Cablegate: Investment Climate Statement for Cambodia

DE RUEHPF #0318/01 1010107
P 100107Z APR 08 ZDK





E.O. 12958: N/A

REF: 07 STATE 158802

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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 1998,
Cambodia joined the Association of Southeast Asian Nations (ASEAN)
and in September 2004, became a member of the World Trade
Organization (WTO). It has shown interest in participating in other
international trading arrangements, including the Asia-Pacific
Economic Cooperation forum (APEC).

2. As part of its WTO commitment 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 2007 including 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 required laws or is waiting
for their approval by the legislature. According to the Economic
Institute of Cambodia, an independent think tank, in 2007 the
government promulgated an additional six of the 21 remaining laws
required by WTO accession.

3. Since the re-establishment of a constitutional monarchy in 1993,
the economy has grown steadily, except for a period between mid-1997
and late 1998 when Cambodia suffered political instability and the
Asian financial crisis affected business ativity. The economy
began to rebound in late 1998 with the establishment of a new
coalition government.

4. Real GDP averaged 8.4 percent growth during the 1994-2006
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 American market for
garments, the economy grew at 13.4 percent in 2005 -- the highest
rate in a decade -- and in 2006 expanded by 10.4 percent. During
the same period, per capita GDP grew from $440 to $513. Success in
garment and tourism sectors and good weather for agriculture
generated the high growth. For 2007, the growth rate decreased
slightly to an estimated 9.6 percent, mainly due to the slower
growth of the garment and agriculture sectors, and per capita GDP
was $590.

5. Inflation increased sharply in 2007, as it did in many countries
throughout Asia. According to the National Institute of Statistics,
in January 2008 the year-on-year inflation rate reached 18.7
percent. The rising price of fuel, depreciation of the dollar, and
dramatic increase food prices continued to fuel inflation in the
first quarter of 2008. Apart from the composite consumer price
index, land prices continue to reach record levels, with the price
of residential property in Phnom Penh increasing by more than 100%
in 2007.

6. 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 $871 million during the first nine months of 2007, compared
with $201 million in all of 2004. The CDC does not have a
functional mechanism to monitor implementation of projects, so it is
not clear how many of these proposed projects will be fully
implemented. However 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.

7. 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 the government's latest public reform effort
called the "Rectangular Strategy for Growth, Employment, Equity, and

8. The government has initiated specific measures to promote
business, especially small and medium-sized businesses, by reducing

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costs and the time required for business registration and by
establishing a number of committees for trade facilitation and
business promotion.

A. Openness to Foreign Investment

9. 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% 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 Cambodian or other foreign
rivals, who engage in acts of corruption or tax evasion, or take
advantage of Cambodia's poorly enforced legal regulations.

10. In addition, there are a few sectors that are open to foreign
investors 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

11. 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 pesticide/insecticides, and other goods that
use chemical substances that affect public health and the
environment. Processing and production of electric power by using
waste imported from foreign countries are prohibited, as is forestry

12. 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.

13. 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.

B. Conversion and Transfer Policies

14. 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.

15. The U.S. dollar is widely used and circulated in the economy.
The 2007 exchange rate was stable, although slightly depreciated
compared to 2006. At the end of 2007, the exchange rate was $1 =
4,003 riel. The government is committed to maintaining exchange
rate stability.

C. Expropriation and Compensation

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16. 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."

17. 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 note entirely in keeping
with the constitution or laws. These actions are usually directed
at poor people unable to protect their rights. According to press
reports, authorities in Phnom Penh carried out 29 mass evictions
affecting more than 7,900 families between 2004 and 2007. If
granted at all, compensation in these cases has been less than the
market value of the property being taken.

18. 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.

19. 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 the
majority of claims have been resolved.

D. Dispute Settlement

20. 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.

21. 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 working on draft
legislation to create a Commercial Court by 2009 that will likely
include a pre-trial mediation component.

22. 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.

23. 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 School
for Judges and Prosecutors, which was created in 2002 and is the
only school of its kind. In an effort to clean up the court system,
the Prime Minister has announced anti-corruption measures, including
the dismissal, replacement, and transfer of judges and prosecutors.

24. 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

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and mediation services.

25. 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 in a quasi-judicial way without involvement of
the Cambodian courts. Parties will be able to select arbitrators
without direct government interference. The law also allows the
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. 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.

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

E. Performance Requirements and Incentives

27. 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.

28. 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%), salary (5 to 20%), withholding (4 to 15%),
value-added (10%) and excise taxes (rates vary).

