 65 on the Annulment the Existing Procedure for Timber Export, 18 June, 1994


Draft Amended Investment Law http://www.moc.gov.kh/laws_regulation/draft_laws-comment/Draft_LawsUpdate/Draft Amended Law on Investment.pdf

Draft Customs Law http://www.moc.gov.kh/laws_regulation/draft_laws-comment/Draft_LawsUpdate/Draft Law on Customs-15August02.pdf

















http://www.cambodiainvestment.gov.kh/Application.asp

http://www.apsaratv.com.kh/pro_tv9.htm

http://www.aseansec.org/home.htm








http://www.ccb-cambodia.com/



http://www.camnet.com.kh/cambodia.daily/




http://www.canadiabank.net/













_______________________________________________________________________________________________________

Draft Law on Copyright and Related Rights, 2002


Draft Law on Patent, Utility Models and Industrial Designs, 2003


ELVIS (Electronic Visa Information System) Visa Arrangement

http://web.ita.doc.gov/Otexa/OTEXAGRE.NSF/

EU-Cambodia Textile Trade Agreement http://europa.eu.int/comm/external_relations/cambodia/intro/index.htm

Foreign Trade Bank http://www.ftbbank.com/ Japan Ministry of Foreign Affairs http://www.mofa.go.jp/policy/economy/gsp/ Labour Law, 1997 http://www.moc.gov.kh/laws_regulation/rkm_labor_law_97

.htm Law on Commercial Regulations and Commercial Register, 1995


Law on Foreign Exchange, 1997 http://www.moc.gov.kh/laws_regulation/rkm897-03-foreign.htm

Law on Import and Export Duties, 1989 http://www.camnet.com.kh/customs/LAW89.htm Law on Investment, 1994 http://www.cambodiainvestment.gov.kh/documents/TCAM

3.1.1laws Investment Law.doc Law on Marks, Trade Name and Acts of Unfair Competition, 2002


Law on Taxation http://www.moc.gov.kh/laws_regulation/rkm97_taxation_law.htm

Law on the Management of Quality and Safety of Products and Services


Mekong River Commission http://www.mrcmekong.org/ Memorandum of Understanding between Cambodia and Canada


Ministry of Commerce http://www.moc.gov.kh/ National Television of Cambodia http://www.tvk.gov.kh/english/default.html New extension of United States of America -Cambodian Textile Agreement

http://www.ustr.gov/releases/2002/01/02-03.htm

Office of Textiles and Apparel, United States of America


Phnom Penh Post http://www.phnompenhpost.com/ Prakas on Measures Against Food Products Devoid of Appropriate Packaging Label


Pre-shipment inspection regulations - Annex

http://www.moc.gov.kh/laws_regulation/New_Update/PSI Regulations Annex. Pdf

Protocol on Dispute Settlement Mechanism, 1996


Radio and Television 3 http://www.tv3.com.kh/ Rubber import, export, transport and equipment company


Singapore Banking Corp. http://www.sbc-bank.com/index.htm Television Station Channel 9 http://www.tv9.com.kh/profile.html The issuance of the Certificate of Origin, Commercial Invoice and Export Licence for Garments, Prakas No. 1347/MOC/PRK


Trade section of the European Commission http://trade-info.cec.eu.int/doclib/docs/2003/april/tradoc_111331.pdf

UNESCAP http://www.unescap.org/ United States of America Apparel quota increase

http://www.ustr.gov/releases/2000/05/00-39.html

WTO http://www.wto.org/







http://web.ita.doc.gov/Otexa/OTEXAGRE.NSF/

http://europa.eu.int/comm/external_relations/cambodia/intro/index.htm

http://europa.eu.int/comm/external_relations/cambodia/intro/index.htm

http://www.ftbbank.com/








http://www.camnet.com.kh/customs/LAW89.htm













http://www.tvk.gov.kh/english/default.html

http://www.ustr.gov/releases/2002/01/02-03.htm





http://www.moc.gov.kh/laws_regulation/New_Update/


http://www.tv3.com.kh/


http://www.sbc-bank.com/index.htm

http://www.tv9.com.kh/profile.html





http://www.unescap.org/

http://www.ustr.gov/releases/2000/05/00-39.html

http://www.wto.org/

Trader's Manual for Least Developed Countries - Cambodia

Documents

Transcript of Trader's Manual for Least Developed Countries - Cambodia