2009 Investment Climate Statement - Cambodia

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09PHNOMPENH71 28 January 2009 No clasificado Embassy Phnom Penh

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DE RUEHPF #0071/01 0281002
P 281002Z JAN 09




E.O. 12958:N/A
SUBJECT: 2009 Investment Climate Statement - Cambodia

REF: 08 STATE 123907

1. Cambodia, a developing country, began the transformation from a
command economy to the free market in the late 1980s. It is now
integrating into the regional and world trading framework. In 1999,
Cambodia joined the Association of Southeast Asian Nations (ASEAN)
and in September 2004, became a member of the World Trade
Organization (WTO). On December 15, 2008 the entry into force of
the ASEAN Charter brought Cambodia and other member states into a
new regional legal framework. Cambodia has shown interest in
participating in other international trading arrangements, including
the Asia-Pacific Economic Cooperation forum (APEC).

2. As part of its WTO commitments to strengthen the investment
climate for both foreign and domestic businesses, Cambodia committed
to enact 46 new laws or regulations to address areas where existing
law did not meet WTO requirements. Cambodia has been behind
schedule in fulfilling its WTO commitments to pass necessary
business legislation. However, the country has made progress
recently, passing several significant laws in 2008, including a Law
on Plant Breeder Rights and Law on Civil Aviation. In 2007, the
government promulgated a Customs Law, Law on Water Resources
Management, Law on Land Traffic, Law on Insolvency, and Secured
Transactions Law. The government has either completed drafts of
most of the remaining required laws or is waiting for their approval
by the legislature. According to the Economic Institute of
Cambodia, an independent think tank, the government must promulgate
an additional 17 laws required by WTO accession.

3. Since the re-establishment of a constitutional monarchy in 1993,
the economy has grown steadily. Real GDP growth averaged 8.8
percent during the 1994-2008 period. Despite dire predictions
surrounding the expiration of the Multi-Fiber Agreement on January
1, 2005, through which Cambodia obtained limited duty-free access to
the U.S. market for garments, the economy grew at 13.4 percent in
2005 — the highest rate in a decade — and in 2007 expanded by 10.2
percent. During the same period, per capita GDP grew from USD 440
to USD 590. Success in the garment, construction, and tourism
sectors and good weather for agriculture generated the high growth.
For 2008, the growth rate decreased to an estimated 6.7 percent,
mainly as a result of decreasing garment orders, constrution
projects, and tourist arrivals due to the global economic slowdown
and political instability in Thailand. Per capita GDP for 2008 was
USD 625.

4. Inflation increased sharply in 2008, as it did in many countries
throughout Asia. According to the Economic Institute of Cambodia,
in 2008 the inflation rate reached an estimated 22.7 percent. The
rising price of fuel, depreciation of the dollar, and dramatic
increase in food prices contributed to the dramatic spike. Apart
from the CPI, land prices retreated from record levels achieved at
the beginning of the year, with the price of residential property in
Phnom Penh decreasing by 25 percent from earlier highs, after rising
by 100 percent in 2007.

5. Foreign Direct Investment (FDI) approved by the Council for the
Development of Cambodia (CDC), Cambodia’s investment approval body,
has dramatically increased in recent years, with approved proposals
reaching nearly USD 11 billion in 2008, compared with USD 201
million in 2004. The CDC does not have a functional mechanism to
monitor implementation of projects, so it is not clear how many
proposed projects are fully implemented. Nonetheless, the increase
in investor interest may be attributed to increased political and
macroeconomic stability, and ongoing government reforms designed to
integrate Cambodia into the regional and global marketplace.
Corruption has been singled out as one of the most serious
deterrents to further private investment. Given inadequate private
investment and poor revenue collection, Cambodia remains dependent
largely on foreign donor funding for budget assistance, capital
expenditure, and social services.

6. Since early 1999, the Cambodian government has intensified its
economic reform program, a process the international financial
institutions and donors encourage, participate in, and monitor
closely. In recent years the government has publicly committed
itself on numerous occasions to fighting corruption, pursuing good
governance, and increasing transparency and predictability. This
strategy is set out in phase II of the government’s latest public
reform effort called the "Rectangular Strategy for Growth,
Employment, Equity, and Efficiency."

7. The government has initiated specific measures to promote

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business, especially small and medium-sized businesses, by reducing
costs and the time required for business registration and by
establishing a number of committees for business promotion and trade

Openness to Foreign Investment

8. Cambodia officially welcomes foreign direct investment.
Cambodia’s 1994 Law on Investment established an open and liberal
foreign investment regime. All sectors of the economy are open to
foreign investment and 100 percent foreign ownership is permitted in
most sectors. Article 44 of the Constitution provides that only
Cambodian citizens and legal entities have the right to own land.
Aside from this, there is little or no discrimination against
foreign investors either at the time of initial investment or after
investment. However, some foreign businesses have reported that
they are at a disadvantage vis-a-vis Cambodia or other foreign
rivals, who engage in acts of corruption or tax evasion, or take
advantage of Cambodia’s poor enforcement of legal regulations.

9. In addition, there are a few sectors open to foreign investors
which are subject to conditions, local equity participation, or
prior authorization from relevant authorities. These sectors
include manufacture of cigarettes, movie production, rice milling,
exploitation of gemstones, publishing and printing, radio and
television, manufacturing wood and stone carvings, and silk weaving.
The government has issued a sub-decree restricting foreign
ownership of hospitals and clinics and forbidding the employment of
non-Cambodian doctors in any specialty in which the Ministry of
Health considers there to be an adequate number of Cambodian

10. Under a sub-decree dated September 2005, Cambodia prohibits
certain investment activities, including investment in production or
processing of psychotropic and narcotic substances, poisonous
chemicals, agricultural pesticides and insecticides, and other goods
that use chemical substances prohibited by international regulations
or the World Health Organization that affect public health and the
environment. Production of electric power by using waste imported
from foreign countries is prohibited, as is forestry exploitation.

11. The privatization of state enterprises and transactions
involving state property has not always been carried out in a
transparent manner. In several instances, the public learned that
enterprises were for sale or swap only after the government
announced a sale or deal to a particular buyer.

12. Investor rights (investment guarantees) provided for in the Law
on Investment include:

— Foreign investors shall not be treated in a discriminatory
manner by reason of being a foreign entity, except in respect to
land ownership as provided for in the Constitution of the Kingdom of
— The Royal Government of Cambodia shall not undertake a
nationalization policy that adversely affects the private property
of investors.
— The Royal Government of Cambodia shall not fix the price of
products or fees for services.
— The Royal Government of Cambodia, in accordance with relevant
laws and regulations, shall permit investors to purchase foreign
currencies through the banking system and to remit abroad those
currencies as payments for imports, repayments on loans, payments of
royalties and management fees, profit remittances and repatriation
of capital.

