Facts
Location: The Kingdom of Cambodia is in Southeastern Asia, bordering the Gulf of Thailand, between Thailand, Vietnam, and Laos
Full name: Kingdom of Cambodia
Population: 14.7 million (UN, 2008)
Capital and largest city: Phnom Penh
Area: 181,035 sq km (69,898 sq miles)
Major language: Khmer
Major religion: Buddhism
Life expectancy: 57 years (men), 62 years (women) (UN)
Monetary unit: 1 riel = 100 sen
Main exports: Clothing, timber, rubber
GNI per capita: US $540 (World Bank, 2007)
Internet domain: .kh
International dialing code: +855
Introduction
Given Cambodia’s rapid economy growth and the increasing competitiveness of free market economy, investment facilitation (TF) is imperative if Cambodia’s emerging economy is to be sustained. Strong expectation is attached to the benefits that increased regional invest, invest facilitation and essential infrastructure both ‘hard’ and ‘soft’, can bring to economic and social development, poverty reduction in the country and to reducing the development gap in the region.
This country paper introduces the major invest facilitation programmers being implemented in the country and their implementation status but focuses mainly on the investment for stakeholder involvement in invest facilitation in the country.
WHY TO INVEST IN CAMBODIA?
• Competitive Investment Incentives
• Pro-Business Government
• One Stop Service - Fast-Track Investment Approval Process
• Low Labor Cost
• Access to ASEAN and World Markets
• Preferential Trading Status
• Sound Macro-economic Environment
• Strategic Location to Serve the Mekong 6
HISTORY
In 1994, the Law on Investment of the Kingdom of Cambodia was passed with the aim of streamlining the investment regime and providing generous and competitive concessions for direct private sector investment. This Law also created the Council for the Development of Cambodia (CDC), a one-stop service organization for investment in Cambodia. The CDC, being the highest decision-making level of the government on private (CIB) and public (CRDB) Investments, it is directly chaired by the prime minister. Its board is composed of all ministers of the Royal Government of Cambodia.
The Cambodian Investment Board (CIB), has been designated as the one-stop service of the government, its main task is to effectively promote and facilitate investment trough a speedy approval procedure and very competitive incentive packages. The final objective of this policy being to create employment, increase national productivity and competitiveness to achieve a sustainable socio-economic development.
Should You Invest?
Cambodia is fast becoming an established country in the international arena. High GDP growth rates indicate a booming economy that is developing at a phenomenal rate, and when coupled with the country's low inflation rate of 3% the overall economic outlook is extremely bright. With the projected continued expansion in the tourism sector and the subsequent effect this will have on the property market, plus with recent oil, gas and mineral discoveries, the country's economic future appears inimitable. That said, this is still a country simultaneously underscored by some very real elements of risk: Corruption is rife, the infrastructure is still unstable and many sectors require much development before they can be classed as dependable. Those willing to shoulder the risk then, could buy into one of the investment markets of the future and providing comprehensive legal advice is sought, and purchasers stick to developed areas of the country, this high risk market could also be one characterised by high returns.
• Rapid development with strong GDP growth figures
• Early stages of development so prices are still very low
• Prices and economy are set to develop rapidly, giving great returns.
• Country is still young and hasn't completely recovered from its past so corruption is still prevalent.
• The infrastructure of the country, and the economy as a whole are still weak and equate to high risk levels for potential investors.
• High risk but potentially high returns.
GOVERNMENT POLICY
Cambodia is one of the poorest countries in the region and international assistance remains a vital component in overcoming the challenges faced in Cambodia's development. Nevertheless, private sector investment is becoming increasingly important for the country as the private sector assumes its position as the main engine for economic growth in Cambodia. The Royal Government of Cambodia sees private sector investment as vital to the development of a fully democratic and prosperous Cambodia in the years ahead.
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 of submission. As such, the government is fully committed to the speeding-up of new investment-project approvals by making the CDC a truly effective and well-disposed one-stop service.
Areas of Investment
LIST OF SUGGESTED AREAS OF INVESTMENT
Crop Production
- Paddy farming greater than 1,000 ha.
- All types of cash crops greater than 500 ha.
- Vegetables greater than 50 ha.
Livestock Production
- Livestock more than 1,000 heads
- Dairy farming more than 100 heads
- Poultry & eggs for 10,000 heads
Fisheries
- Hatcheries more than 2 ha.
- Shrimp farming and other aqua-culture production greater than10 ha.
Manufacture and Processing of Food & Related Products
Investment Capital Greater Than 500,000 USD
- Beverages
- Fats & oils
- Sugar confectionery
- Meat products
- Dairy products
- Preserved fruits and vegetables
- Grain mill products
- Bakery products
- Animal feed products
Manufacture of Textile Mill Products
Investment Capital Greater Than 1,000,000 USD
- Weaving mill cotton, wool and man-made material
- Narrow fabric mills
- Floor covering mills
- Knitting mills
Manufacture of Apparel and Other Textiles
Investment Capital Greater Than 500,000 USD
- Manufacture of Furniture & Fixtures
Investment Capital Greater Than 500,000 USD
- Household furniture
- Office furniture
- Building partitions and fixtures
Manufacture of Paper & Allied Products
Investment Capital Greater Than 1,000,000 USD
- Tree plantations for paper and pulp mills
- Paper production
- Paperboard mills
- Paperboard containers
Manufacture of Chemicals & Allied Products
Investment A Capital Greater Than 500,000 USD
- All types of chemicals including agricultural chemicals
- Plastics and other synthetics
- Drugs
- Cleaning products
- Paint & allied products
Manufacture of Rubber & Miscellaneous Plastics
Investment Capital Greater Than 500,000 USD
Manufacture of Leather & Other Products
Investment Capital Greater Than 500,000 USD
Manufacture of Fabricated Metal Products
Investment Capital Greater Than 500,000 USD
Manufacture of Electrical and Electronic Equipment
Investment Capital Greater Than 500,000 USD
Manufacture of Transportation Equipment
- Automobiles and spare parts
- Aircraft and spare parts
- Constructions and
_means of water transports
- Equipments and means of rail transports
- Bicycles and motorcycles
Highway & Bridge Construction
Exploitation of minerals, ore, coal, oil and natural gas
Production of machineries and industrial equipment
Investment Capital Greater Than 1,000,000 USD
Production of consumption goods
Hotel construction
Three stars classification or higher
Medical complex of International standards, Educational facilities International standards, Vocational training centers
Physical infrastructure facilities to support the tourism and cultural sectors
Production and exploitation activities to protect the environment.
Recent Macro-economic Performance
The overall recent economic performance has been characterized by balanced contributions from agriculture, manufacturing, construction, tourism and services. Despite the global downturn, the Cambodia economy remains in good shape underpinned by a continue increase in investment in agriculture, broad base development of non-agriculture sectors, political stability, active private sector participation, reform efforts, increased official development aids and sustained foreign direct investment. According to the Circular on the Preparation of Budget Strategic Plan 2010 of the Royal Government of Cambodia, the economy still manages to grow around 2 percent and 3 percent in 2009 and 2010 respectively. These figures are tentative and based on conservative estimations.
ASEAN and East Asia:
Cambodia became a member of the Association of Southeast Asian Nations (ASEAN) in 1999. Since then, Cambodia has made remarkable but uneven progress in socio-economic development, and in both regional integration and effective participation in the international community. Over the decade from 1998 to 2007, Cambodia has been one of the fastest growing economies in Asia, with strong and effective macro-economic management and average annual economic growth of about 8 percent, with a peak of growth of 13.4 percent in 2005. The decade has also seen a steady achievement in poverty reduction with a nation-wide decline from 47% in 1994 to 30.1 percent in 2007, as reported in the World Bank’s Cambodia Country Economic Memorandum 2009. In recent times ASEAN has seen various trade and trade facilitation initiatives of which Cambodia has been an active member, with the
confidence that these regional integration efforts help Cambodia to be better integrated into the region with associated benefits from diversification of trading partners and markets. These initiatives include the ASEAN Free Trade Area, ASEAN-China FTA-Services and The Economic and Industrial Cooperation Committee of the ASEAN Economic Ministers and the Minister of Economy, Trade and Industry of Japan or AMEICC.
SWOT Analysis macro economics
.Strengths: policy of the government shabbily and, given opportunity for all investors easy both law and safety in society.
Weaknesses: attributes of the person or officials of government that hope profit from investor, stepping from corruption in society.
Opportunities: external conditions that are helpful to open country develop society to competitive with other country because Low Labor Cost, making our country can ability challenge.
Threats: capility of government not sufficient in challenge and field of study still limited.
Conclusion:
Invest Facilitation is a vital tool for the Royal Government of Cambodia to increase more foreign direct investment and to improve domestic public services for invest and toward cheaper and more efficient invest flow within the country and in the region. Despite bold accomplishments achieved recently to facilitation domestic, regional and international invest, Cambodia still faces many challenges and there are some important tasks ahead to fulfill in order that its economy and export sector in particular to grow strong and be sustained. For that to happen, there is a need for better coordination, consultation and involvement of key stakeholders, increased mobilization of resources and investment in local capacity building programmers, promotion of public awareness, improved roles of related development partners and donor agencies in the management and implementation of TF initiatives.
References:
ADB (2008a), “Background Paper for Session 5: GMS Transport and Trade Facilitation Initiative” http://www.adb.org/documents/events/2008/Senior-Officials-Meeting/ (retrieved on 15 February, 2009)
____ (2007), “Cambodia in the Greater Mekong Subregion” www.adb.org/gms (retrieved on 10 February 2009)
www.internet .Google.com
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