Академический Документы
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CAMBODIA
UNITED NATIONS
ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC
CAMBODIA
UNITED NATIONS
New York, 2004
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.
i
PREFACE
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.
ii
iii
CONTENTS
Page
PREFACE ……………………………………………………………………………… ii
ABBREVIATIONS ……………………………………………………………………. v
Part One
GLOBAL COUNTRY PRESENTATION ………….……… 1
Chapter
Part Two
SELLING TO CAMBODIA ………………………… 11
Part Three
BUYING FROM CAMBODIA ……………………….. 24
Part Four
INVESTING IN CAMBODIA ……………………… 31
Part Five
TIPS FOR VISITORS TO CAMBODIA ………………… 45
ANNEX
Integrated Internet links listed in this document ………………………………………… 47
iv
ABBREVIATIONS
v
Traders’ Manual for Least Developed Countries: CAMBODIA
_______________________________________________________________________________________________________
Part one
GLOBAL COUNTRY PRESENTATION
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
_______________________________________________________________________________________________________
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.
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.
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.
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’s legal system stems from the Constitution of 1993 and is organized in the
following way.
Kret Highest Norm that may be enacted by the Executive Power, within the
(Decree) 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.
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
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.
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.
_______________________________________________________________________________________________________
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.
_______________________________________________________________________________________________________
Trade
16%
Construction
Electricity, gas Manufacturing
4% Mining
and water 12% 0%
0%
Source: Asian Development Bank, Key Indicators, May 2003.
Trade
15%
Mining
Construction 0%
7% Electricity, gas Manufacturing
and water 19%
1%
Source: Asian Development Bank, Key Indicators, May 2003
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’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.
_______________________________________________________________________________________________________
2,000
Millions
US$ 1,500
1,000
500
0
1995 1996 1997 1998 1999 2000 2001
D. Foreign investment
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.
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.
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.
Part two
SELLING TO CAMBODIA
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.
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.
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.htm
2
http://www.moc.gov.kh/laws_regulation/prk-moc-trading.htm
3
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.
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.
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).
Source: WTO Diagnostic Trade Integration Study for Cambodia, August 2002, WT/IFSC/W/12/Add.1,
page 33.
_______________________________________________________________________________________________________
D. Import requirements
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.
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.
F. Inspections
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.
_______________________________________________________________________________________________________
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
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.
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.
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.
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
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.
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.
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
_______________________________________________________________________________________________________
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.
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).
Bank Ownership/status
Foreign 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)
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.
_______________________________________________________________________________________________________
IV. DOCUMENTS
Number of
Document Body concerned
copies
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. 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.
B. Product standards
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.
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.
_______________________________________________________________________________________________________
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.
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 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.
Source: WTO Report of the Working Party on the Accession of Cambodia, 15 August 2003,
WT/ACC/KHM/21, page 59.
_______________________________________________________________________________________________________
Source: WTO Report of the Working Party on the Accession of Cambodia, 15 August 2003,
WT/ACC/KHM/21, page 60.
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.
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
Part Three
BUYING FROM CAMBODIA
A. General
B. Export approval
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.
_______________________________________________________________________________________________________
Canada
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.
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.
_______________________________________________________________________________________________________
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
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.
_______________________________________________________________________________________________________
Export tariff
HS heading Description of good (per cent
ad valorem)
01.02; 01.03 Pure bred breeding bovine animals and swine 10
03.01; 03.02; 03.03; Live fish, prepared fish and fish products 10
03.04; 03.05
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 50
of a cyclic alcohol*
29.26 Nitril-function compounds* 50
40.01; 40.04 Natural rubber in primary forms or in plates, sheets or 10
strips and rubber waste
44.02; 44.03; 44.04; Unprocessed and semi-processed wood; wood charcoal 10
44.05; 44.06; 44.07
44.08.10.00; 44.09 Sawn and shaped wood. Veneer sheets and sheets for 5
plywood; strips for flooring
* Categories included for the sake of formal completeness. The products in these
groups require a licence in order to be exported.
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.
Number Form
Document Body concerned Cost
of copies number
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/ .
_______________________________________________________________________________________________________
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.
Cambodia’s main export partner is the United States with which it has the special
agreement for garments and textiles.
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
Part Four
INVESTING IN CAMBODIA
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.
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.
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
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
_______________________________________________________________________________________________________
ISIC Remarks
Sector/industry
code (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 No new licence will be issued.
products utilizing local logs as raw
materials.
2411 DBSA production: Subject to prior approval from the Ministry of
Toxic chemicals effecting health of health and related ministries.
community and impacting to environment. Prohibited in accordance with an international
Production of toxic chemicals or utilization treaty.
of toxic agents.
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 National defence policy
securities
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 Subject to discussion with the Ministry of
periodicals 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
Any foreign investment in Cambodia requires the approval from CDC. Investment
applications must be submitted to CDC including:
Application fees for investment projects are detailed in the Anukret No. 88 on the
Implementation of the Law on Investment 6 as follows.
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.
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.
_______________________________________________________________________________________________________
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.
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.
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
_______________________________________________________________________________________________________
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
_______________________________________________________________________________________________________
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.
Region 1: Phnom Penh, Kandal Province, Siem Reap Province and Sihanoukville.
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.
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.
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).
_______________________________________________________________________________________________________
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.
Tax rate
Taxable parts of the monthly salary
(%)
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
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.
_______________________________________________________________________________________________________
23.08; 23.09 except 2309.10.10 and 2309.10.90 Animal feedstuff and supplementary feed
E. Minimum tax
F. Withholding tax
The following three rates of withholding tax are applied according the below listed
specifications.
G. Other taxes
Each business enterprise should register annually with the tax authorities and pay a
business registration tax of US$300 per year. In the trade and industrial sectors, the
maximum business registration tax is 0.1 per cent of the turnover. In the service sector, the
maximum rate is 0.25 per cent of the turnover.
V. FOREIGN EXCHANGE
The Law on Foreign Exchange, 1997 stipulates that, “there shall be no restrictions on
foreign exchange operations through book entry including purchases and sales of foreign exchange
on the foreign exchange market, transfers, all kinds of international settlements, and capital flows in
foreign or domestic currency, between Cambodia and the rest of the world or between residents and
_______________________________________________________________________________________________________
There are currently no restrictions on the repatriation of profit or capital derived from
investments made in Cambodia, nor on most transfers of funds abroad. The Law on
Investment guarantees that investors can freely remit foreign currencies abroad for the
purposes of:
• Payment for imported goods and services, and repayment of loans including
interests and principals made by foreign banks or institutions;
• Royalties and management fees;
• Profits after discharge of obligations due and payment of all relevant taxes and
royalties; and
• Repatriation of invested capital on dissolution of an investment project.
Any transfer equaling or exceeding US$ 100,000 shall be reported to the Central
Bank.
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.
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
_______________________________________________________________________________________________________
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.
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.
_______________________________________________________________________________________________________
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.
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.
_______________________________________________________________________________________________________
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.
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.asp
Economist 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.htm
Médecins Sans Frontières
http.//www.msf.org/content/page.cfm?articleid=2ECD1BDD-94B2-49EB-
8EC939E2C87E54C7
Ministry of Commerce www.moc.gov.kh
US Commercial Service, Country Commercial Guide for Cambodia FY 2001
http//www.usatrade.gov/website/ccg.nsf/ShowCCG?OpenForm&Country=CAMBODIA
WTO 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
_______________________________________________________________________________________________________
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.
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.
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B. Entry points
Cambodia-travel.com
http.//www.cambodia-travel.com/information/cambodia-visa.htm
Embassy 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
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Annex
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