Conversion and Transfer Policies

13. There are no restrictions on the conversion of capital for
investors. The Foreign Exchange Law allows the National Bank of
Cambodia (the central bank) to implement exchange controls in the
event of a crisis; the law does not define what would constitute a
crisis. The U.S. Embassy is not aware of any cases in which
investors have encountered obstacles in converting local to foreign
currency or in sending capital out of the country.

14. The U.S. dollar is widely used and circulated in the economy.
The 2008 exchange rate was stable, although slightly depreciated
compared to 2007. At the end of 2008, the exchange rate was USD 1 =
4,049 riel. The government is committed to maintaining exchange

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rate stability.

Expropriation and Compensation

15. Article 44 of the Cambodian Constitution, which restricts land
ownership to Cambodian nationals, also states that "the (state’s)
right to confiscate properties from any person shall be exercised
only in the public interest as provided for under the law and shall
require fair and just compensation in advance." Article 58 states
that "the control and use of state properties shall be determined by
law." The Law on Investment provides that "the Royal Government of
Cambodia shall not undertake a nationalization policy which
adversely affects the private property of investors."

16. In spite of various legal protections, protection of immovable
property rights is complicated by the fact that most property
holders do not have legal documentation of their ownership rights.
Numerous cases have been reported of influential individuals or
groups acquiring property through means not entirely in keeping with
the Constitution or laws. These actions are usually directed at
poor people and those unable to protect their rights. Human rights
NGO ADHOC reported receiving 195 land-related cases from January to
August 2008. During the same period, another NGO received 51
land-related cases in Phnom Penh and 13 other provinces affecting a
total of 3,275 families. If granted at all, compensation in these
types of cases is usually less than the market value of the property
being taken.

17. The Ministry of Economy and Finance is drafting a law on
expropriation which will set broad guidelines on land-taking
procedures for public interest purposes and define public interest
activities such as construction of infrastructure projects,
development of buildings for national protection and civil security,
construction of facilities for research and exploitation of natural
resources, and construction of oil pipeline and gas networks.

18. To date, there are no known investment disputes involving
government expropriation of property belonging to U.S. citizens. Up
to 17 Thai businesses sustained varying degrees of damage during
anti-Thai rioting in Phnom Penh on January 29, 2003. The Cambodian
government pledged to compensate Thai business owners, and all of
claims have been resolved.

Dispute Settlement

19. Cambodia’s legal system is a mosaic of pre-1975 statutes
modeled on French law, communist-era legislation dating from
1979-1991, statutes put in place by the UN Transitional Authority in
Cambodia (UNTAC) during the period 1991-93, and legislation passed
by the Royal Government of Cambodia since 1993.

20. Cambodian culture and its legal system have traditionally
favored negotiation and conciliation over adversarial conflict and
adjudication. Thus, compromise solutions are the norm, even in
cases where the law clearly favors one party in a dispute. In civil
cases, courts will often try conciliation before proceeding with a
trial. The Ministry of Commerce is currently finalizing draft
legislation to create a Commercial Court that will likely include a
pre-trial mediation component. A number of draft bills are slated
to be considered by the National Assembly during its fourth term
(2008-2013); no date has been set for consideration of Commercial
Court legislation.

21. Cambodia’s court system is generally seen as non-transparent
and subject to outside influence. Judges, who have been trained
either for a short period in Cambodia or under other systems of law,
have little access to published Cambodian statutes. Judges can be
inexperienced and courts are often understaffed with little
experience, particularly in adjudicating commercial disputes. The
local and foreign business community reports frequent problems with
inconsistent judicial rulings as well as outright corruption.

22. The Cambodian judiciary system is beginning to undergo reform.
To provide the necessary background knowledge, judges and court
staff from around the country are being trained by the Royal Academy
for Judges and Prosecutors, which was created in 2002. In an effort
to clean up the court system, the Prime Minister has announced ad
hoc anti-corruption measures, including the dismissal, replacement,
and transfer of judges and prosecutors. The Supreme Council of
Magistracy, comprised of a president (the King) and 8 other members,

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is responsible for the appointment and conduct of judges and

23. To handle specific disputes with regard to labor, the Ministry
of Labor and Vocational Training established an Arbitration Council
in May 2003. Basing its decision on the provisions of the Labor
Law, the Council has 30 arbitrators. The Council is an independent
body whose function is to resolve collective labor disputes that the
Ministry is unable to solve by conciliation. The Council’s
decisions are non-binding but it has been very successful in
reducing the number of industrial actions in the garment sector.
The Council plays a vital role in contributing to the development of
healthy industrial relations in Cambodia. The Council’s success in
the garment industry has prompted unions in other sectors, e.g., the
hospitality and tourism sectors, to seek the Council’s arbitration
and mediation services.

24. Under the 2006 Law on Commercial Arbitration, a National
Arbitration Center (NAC) will be established in the Ministry of
Commerce. When active, parties involved in a commercial dispute
that have a written arbitration agreement will be able to settle
commercial disputes by means of quasi-judicial methods without
involvement of the Cambodian courts. Parties will be able to select
arbitrators without direct government interference. The law also
allows the Cambodia Chamber of Commerce to establish its own
arbitration center for disputes between members or between members
and third parties. Neither of these proposed arbitration centers
has been established to date. However a sub-decree on the
establishment of the National Arbitration Center is currently
awaiting approval by the Council of Ministers. The Law on
Commercial Arbitration also mandates recognition of arbitral awards
made outside of Cambodia. Arbitration awards can be appealed to the
Appellate and Supreme Court of Cambodia based on limited grounds.

25. Although party to the Convention for the Settlement of
Investment Disputes between States and Nationals of Other States
since 2005, Cambodia has not yet had any cases taken to the
International Center for the Settlement of Investment Disputes.

Performance Requirements and Incentives

26. The Council for the Development of Cambodia (CDC), Cambodia’s
foreign investment approval body, administers a package of
investment incentives. The CDC was created as a one-stop shop to
facilitate foreign direct investment.

27. Seeking to increase government revenue, the international
financial institutions recommended that the Cambodian government
scale back its investment incentives. Consequently, the Cambodian
government amended the Law on Investment in 2003. The law creates
regimes for profit (20 percent), salary (5 to 20 percent),
withholding (4 to 15 percent), value-added (10 percent) and excise
taxes (rates vary). While some incentives have been eliminated, the
law provides a simplified, more transparent, and faster mechanism
for investment approval.

28. Under the amended Law on Investment, the profit tax exemption
is allocated automatically on the basis of activity and minimum
investment amounts as set out in the sub-decree. To maintain the
incentives under the law, qualified investment projects (QIP) are
required to obtain an annual Certificate of Compliance from the CDC
and file this with the annual tax return.

29. The amended Law on Investment includes the following
provisions, which include the exemption, in whole or in part, of
customs duties and taxes, for QIPs:
— An exemption from the tax on profit imposed under the Law on
Taxation for a set period. The tax exemption period is composed of
a trigger period + three years + n years (a number of years
determined according to the Financial Management Law and depending
on the economic sector). The maximum allowable trigger period is to
be the first year of profit or three years after the QIP earns its
first revenue, whichever is sooner.
— 100 percent exemption from import duties for construction
material, production equipment and production input materials for
export QIPs and supporting industry QIPs in accordance with the
provisions of the sub-decree on the Implementation of the Amendment
to the Law on Investment
— Transfer of incentives by merger or acquisition.
— Renewable land leases of up to 99 years on concession land for
agricultural purposes and land ownership permitted to joint ventures

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with over 50 percent equity owned by Cambodians.
— No price controls on goods produced or services rendered by
— No discrimination between foreign and local investors.
— 100 percent exemption from export tax or duty, except for
activities specifically mentioned in the Law on Customs.
— Employment of foreign expatriates where no qualified Cambodians
are available. QIPs are entitled to obtain visas and work permits.
— A QIP that is located in a designated special economic zone
(SEZ) is entitled to the same incentives and privileges as other
QIPs as stipulated in the law.

30. The September 2005 sub-decree on the Implementation of the
Amendment to the Law on Investment also details investment
activities that are not eligible for incentives, although investment
is permitted. They include the following sectors: retail,
wholesale, and duty-free stores; entertainment (including
restaurants, bars, nightclubs, massage parlors, and casinos);
tourism service providers; currency and financial services; press
and media related activities; professional services; and production
and processing of tobacco and wood products.

31. Incentives are also not available for production of certain
products with an investment of less than USD 500,000 such as food
and beverages; textiles, garments and footwear; and plastic, rubber,
and paper products. Investors are encouraged to refer to the
sub-decree for details of other investment activities that are not
eligible for incentives.

32. Investment activities that are eligible for customs duty
exemption, but not eligible for the profit tax exemption, are
telecommunication basic services; exploration of gas and oil,
including supply bases for gas and oil activities; and mining.

33. Cambodia allows foreign lawyers to supply legal services with
regard to foreign law and international law, and allows them to
supply certain legal services with regard to Cambodian law in
"commercial association" with Cambodian law firms. Cambodia’s WTO
General Agreement on Trade in Services (GATS) commitment defines
"commercial association" as any type of commercial arrangement,
without any requirement as to corporate form. Thus, there are no
equity limitations on the practice of foreign and international law
by foreign enterprises and there are no equity limitations on the
formation of "commercial associations" under which foreigners may
practice certain legal services with regard to Cambodian law.

34. Investors who wish to take advantage of investment incentives
must submit an application to the Cambodian Investment Board (CIB),
the division of the CDC charged with reviewing investment
applications. Investors not wishing to apply for investment
incentives, or who are ineligible, may establish their company
simply by registering corporate documents with the Department of
Legal Affairs of the Ministry of Commerce. Once an investor’s
application is submitted, the CDC will issue to the applicant either
a Conditional Registration Certificate or a Letter of Non-Compliance
within three workdays. The Conditional Registration Certificate
will set out the terms, such as approvals, authorization,
clearances, permits or registrations required. If the CDC fails to
issue the Conditional Registration Certificate or Letter of
Non-Compliance within three workdays, then the Conditional
Registration Certificate will be considered approved.

35. The CDC has the responsibility to obtain all of the licenses
from relevant government agencies on behalf of the applicants. The
relevant government agencies must issue the required documents no
later than 28 workdays from the date of the Conditional Registration
Certificate. At the end of the 28 days, the CDC will issue a Final
Registration Certificate.

36. The Sub-decree on the Implementation of the Amendment of the
Law on Investment adopted on September 27, 2005 does not require
investors to place a deposit guaranteeing their investment except in
cases in which the deposit is required in a concession contract.
Investors who wish to apply are required to pay an application fee
of seven million riel (approx. USD 1,750) representing the
administration fees for securing the approvals, authorizations,
licenses, or registrations from all relevant ministries and entities
including stamp duty.

37. Under a 2008 sub-decree, the CDC is required to submit
investment proposals to the Council of Ministers for approval with
an investment capital of USD 50 million or more; involve

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politically sensitive issues; involve the exploration and the
exploitation of mineral or natural resources; may have a negative
impact on the environment; have long-term strategy; or, involve
infrastructure concessions.

38. After receiving several billion dollars of real estate
development proposals, the Ministry of Economy and Finance (MoEF)
proposed new regulations in July 2008 to protect consumers from
fraud. The proposed rules require all developers to obtain licenses
from an Inter-Ministerial Task Force, purchase construction site
insurance, and deposit two percent of total project costs in a
non-interest bearing MoEF account at the National Bank of Cambodia.
License fees and the period of the license would be determined by
the type and size of development. It also requires developers to
create a housing development account at a commercial bank into which
buyers can make down payments on units. Developers would need
approval from an inter-ministrerial working group to access the
account, and the working group can intervene if the company fails to
honor its contracts. The rule was originally slated to take effect
from September 30, 2008 but was postponed amid complaints from
international developers. After receiving support from the Prime
Minister at the Government-Private Sector Forum in November 2008,
the MoEF intends to reintroduce the regulations in early 2009.

Right to Private Ownership and Establishment

39. There are no limits on the rights of foreign and domestic
entities to establish and own business enterprises or to compete
with public enterprises. However, the Constitution provides that
only Cambodian citizens or legal entities have the right to own
land. A legal entity is considered to be Cambodian when at least 51
percent of its shares are owned by Cambodian citizen(s) or by
Cambodian legal entities. Investment incentives vary depending on
the nature of the investment project.

40. Under the 2001 Land Law, foreign investors may secure control
over land through concessions, long-term leases, or renewable
short-term leases. If investors intend to take a long-term lease
interest in land or ownership interest through a 51 percent
Cambodian company, it is essential that caution be exercised to
ensure that clear and unencumbered ownership of the land is

41. The Land Law establishes a comprehensive legal framework for
long-term leasing. The leaseholder has a contractual interest in
the land, which means the lease can be sold or transferred through
succession and can be pledged as security in order to raise
financing. It is also important to make sure that the land
ownership is clearly and legally established before entering into
any leasing agreement.

42. Qualified investors approved by the Council for the Development
of Cambodia have the right to own buildings built on leased
property. However the law is unclear as to whether buildings from
qualified projects can be transferred between foreign investors or
whether foreign investors can own buildings built through projects
not approved by the CDC. To remove the ambiguity, several real
estate developers and members of the legal community are urging the
government to issue formal regulations for foreign ownership rights
on buildings such as apartments and condominiums.

Protection of Property Rights

43. Cambodia has adopted legislation concerning the protection of
property rights, including the Land Law and the Law on Copyrights
and Law on Patent and Industrial Design. Cambodia is a member of
the World Intellectual Property Organization (WIPO) and the Paris
Convention for the Protection of Industrial Property.

44. Chattel and real property: The 2001 Land Law provides a
framework for real property security and a system for recording
titles and ownership. Land titles issued prior to the end of the
Khmer Rouge regime in 1979 are not recognized due to the severe
dislocations that occurred during the Khmer Rouge period. The
government is making efforts to accelerate the issuance of land
titles, but in practice, the titling system is cumbersome,
expensive, and subject to corruption. The majority of property
owners lack documentation proving ownership. Even where title
records exist, recognition of legal title to land has been a problem
in some court cases where judges have sought additional proof of

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ownership. Although foreigners are constitutionally forbidden to
own land, the 2001 law allows long or short-term leases to

45. Intellectual property rights (IPR): As a WTO member,
Cambodia’s IPR regime is in compliance with its WTO commitments;
however, comprehensive enforcement remains problematic. The 1996
U.S.-Cambodia Trade Agreement contained a broad range of IPR
protections, but given Cambodia’s very limited experience with IPR,
the WTO agreement granted phase-in periods for the Cambodian
government to fully implement IPR protections. On November 9, 2005,
the WTO granted a deadline extension until 2013 for Cambodia and
other least developed countries to enforce copyright laws and begin
accepting patents.

46. In a significant step toward consolidating IPR policy-making,
enforcement and technical assistance, the Council of Ministers
created the National Committee for Intellectual Property Management
on September 18, 2008 with its secretariat within the Ministry of
Commerce. Once operational, this committee will develop national
policy on intellectual property, strengthen interagency cooperation,
prepare and disseminate new laws and regulations, and act as a
clearinghouse for technical assistance relating to the intellectual
property sector. This new interagency IPR committee chaired by the
Minister of Commerce includes a broad range of IPR actors including
representatives from the Council of Ministers and the Ministries of
Industry Mines and Energy; Culture and Fine Arts; Interior; Economy
and Finance; Posts and Telecommunications; Health; Agriculture,
Forestry and Fisheries; Environment; Justice; Education; and

47. Trademarks: The Cambodian National Assembly approved the Law
Concerning Marks, Trade Names and Acts of Unfair Competition to
comply with Cambodia’s WTO obligations under the Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS).
Signed in February 2002, the law outlines specific penalties for
trademark violations, including jail sentences and fines for
counterfeiting registered marks. It also contains detailed
procedures for registering trademarks, invalidation and removal,
licensing of marks, and infringement and remedies.

48. Despite lacking clear legal authority to conduct enforcement
activities, the Ministry of Commerce has taken effective action
against trademark infringement in several cases since 1998. The
Ministry has ordered local firms to stop using well-known U.S.
marks, including Pizza Hut, McDonalds, Nike, Scotties, Marlboro,
Seven Eleven, and Pringles. In 2008, the Ministry of Commerce
resolved 12 cases of trademark infringements.

49. Since 1991, the Ministry of Commerce has maintained an
effective trademark registration system, registering more than
30,000 trademarks (nearly 6,000 for U.S. companies) under the terms
of a 1991 sub-decree, and has proven cooperative in preventing
unauthorized individuals from registering U.S. trademarks in

50. Copyrights: Copyrights are governed by the Law on Copyrights
and Related Rights, which was enacted in January 2003.
Responsibility for copyrights is split between the Ministry of
Culture and Fine Arts, which handles phonograms, CDs, DVDs, and
other recordings, and the Ministry of Information, which deals with
printed materials. Pirated CDs, videos, textbooks, and other
copyrighted materials are widely available in Cambodian markets and
used throughout the country. Before the adoption of the law, there
were no provisions for enforcement of copyrights.

51. To protect and manage their economic rights, authors and
related rights holders are allowed by law to establish a collective
management organization (CMO). The creation of the CMO requires
authorization from either the Ministry of Culture and Fine Arts or
the Ministry of Information, depending on the nature of their work.
The Ministry of Culture and Fine Arts hopes to draft a sub-decree on
collective management in 2009. In mid-2007, the Ministry of Culture
and Fine Arts created a Copyright Department which is gradually
building capacity.

52. Patents and industrial designs: Cambodia has a very small
industrial base, and infringement on patents and industrial designs
is not yet commercially significant. With assistance from WIPO, the
Ministry of Industry, Mines, and Energy (MIME) prepared a
comprehensive law on the protection of patents and industrial
designs which went into force in January 2003. The law provides for

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the filing, registration, and protection of patents, utility model
certificates and industrial designs. The MIME issued a declaration
in June 2006 on granting patents and registering industrial

53. Encrypted satellite signals, semiconductor layout designs, and
trade secrets: The Ministry of Commerce is preparing a draft law
for trade secrets while the Ministry of Industry, Mines, and Energy
is drafting a law on integrated circuit protection. Cambodia has
not yet made significant progress toward enacting required
legislation on encrypted satellite signals, although it obtained a
model law on encrypted satellite signals and semiconductor layout
designs from WIPO in March 1999. Cambodia has committed to the WTO
to promulgate a law by 2009 but is unlikely to meet this goal.

54. IPR enforcement: With the exception of the trademark
enforcement, the Cambodian government has taken few significant
actions to enforce its IPR obligations. However, in January 2008,
at the annual conference of the Ministry of Culture and Fine Arts,
the government suggested it would increase prosecutions for
copyright violations on domestically produced products before
expanding prosecutions for foreign products. Cambodian copyright
law allows IPR owners to file a complaint with the authorities to
take action. Law enforcement action taken at the request of owners
is directed against the piracy of domestically produced music or
video products, but not against piracy of foreign optical media.
The owners requesting crackdowns must pay support costs to the
authorities for conducting the operation. Crackdowns on such IPR
violations are not conducted on a consistent basis.

55. Infringement of IPR is pervasive, ranging from software,
compact discs, and music, to photocopied books and the sale of
counterfeit products, including cigarettes, alcohol, and
pharmaceuticals. The Business Software Alliance recently estimated
a 95 percent software piracy rate in Cambodia which cost the
industry USD 47 million in 2007. Although Cambodia is not a major
center for the production and export of pirated CDs, videos, and
other copyrighted materials, local businesses report Cambodia is
becoming an increasingly popular source of pirated material due to
weak enforcement. The Ministry of Commerce has plans to put in
place measures to stop IPR-violated products at borders, as
post-inspection mechanisms are unlikely to be effective. During the
TIFA discussions in November 2007, Cambodia requested technical
assistance for a draft Sub-decree on Border Measures detailing
procedures at the borders allowing IPR owners to file an application
with customs to suspend clearance of suspected counterfeit goods.

Transparency of the Regulatory System

56. There is no pattern of discrimination against foreign investors
in Cambodia through a regulatory regime. Numerous issues of
transparency in the regulatory regime arise, however, from the lack
of legislation and the weakness of key institutions. Investors
often complain that the decisions of Cambodian regulatory agencies
are inconsistent, irrational, or corrupt.

57. The Cambodian government is still in the process of drafting
laws and regulations that establish the framework for the market
economy. In addition to existing laws and regulations, in 2008, the
government adopted the Law on Civil Aviation and the Law on Plant
Breeder Rights. A commercial contract law and other important
business-related laws such as commercial court, e-commerce,
telecommunications, and personal property leasing laws are in draft
or still pending promulgation.

58. Cambodia currently has no anti-monopoly or anti-trust statutes.
On a practical level, Cambodia has indicated a desire to discourage
monopolistic trading arrangements in most sectors.

59. Cambodia is currently working on the establishment of standards
and other technical measures based on international practice,
guidelines, and recommendations. Under the Law on Standards in
Cambodia, passed in 2007, the Institute of Standards in Cambodia
(ISC) was created within the Ministry of Industry, Mines, and Energy
(MIME) as a central authority to develop and certify national
standards for products, commodities, materials, services, and
practices and operations. When fully functional, the ISC will serve
as the secretariat of the National Standards Council which will
consist of representatives from various government ministries,
state-controlled academic/research institutions, the private sector,
and a consumer representative created to advise as well as approve

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60. The responsibility for establishing industrial standards and
certifications currently resides with the Department of Industrial
Standards of Cambodia of MIME which will become part of the
Institute of Standards of Cambodia in the future. The ISC has been
assigned as the focal point for technical barriers to trade (TBT)
and as the agency responsible for notifications and publications
required by the WTO TBT Agreement. The Ministry of Health is
charged with prescribing standards, quality control, distribution
and labeling requirement for medicines, but this responsibility will
be brought under the ISC in the future.

61. Quality control of foodstuffs, plant and animal products is
currently under the Department of Inspection and Fraud Repression
(CamControl) of the Ministry of Commerce. Cambodia is a member of
the Codex Alimentarius Commission. Currently CamControl is the
national contact point for Codex Alimentarius. Its primary
responsibility is the enforcement of quality and safety of products
and services relating to sanitary and phytosanitary (SPS) measures.

62. The Cambodian Constitution and the 1997 Labor Code provide for
compliance with internationally recognized core labor standards.
The law authorizes the Ministry of Labor and Vocational Training to
set health, safety and other conditions for the workplace. (The
"Labor" Section of this report discusses the labor situation in more

63. The National Bank of Cambodia supervises Cambodia’s banks and
financial institutions while the Ministry of Economy and Finance
regulates the insurance industry. The insurance market in Cambodia
is relatively new, but has recently begun to gain credibility and
expand its scope. Currently, there are a few major insurance
companies operating here such as Asia Insurance, the state-owned
insurance company Caminco, Forte Insurance, and Infinity Insurance.

64. To help Cambodian businesses stay competitive in the world
market, the government introduced specific measures to facilitate
business, in particular exports, by attempting to reduce informal
costs and streamline bureaucratic hurdles. Measures included: (1)
introduction of a joint inspection by CamControl and the Customs and
Excise Department and issuance of a common inspection report valid
for both agencies and the "Federal Office" in order to reduce the
amount of time spent applying for goods inspection; (2) based on
this common report, MIME and the Ministry of Commerce will issue the
Certificate of Processing (CP) and the Certificate of Origin (CO),
respectively; (3) reduction of the costs of registration from USD
615 to USD 177 and of the time limit for Cambodian government
issuance of registration from 30 days to ten and a half working
days; and (4) reduction of time required to acquire documents
related to the CO and exports and for goods inspection.

65. Cambodia has renewed its commitment to creating a favorable
environment for investment and trade. During the Trade and
Investment Framework Agreement (TIFA) discussions in November 2007,
the government further committed to reducing unofficial fees and
costs related to imports and exports.

Efficient Capital Markets and Portfolio Investment


66. Cambodia is moving to address the need for capital markets. In
November 2006, the National Assembly passed legislation to permit
the government to issue bonds and use the capital to make up budget
deficits. The Budget Law for 2007 permitted the government to issue
bonds worth USD 250,000. However no 2007 bonds were sold to
investors and Prime Minister Hun Sen mentioned in 2008 that the
government does not plan to issue bonds in the near future. In
2007, the government also passed the Law on the Issuance and Trading
of Non-government Securities, and, in partnership with the Korean
Stock Exchange, plans to establish a stock market by the end of

67. The Cambodian government does not use regulation of capital
markets to restrict foreign investment. Domestic financing is
difficult to obtain at competitive interest rates. A new law
addressing secured transactions, which includes a system for
registering such secured interests, was promulgated in May 2007.
Most loans are secured by real property mortgages or deposits of
cash or other liquid assets, as provided for in the existing
contract law and land law.

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68. The total assets of Cambodia’s banking system as of July 2008
were approximately USD 4 billion, an increase of nearly 50 percent
from the end of 2005. Loans account for about 56 percent of the
banking system’s assets. Nonperforming loans have fallen to
historic lows, between 2 - 4 percent, likely due to dramatic
increases in property values through mid-2008, but banking experts
predict an increase in future nonperforming loans as property prices
decline. As of July 2008, credit granted by the commercial banks
amounted to USD 2.2 billion. Loans made to services and the
wholesale and retail sectors accounted for over 50 percent of total

69. The banking sector has shown significant improvement, but
requires continued progress to gain international confidence. Under
the amended Law on Banking and Financial Institutions, all of
Cambodia’s commercial banks had to reapply for licenses from the NBC
and meet new, stricter capital and prudential requirements by the
end of 2001. As a result, there was a significant shakeout and
consolidation within the banking sector with the closure and
liquidation of 12 banks. Since the shakeout, Cambodian banks have
gradually increased in number with 25 commercial banks in operation
as of January 2009. As a supplement to commercial banking, six
specialized banks and seventeen microfinance institutions also offer
financial services to the public. In September 2008, the National
Bank of Cambodia moved to slow the rapid growth in the number of
commercial banks, which increased by more than 20 percent in the
first nine months of 2008, giving commercial banks without an
investment grade shareholder until the end of 2010 to triple minimum
capital from USD 12.5 million to USD 37.5 million. In January 2008,
Cambodia’s banks were given their first-ever risk assessment from
Standard & Poor’s. Their placement was alongside that of banks in
Venezuela, Bolivia, Ukraine, and Jamaica.

Political Violence

70. Cambodia is relatively peaceful compared to its pre-UNTAC
history. Election-related violence has decreased in each national
election held at five-year intervals since 1993. Cambodia’s 2007
commune council elections followed by the July 2008 National
Assembly election had little of the pre-election violence or
intimidation that preceded the 2002 and 2003 elections. The 2007
and 2008 polls resulted in clear victories for the Cambodian
People’s Party, with the Sam Rainsy Party emerging as the main
opposition party.

71. Cambodian political activities have turned violent in the past,
and the possibility for politically motivated violence remains. In
November 2000, an anti-government group based in the U.S. led an
attack against government buildings in Phnom Penh. During the
anti-Thai riots in 2003, the Royal Embassy of Thailand and
Thai-owned commercial establishments were attacked. In November
2006, police arrested six people for allegedly plotting to conduct
bomb attacks in Phnom Penh during the Water Festival.

72. On July 29, 2007, three improvised explosive devices (IEDs)
were planted at the Vietnam-Cambodia Friendship Monument in Phnom
Penh. One of the IEDs partially exploded, but the others failed to
detonate and were recovered by Cambodian authorities. No one was
injured. On January 2, 2009, two undetonated IEDs were found near
the Ministry of National Defense and state-owned TV3. While there
is no indication these incidents were directed at U.S. or other
Western interests, the possibility remains that further attacks
could be carried out.

73. Following the July 2008 UNESCO World Heritage Site listing of
the Preah Vihear Temple, thousands of Thai and Cambodian soldiers
amassed in various areas along the Thai-Cambodian border,
particularly near the disputed Preah Vihear temple area. Soldiers
clashed October 15, 2008 near the temple resulting in deaths on both
sides, but the outbreak of violence was isolated and lasted only a
few hours.


74. Despite increasing investor interest, Cambodia continues to
rank poorly on global surveys of competitiveness and corruption.
The World Economic Forum’s 2008 competitiveness survey ranked
Cambodia 109 out of 134 countries surveyed, slightly better than its
2007 rating of 110 out of 131. The World Bank also ranked Cambodia
in the lower half of the list, 134 of 181, on business climate. The

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2007 Transparency International Global Corruption Barometer ranked
Cambodia second-worst in corruption with 72 percent of those
surveyed reporting that they paid a bribe to receive a service in
the previous 12 months.

75. Business people, both local and foreign, have identified
corruption, particularly within the judiciary, as the single biggest
deterrent to investment in Cambodia. Corruption was cited by a
plurality of respondents to the World Economic Forum survey as the
most problematic factor for doing business in Cambodia. A 2007
USAID-funded survey of the Phnom Penh Chamber of Commerce also found
that corruption is considered to be the main obstacle for doing

76. Public sector salaries range from USD 25-60 per month for
working level officials, and around USD 2000 per month for
high-ranking officials. Although there has been a recent salary
increase of 15 percent for some officials, these wages are far below
the level required to maintain a suitable quality of life in
Cambodia, and as a result, public employees are susceptible to
corruption and conflicts of interest. Local and foreign businesses
report that they must often pay extra facilitation fees to expedite
any business transaction. Additionally, for those seeking to enter
the Cambodian market, the process for awarding government contracts
is not transparent and is subject to major irregularities.

77. Current Cambodian laws and regulations and their application
are insufficient to address the problem of corruption. Laws dating
from the UNTAC period (1991-93) against embezzlement, extortion, and
bribing public officials exist, but are enforced rarely, often for
political reasons.

78. Cambodia is not a signatory to the OECD Anti-Bribery
Convention, but has endorsed the ADB/OECD Anti-Corruption Action
Plan for Asia and the Pacific. In 2007, the government signed a
regional anti-corruption pact with eight other ASEAN countries, and
in September of the same year, also signed the UN Convention Against
Corruption. Cambodia is considering joining the Extractive
Industries Transparency Initiative governing the oil sector.

79. After a draft national anti-corruption law was sent to the
National Assembly but not voted on in 2003, the Cambodian government
undertook to revise the draft with cooperation from local and
international NGOs, and international donors. The draft, which is
still pending, falls short of international standards due to limited
independence of the proposed anti-corruption body and weak
declaration of assets provisions.

80. Cambodia is under increasing pressure from donors to address
the issue of good governance in general, and corruption in
particular. In a draft action plan on good governance presented to
donors in May 2000, Cambodia promised to pass anti-corruption
legislation by late 2001. After missing the first deadline, the
government again promised to pass anti-corruption legislation by
July 2003. In the December 2004 Consultative Group (CG) meeting of
development assistance agencies, donors established a benchmark to
have a new anti-corruption law submitted to the National Assembly
before the next CG meeting, which was held June, 2006. However,
this deadline was not met and donors have become increasingly
frustrated with the government’s failure to act. The passage of new
anti-corruption legislation is reportedly a high priority for the
fourth mandate government.

81. The Ministry of National Assembly-Senate Relations and
Inspection (MONASRI) has an anti-corruption mandate, but is largely
inactive. In 2007, however, MONASRI, with technical assistance from
USAID, created a draft Access to Information Policy. The draft has
yet to be forwarded to the Council of Ministers. The government
also created an anti-corruption commission within the cabinet in
late 1999, which has undertaken a few investigations, one of which
resulted in the dismissal of a mid-level official in late 2001.
Also in 2001, the government established a National Audit Authority,
which has been ineffective because of its secrecy and lack of

82. Ignoring the existing anti-corruption commission, the
government established the Anti-Corruption Unit (ACU) in August
2006, a temporary body designed to address corruption until the
anti-corruption legislation is passed. The mission of the ACU is to
focus on preventing corruption, strengthening law enforcement, and
obtaining public support for combating corruption. The first
investigation of ACU resulted in the arrest of five illegal car

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importers and 39 officials; 10 mid-level officials have been removed
from their positions. Other investigations are underway. However
the ACU is considered to be ineffective because of its lack of
independence and capacity.

83. In its most comprehensive reform strategy, the Rectangular
Strategy Phase II, adopted as the government platform in 2008 after
phase I in 2004, the Cambodian government once again renewed its
commitment to fight corruption and make good governance the
centerpiece of reform. The strategy acknowledges the importance of
taking action against corruption, but the challenge remains a
daunting and long-term one that will require political will at the
highest levels of the government.

Bilateral Investment Agreements

84. Cambodia has signed bilateral investment agreements with China,
Croatia, Cuba, the Czech Republic, France, Germany, Indonesia,
Kuwait, Japan, Laos, Malaysia, the Netherlands, North Korea, the
Organization of the Petroleum Exporting Countries (OPEC), Pakistan,
the Philippines, Singapore, South Korea, Switzerland, Thailand, and
Vietnam. Future agreements with Algeria, Burma, Egypt, Russia, the
United Kingdom, and Ukraine are planned. The agreements provide
recprocal national treatment to investors, excluding benefits
deriving from membership in future customs unions or free trade
areas and agreements relating to taxation. The agreements preclude
expropriations except those that are undertaken for a lawful or
public purpose, are non-discriminatory, and are accompanied by
prompt, adequate and effective compensation at the fair market value
of the property prior to expropriation. The agreements also
guarantee repatriation of investments and provide for settlement of
investment disputes via arbitration.

85. In addition, in July 2006, Cambodia signed a Trade and
Investment Framework Agreement (TIFA) with the United States, which
will promote greater trade and investment in both countries and
provide a forum to address bilateral trade and investment issues.
Two very successful meetings were held under the TIFA in 2007 in
which the U.S. and Cambodian governments discussed WTO accession
requirements, trade facilitation and economic development
initiatives, and progress on intellectual property rights. In 2008,
several bilateral working level meetings were held to advance the
TIFA agenda.

OPIC and Other Investment Insurance Programs

86. Cambodia is eligible for the Quick Cover Program under which
the Overseas Private Investment Corporation (OPIC) offers financing
and political risk insurance coverage for projects on an expedited
basis. With most investment contracts written in U.S. dollars,
there is little exchange risk. Even for riel-denominated
transactions, there is only one exchange rate, which is fairly

87. Cambodia is a member of the Multilateral Investment Guarantee
Agency (MIGA) of the World Bank, which offers political-risk
insurance to foreign investors.


88. The country has an economically active population (defined as
being ten years of age and older) of some 7.8 million people out of
a population of 13.4 million. According to the EIC, the labor
participation rate was 70 percent in 2008. While government
statistics are somewhat higher, they do not fully capture the
problems of unemployment and underemployment in Cambodia.

89. The economy is not able to generate enough jobs in the formal
sector to handle the large number of entrants to the job market.
This dilemma is likely to become more pronounced over the next
decade. Cambodia suffers from a large demographic imbalance.
According to the 2004 Intercensal Population Survey (CIPS), persons
20 years of age or younger account for 53 percent of the total
population. As a result, over the next decade at least 275,000 new
job seekers will enter the labor market each year.

90. Approximately 65 - 70 percent of the labor force is engaged in
subsistence agriculture. At the end of 2008, about 337,000 people,
the majority of whom are women, were employed in the garment sector,

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with 300,000 Cambodians employed in the tourism sector, and a
further 50,000 people in construction.

91. The 2008-2009 Global Competitiveness Report of the World
Economic Forum identified an inadequately educated workforce as one
of the most serious problems in doing business in Cambodia. Given
the severe disruption to the Cambodian education system and loss of
skilled Cambodians during the 1975-79 Khmer Rouge period, workers
with higher education or specialized skills are few and in high
demand. A Cambodia Socio-Economic Survey conducted in 2004 found
that about 12 percent of the labor force has completed at least an
elementary education. Only 1.2 percent of the labor force completed
post-secondary education.

92. Overall literacy, for those aged fifteen and over, is 74
percent with male literacy rates considerably higher than those for
females in both urban and rural areas. Many adults and children
enroll in supplementary educational programs, including English and
computer training. Employers report that Cambodian workers are
eager to learn and, when trained, are excellent, hardworking

93. Cambodia’s 1997 labor code protects the right of association
and the rights to organize and bargain collectively. The code
prohibits forced or compulsory labor, establishes 15 as the minimum
allowable age for paid work, and 18 as the minimum age for anyone
engaged in work that is hazardous, unhealthy or unsafe. The statute
also guarantees an eight-hour workday and 48-hour work week, and
provides for time-and-a-half pay for overtime or work on the
employee’s day off. The law gives the Ministry of Labor and
Vocational Training (MOLVT) a legal mandate to set minimum wages
after consultation with the tripartite Labor Advisory Committee. In
January 2007, the minimum wage for garment and footwear workers was
officially set at USD 50 per month. In April 2008, a temporary USD
6 per month cost of living allowance was instituted to offset high
levels of inflation. There is no minimum wage for any other
industry. To increase competitiveness of garment manufacturers, the
labor code was amended in 2007 to establish a night shift wage of
130 percent of day time wages.

94. Acleda Bank, a local commercial bank, is currently managing
Cambodia’s first National Social Security Fund (NSSF), which
protects workers against occupational risks and workplace accidents.
The fund was established by sub-decree in 2007 and requires
employers to contribute 0.8 percent of each employee’s salary to the
NSSF. As of October, 2007, approximately 250,000 workers, most from
the garment sector, contribute to the fund through their employer.
A second phase of the fund, to be implemented in 2010, will focus on
health care for employees, followed by pensions in 2012.

95. Enforcement of many aspects of the labor code is poor, albeit
improving. Labor disputes can be problematic and may involve
workers simply demanding conditions to which they are legally
entitled. In labor disputes in which workers complain of poor or
unhealthy conditions, MOLVT and the Ministry of Commerce have
ordered the employer to take corrective measures. The U.S.
Government, the ILO, and others are working closely with Cambodia to
improve enforcement of the labor code and workers’ rights in
general. The U.S.-Cambodia Bilateral Textile Agreement linked
Cambodian compliance with internationally recognized core labor
standards with the level of textile quota the U.S. granted to
Cambodia. While the quota regime ended on January 1, 2005, a
"Better Factories" program attempts to build on the labor standards

96. For the past few years, Cambodia has enjoyed high economic
growth and low inflation of approximately 4-6 percent, keeping
inflation-driven wage increases in check. However, the early part
of 2008 saw inflation skyrocket, driven in part by high oil and food
prices. After peaking in May, inflation has slowly been declining
to about 18 percent in November, year-on-year. Experts suggest the
increase in the cost of living insufficiently compensated by the
recent USD 6 cost of living allowance has led to a recent shortage
of workers willing to work in the garment industry.

Foreign Trade Zones

97. To facilitate the country’s development, the Cambodian
government has shown great interest in increasing exports via
geographically defined special economic zones (SEZs), with the goal
of attracting much-needed foreign direct investment.

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98. Cambodia has yet to pass the Law on Industrial Zones which will
define SEZs and establish the rules under which they will operate.
The law is currently being drafted by the Council for the
Development of Cambodia and may be submitted for approval of the
Council of Ministers in 2009.

99. In late December 2005, the Council of Ministers passed a
sub-decree on Establishment and Management of Special Economic Zones
to speed up the creation of the zones. The sub-decree details
procedures, conditions and incentives for the investors in the

100. Since issuing the sub-decree, the Cambodia Special Economic
Zones Board (CSEZB) has approved 19 SEZs, located near the borders
of Thailand and Vietnam, Phnom Penh, Kampot, and at Sihanoukville.

Foreign Investment Statistics

101. Foreign Direct Investment (FDI) proposals approved by the
Council for the Development of Cambodia (CDC) have dramatically
increased in recent years, with approved FDI reaching USD 10.9
billion in 2008, compared with USD 201 million in 2004. FDI
registered capital however, has been modest since 1995, with an
average inflow of USD 304 million in the period 1995-2008. The FDI
registered capital figures probably understate actual investment,
since they report only registered capital and not fixed assets. CDC
statistics for fixed assets, however, are based on projections, and
the CDC has no effective monitoring mechanism to determine the
veracity of the numbers. The FDI registered capital flow into
Cambodia is uneven and gradually declined from USD 135 million in
1999 to USD 30 million in 2003. FDI registered capital increased to
USD 260 million in 2008.