29. The amendments to the Law on Investment eliminated the special
nine percent corporate tax rate for all new investments.
Investments approved prior to the amendment to the Law on Investment
were entitled to the special nine percent rate for a transitional
period of not more than five years. After this five-year period
expires in 2008, such investments will also be subject to the
standard 20 percent rate. The amendments brought to an end the
tax-free reinvestment of profits and the rights to tax-free
repatriation of earnings and other incomes by approved enterprises.
While some incentives have been eliminated, the law also provides a
simplified, more transparent, and faster mechanism for investment

30. 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.

31. 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 (n to be determined
according to the Financial Management Law 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% 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

--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 join ventures
with over 50% equity owned by Cambodians.

--No price controls on goods produced or services rendered by

--No discrimination between foreign and local investors.

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--100% exemption from export tax or duty, except for activities
specifically mentioned in the Law in 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.

32. 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.

33. Incentives are also not eligible for production of certain
products with an investment of less than $500,000 such as food and
beverages; textiles, garment 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

34. 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.

35. Cambodia has agreed to allow foreign lawyers to supply legal
services with regard to foreign law and international law. It also
agreed to allow 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.

36. 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.

37. 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.

38. 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 the concession contract.
Investors who wish to apply are required to pay an application fee
of seven million riel (approx. $1,750) representing the
administration fees for securing the approvals, authorizations,
licenses, or registrations from all relevant ministries and entities
including stamp duty.

F. 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

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land. A legal entity is considered to be Cambodian when at least
51% 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 concession, a long-term lease, or renewable
short-term lease. If investors intend to take a long-term lease
interest in land or ownership interest through a 51% Cambodian
company, it is essential that caution be exercised to ensure that
clear and unencumbered ownership of the land is verified.

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 foreigners or whether
foreigners can own buildings built through projects not approved by
the CDC.

G. 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 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
ownership. Although foreigners are constitutionally forbidden to
own land, the 2001 law allows them a long or short-term lease.
Foreigners may also legally transfer ownership of buildings and
improvements on the land that they lease. By law, foreign investors
are allowed to own buildings on the long-term land lease. Cambodia
has yet to establish the means by which such ownerships can be

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. 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.

47. 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, and
Pringles. In 2007, the Ministry of Commerce solved 32 cases of
trademark disputes.

48. Since 1991, the Ministry of Commerce has maintained an

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effective trademark registration system, registering more than
30,000 trademarks (over 5,500 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

49. 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, and other
recordings, and the Ministry of Information, which deals with
printed materials. Before the adoption of the law, there were no
provisions for enforcement of copyrights.

50. Although Cambodia is not a major center for the production and
export of pirated CDs, videos, and other copyrighted materials, they
are widely available in Cambodian markets. Pirated computer
programs, VCDs, and music CDs are widely used throughout the

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 2008.

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
the filing, registration, and protection of patents, utility model
certificates and industrial designs. The MIME has also issued a
sub-decree on granting patents and registering industrial designs.

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.

54. IPR enforcement: With the exception of the trademark
enforcement actions described above, the Cambodian government has
taken few significant actions to enforce its IPR obligations. One
of the few such actions was a police raid in October 2007 on a local
market where police seized 15 illegally copied books about the
Angkor era and the Khmer Rouge. 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
only 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. Infringements of IPR are pervasive, ranging from software,
compact discs, and music, to photocopied books and the sale of
counterfeit products, including cigarettes, alcohol, and
pharmaceuticals. Authors and local producers, particularly of
optical media, frequently complain of the pervasive piracy.

56. 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.

H. Transparency of the Regulatory System

57. There is no pattern of discrimination against foreign investors
in Cambodia through a regulatory regime. Numerous issues of

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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.

58. 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 law and regulations, in 2007, the
government adopted the Customs Law, Law on Water Resources
Management, Law on Land Traffic, Law on Standards, Law on
Insolvency, and Secured Transactions Law. 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.

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

60. Amendments to the tax system have brought substantial changes
to the taxation regime applicable to businesses operating in
Cambodia. The tax system currently includes a profit tax (20%),
excluding certain natural-resource development projects and
including all QIPs registered with the CDC; a withholding tax
(4-15%); a salary or personal income tax (5-20%); a value added tax
(10%); various property taxes; registration taxes; and specific
excise taxes on certain merchandise (rates vary). There is a
minimum turnover tax (1%). Some foreign inputs are exempt from this
levy, but have to pay a 1% advanced profits tax instead. There are
also import and export duties (rates vary). The U.S. and Cambodia
have not signed a Double Taxation Treaty.

61. 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

62. 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 Department
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.

63. 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 creates
standards for foodstuffs and 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.

64. 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. (Section
N of this report discusses the labor situation in more detail.)

65. 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.

66. To 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

PHNOM PENH 00000318 009 OF 015

joint inspection by CamControl and the Customs and Excise Department
and issuance of a common inspection report valid for both agencies
and "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 $615 to $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 CO and exports and for
goods inspection.

67. Cambodia has renewed its commitment to creating a favorable
environment for investment and trade. During the TIFA discussions
in November 2007, the government further committed to reducing
unofficial fees and costs of imports and exports.

I. Efficient Capital Markets and Portfolio Investment

68. 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 permits the government to issue
bonds worth $250,000. 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 2009.

69. 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.

70. Export/import financing is available from multinational banks
through a variety of credit instruments. The U.S. Overseas Private
Investment Corporation (OPIC), the International Finance Corporation
(IFC), and the Multilateral Investment Guarantee Agency (MIGA) offer
both investment guarantees and loans in Cambodia. The Export-Import
Bank of the United States does not operate in Cambodia.

71. The total assets of Cambodia's banking system as of August 2007
were approximately 11,351 billion riel (approx. $2.8 billion), an
increase of 66% from the same period of 2005. Loans account for
about 50% of the banking system's assets. It is impossible to
estimate the percentage of loans that are non-performing. As of
September 2007, credit granted by the commercial banks amounted to
5,200 billion riel ($1.3 billion). Loans made to services and the
wholesale and retail sectors accounted for some 50% of total loans.

72. 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 17 commercial banks in operation
as of December 2007. As a supplement to commercial banking, seven
specialized banks and dozens of microfinance institutions also offer
financial services to the public. 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.

J. Political Violence

73. 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. The most recent
commune council election held in April 2007 was generally peaceful.
The next national election is scheduled for July 27, 2008.

74. Political tensions have eased, and the current situation is
relatively stable. However, 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

PHNOM PENH 00000318 010 OF 015

attacked. More recently, in November 2006, police arrested six
people for allegedly plotting to conduct bomb attacks in Phnom Penh
during the Water Festival.

75. 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, primarily because the explosion occurred during the early
morning hours. Police subsequently arrested several individuals
suspected of constructing the devices and planning the bombings.
While there is no indication this attack was directed at U.S. or
other Western interests, the possibility remains that further
attacks could be carried out.

K. Corruption

76. Despite increasing investor interest, Cambodia continues to
rank poorly on global surveys of competitiveness and corruption.
The World Economic Forum's 2007 competitiveness survey ranked
Cambodia 110 out of 131 countries surveyed, similar to its 2006
rating of 103 out of 125. The World Bank also ranked Cambodia near
the bottom of the list, 143 of 175, on business climate. The 2007
Transparency International Global Corruption Barometer ranked
Cambodia second-worst in corruption with 72% of those surveyed
reporting that they paid a bribe to receive a service in the
previous 12 months.

77. 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 80% 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

78. Public sector salaries range from $20-60 per month for working
level officials, and less than $800 per month for high-ranking
officials. Although there has been a recent salary increase of 15%,
these wages are far below the level required to survive 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.

79. 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.

80. 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 September 2007, the government
also signed the UN Convention Against Corruption, and is considering
joining the Extractive Industries Transparency Initiative governing
the oil sector.

81. After a draft national anti-corruption law was sent to the
National Assembly but not voted on in 1999, the Cambodian government
undertook to revise the draft with cooperation from local and
international NGOs, and international donors. The draft, which is
still pending, applies only to acts of corruption within Cambodia,
and falls short of international standards due to limited
independence of the proposed anti-corruption commission and weak
declaration of assets provisions.

82. 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 March 2-3, 2006.
Nevertheless, this deadline was not met and donors have become
increasingly frustrated with the government's failure to act.

83. The Ministry of National Assembly-Senate Relations and

PHNOM PENH 00000318 011 OF 015

Inspectorate (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 lack of
independence and secrecy. In 2007, the National Audit Authority
conducted 39 audits of government institutions, projects, and
companies doing projects with the government.

84. Ignoring the existing commission, the government established
the Anti-Corruption Body (ACB) in August 2006, a temporary body
designed to address corruption until the anti-corruption legislation
is passed. The mission of the ACB is to focus on preventing
corruption, strengthening law enforcement, and obtaining public
support for combating corruption. The first investigation of ACB
resulted in the arrest of five illegal car importers and 39
officials; 10 mid-level officials have been removed from their
positions. Other investigations are underway. However the ACB is
considered to be ineffective because of its lack of independence and

85. In its most comprehensive reform strategy, the Rectangular
Strategy adopted as the government platform 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.

L. Bilateral Investment and Agreements

86. Cambodia has signed bilateral investment agreements with
Australia, Austria, Burma, China, Croatia, Cuba, the Czech Republic,
Egypt, Indonesia, Japan, France, Germany, 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,
Laos, Libya, Russia, the United Kingdom, and Ukraine are planned.
The agreements provide reciprocal 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, non-discriminatory, and accompanied
by prompt, adequate and effective compensation at the fair market
value of the property prior to expropriation. They also guarantee
repatriation of investments and provide for settlement of investment
disputes via arbitration.

87. 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.

M. OPIC and Other Investment Insurance Programs

88. Under the Quick Cover Program, the Overseas Private Investment
Corporation (OPIC) offers financing and political risk insurance
coverage for projects on an expedited basis. Cambodia is eligible
for this program. OPIC currently provides assistance to a local
bank for micro-financing projects, and may expand to 2-3 banks in
the future. 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

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

N. Labor

90. According to government statistics, the labor participation
rate was 75 percent in 2005. However, unemployment and
underemployment are major problems which are not fully captured in
government statistics. The country has an economically active
population (defined as being ten years of age and older) of some 7.8

PHNOM PENH 00000318 012 OF 015

million people out of a population of 14.1 million. The Economic
Institute of Cambodia estimated that the total labor force stood at
8.4 million in 2007.

91. 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 200,000 new
job seekers will enter the labor market each year.

92. Approximately 73 percent of the labor force are engaged in
subsistence agriculture. About 350,000 people are employed in the
garment sector while over 235,000 Cambodians work in the tourism

93. In the 2005-2006 Global Competitiveness Report of the World
Economic Forum, an inadequately educated workforce was identified 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.

94. Overall literacy, for those age 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 employees.

95. 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 $50 per month. In April 2008, a temporary $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.

96. Cambodia does not currently have legislation governing worker
health and safety, but there are various detailed ministerial
regulations regarding payments in the event of on-the-job accidents.
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.

97. 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. 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 established.

98. Cambodia has seen reasonably low inflation and high economic
growth rates during the past few years, keeping inflation-driven
wage increases in check. However, inflation increased rapidly
during the last quarter of 2007 and the first quarter of 2008,
leading to demands for higher wages.

O. Foreign Trade Zones

99. 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

PHNOM PENH 00000318 013 OF 015

of attracting much-needed foreign direct investment.

100. 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 in draft form and awaiting approval
from the National Assembly.

101. 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

102. Since issuing the sub-decree, the government has approved 11
SEZs, located near the borders of Thailand and Vietnam, Phnom Penh,
Kampot, and at Sihanoukville, and six others have obtained
conditional licenses from the Cambodia Special Economic Zones Board
(CSEZB) pending successful implementation of conditions of the

P. Foreign Investment Statistics

103. 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 $871 million
during the first nine months of 2007, compared with $201 million in
all of 2004. FDI registered capital however, has been modest since
1995, with an average inflow of $183 million in the period
1995-2007. 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 $135
million in 1999 to $30 million in 2003. In 2006, FDI increased to
$209 million.

104. Total FDI registered capital flows into Cambodia for the years
1995-2007 (October) are presented in the table below, in US$
million. (Source: CDC) (Note: statistics from the National Bank of
Cambodia and the Ministry of Commerce differ significantly from
CDC's figures and from each other.)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
1,556 351 294 320 135 74 81 50 30 45 383 209 323

105. Figures from the CDC for registered capital of approved
projects as of October 2007, 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

106. Total cumulative registered investment projects approved, by
country of origin, August 1994 to October 31, 2007. (source: CDC)
Country US$ millions pct.
Malaysia 1,730 34.11
Cambodia 1,340 26.42
China 522 10.29
Taiwan 386 7.61
Singapore 181 3.57
Thailand 162 3.19
U.K. 127 2.50
South Korea 141 2.78
Hong Kong 117 2.31
Canada 58 1.14
Indonesia 54 1.06
Australia 52 1.03
USA 53 1.05
France 37 0.73
Japan 14 0.28
Other 97 1.91
Total 5071

107. Total cumulative registered investment capital by sector, from
August 1994 to October 31, 2007 (source: CDC).

PHNOM PENH 00000318 014 OF 015

Sector US$ millions No. of Projects
Industry 2,363 1,001

- Food Processing 161 73
- Garments 579 68
- Petroleum 264 15
- Wood Processing 255 40
- Footwear 46 31

Agriculture 188 97

Services 486 115

- