1. GOVERNMENT ATTITUDES
As one of the poorest countries
in the region, international assistance remains a vital component in overcoming
the challenges faced in Cambodia's development. Nonetheless, private sector
investment will become increasingly important for the country as the private
sector assumes its position as the main engine for economic growth in
Cambodia. To this end, the Royal Government of Cambodia sees private sector
investment as integral to the development of a fully democratic and prosperous
Cambodia in the years ahead.
The government is fully aware that if the country
is to achieve its developmental goals, it cannot rely on foreign aid and
assistance indefinitely, and that real economic growth and development
lie in the private sector. Consequently, a programme of reform is now
being undertaken by the government in order to create a conducive environment
for private sector investment.
In 1994, the Law on Investment of the Kingdom
of Cambodia was passed with the aim of streamlining the foreign investment
regime and providing generous and competitive concessions for direct private
sector investment. The Law on Investment also created the Council for
the Development of Cambodia (CDC), a one-stop service Organisation for
investment in Cambodia. The CDC, through the executive arm of the Cambodian
Investment Board (CIB), is now responsible for the processing of applications
for investment projects and is required to give a decision within 45 days
As such, the government is fully committed to the
speeding-up of new investment-project approvals by making the CDC a truly
effective and well-disposed one-stop service.
2. SUMMARY OF FOREIGN INVESTMENT POLICY
In order to attract FDI,
the government has strengthened the country's legal framework, bolstered
its institutions and liberalised the relevant regulations, in ways that
are conducive to private sector investment and business activities in
Cambodia. The 1994 Law on Investment provides similar treatment to foreign
and domestic investors alike, with the exception of the issue of land
ownership, as set forth in Cambodia's constitution. Even in this area,
the regulations are generous, with foreign investors able to lease land
for a period of up to 70 years, with the possibility of renewal thereafter.
The government provides
investors with a guarantee neither to nationalise foreign-owned assets,
nor to establish price controls on goods produced and services rendered
by investors, and to grant them the right to freely repatriate capital,
interest and other financial obligations.
Investors can set up 100%
foreign-owned investment projects and employ skilled workers from overseas,
in cases where these workers cannot be found in the domestic labourforce.
In addition, the Law on
Investment and its related Sub-Decree grant generous incentives to investors,
especially those concerned in investment projects geared towards exports.
Attention is also accorded
to private investment in Build-Operate-Transfer (BOT) projects, and private
investment in infrastructure, including public utilities such as electricity,
water supply and telecommunications.
In order to facilitate investors
in their applications for investment approval, the government has established
an institution to oversee investment policy and strategy called the Council
for the Development of Cambodia (CDC) . The CDC, being the highest decision-making
level of the government on private (CIB) and public (CRDB) investments,
is chaired by the prime minister and composed of senior ministers from
related government ministries.
The Cambodian Investment
Board (CIB), the operational arm of the CDC, has been designated as the
etat major and one-stop service of the government, responsible for the
evaluation of investment proposals and projects from all investors, both
individual and corporate.
Cambodia has obtained "Generalized
System of Preferences (GSP)" and "Most Favored Nation (MFN)" status from
its major trading partners, including the European Union, the USA, Japan,
Canada and Australia.
Apart from facilitation and support at the national
level, attention is also being given by the government to opening up access
to international sources of finance for private sector investment. Cambodia
is already a member of the IFC and MIGA, and is currently applying for
membership to the ICSID (International Center for Settlement of Investment
It has also signed agreements with the ADB, providing
private sector investors with the opportunity to obtain funding for their
investment projects from this international financing institution.