102. Total FDI registered capital flows into Cambodia for the years
1995-2008 are presented in the table below, in USD million.
(Source: CDC) (Note: statistics from the National Bank of Cambodia
differ significantly from CDC’s figures.)

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
351 294 320 135 74 81 50 30 45 383 209 473 260

103. Figures from the CDC for registered capital of approved
projects, including domestic investment, and broken down by country
of origin and economic sector, are provided below. The FDI
registered capital figures below may overstate investment because
they include projects that have not yet been, or may never be, fully
implemented and retention of dormant or defunct projects from
earlier years makes the investment figures appear higher.

104. Total cumulative registered investment projects approved, by
country of origin, August 1994 to December 2008 (source: CDC)

Country USD million Pct.

Malaysia 1,736 32.79
Cambodia 1,509 28.50
China 569 10.27
Taiwan 400 7.56
Thailand 206 3.89
Singapore 194 3.67
South Korea 165 3.12
U.K. 130 2.46
USA 70 1.32
Vietnam 61 1.15
Indonesia 54 1.02
Australia 54 1.02
France 40 0.76
Japan 23 0.43
Other 82 1.55
Total 5293

105. Total cumulative registered investment capital by sector, from
January 1998 to December 2008 (source CDC)

Sector USD million No. of Projects
Industry 1,482.0 699
- Food Processing 91.5 12

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- Garments 449.4 401
- Petroleum 203.0 5
- Wood Processing 98.3 15
- Footwear 27.8 21
Agriculture 177.1 74
Services 338.8 78
- Construction 63.6 14
- Telecommunications 92.5 15
Tourism 434.4 88
Total 2432.4

106. New investment projects in USD million, by country of
origin,1998-2008(source: CDC)

Country 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Malaysia 22.6 17 1.6 28 na 3.6 7.8 10.6 2.5 19.8 1.0
Cambodia 110 98 28 47 21 44 15 78.5 116.8 264.3 99.8
USA 2.3 4.4 3.7 5.2 na na 2.1 2.2 4.3 6.5 12.3
Taiwan 79 29 16 35.6 5 1 4.6 4.1 16.4 14 9.5
Singapore 12 2.3 3.1 na 10 3.3 1.6 5.3 3.8 1 12
China 75 36 3.9 4.2 8 14 24 38 28.3 40.4 37.9
South Korea 4.0 na 10 2 7.6 1 4.1 16 4.5 22.0 19.5
Hong Kong 48 22 4 0.7 1 1 na 0.3 1.5 0.6 na
France 0.6 0.6 3 na na 1.7 0.6 0.4 na 0.3 2.3
Thailand 53 16 17 3.1 na 3.1 2.0 15 10.0 13.8 30.6
U.K. 0.4 1.5 6.5 1.5 0.4 0.5 1.5 1 1 1.5 1
Canada 2.1 0.2 1 na 2.2 na 1.7 0.6 1.5 na 4.8
Indonesia 10 0.4 3 na na na na na na na na
Australia 1.4 0.02 0.8 na na 0.6 na 7 na 3.5 1
Japan 2 2.1 0.2 na 1.2 na 0.7 na 1 7.5 4.6
Other 8.3 2.8 1.3 1.7 13.6 na na na 8.1 78.5 4.1

Total 430 233 103 129 69 74.3 66 379 209.7 473.7 259.9

107. New investment projects in USD million, by sector, 1998-2008
(source: CDC)

Sector 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Industry 298 101 48 61 22.5 41 53.5 325 173.4 269.9 90
- Food 8.0 2.4 27 1.5 na 1.6 1 na 22 24 4
- Garments 91.6 49.5 28 17 12.6 42 19 54 41.9 45.1 49
- Petroleum 1 1 na na na na 1 200 na na na
- Wood 92 na na 1 1 1.3 1 na na 2.0 na
- Mining 5 na na na na 2 na 30 1 149 4

Agriculture 44 31.3 8.5 1 6.2 2.0 2.0 4.0 2.0 50.1 26

Services 22.1 55 10 5.2 18 5.5 5 32 16.3 127.2 43

- Construct 1.2 16.4 na na na na 3.0 31 6.0 5 1
- Telecom 13.4 22 na na 2.9 10 na na na 42.2 2
- Infrastructure 2 na na 1.5 4.1 na na na na 65 na

Tourism 67 45.5 36.5 61 22 26 5.5 18 18 33.5 101

Total 430 233 103 129 69 74 66 379 210 473 261

108. The CDC has registered approximately USD 70 million in U.S.
investment since August 1994. Caltex has a chain of service
stations and a petroleum holding facility in Sihanoukville; Crown
Beverage Cans Cambodia Limited, a part of Crown Holdings Inc.,
produces aluminum cans; and Chevron is actively exploring offshore
petroleum deposits. There are also U.S. investors in a number of
Cambodia’s garment factories.

109. In 2008, several Cambodia-focused private equity funds emerged
seeking to raise between USD 100 and USD 500 million each for
investments in infrastructure, agriculture, tourism, and real estate
development, among other sectors. However it appears the global
economic slowdown is limiting fund-raising abilities, and widespread
investments by these funds have not yet materialized.

110. Major non-U.S. foreign investors include Asia Pacific
Breweries (Singapore), Asia Insurance (Hong Kong), ANZ Bank
(Australia), BHP Billiton (Australia), Oxiana (Australia), Infinity
Financial Solutions (Malaysia), Total (France), Cambodia Airport
Management Services (CAMS) (France), Samart Mobil Phone (Malaysia),
Shinawatra Mobile Phone (Singapore), Thakral Cambodia Industries

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(Singapore), Petronas Cambodia (Malaysia), Charoeun Pokphand
(Thailand), Siam Cement (Thailand), and Cambrew (Malaysia).

111. Since 2007, several well-known U.S. companies opened or
upgraded their presence in Cambodia. General Electric opened a
representative office in July 2007. In 2008, Cargill and Dupont
established representative offices. Otis Elevators, a division of
United Technologies, also upgraded to a branch office, and Mircosoft
initiated a presence through its Market Development Program.

112. Some major local companies and their sectors are: Sokimex
(petroleum, tourism, garment), Royal Group of Companies (mobile
phone, telecommunication, banking, insurance), AZ Distribution
(construction, telecommunication), Mong Rethy Groups (construction,
agro-industry, rubber and oil palm plantation), KT Pacific Group
(airport project, construction, tobacco, food and electronics
distribution), Hero King (cigarettes, casinos and power), Anco
Brothers (cigarettes, casinos and power), Canadia Bank (banking and
real estate), Acleda Bank (microfinance), and Men Sarun Import and
Export (agro-industry, rice and rubber export).

113. In January 2008, Acleda Bank announced it obtained permission
to operate in Laos, and the bank has plans for further expansion
into Vietnam and China. Statistics on Cambodian investment overseas
are not available, but such investments are likely minimal.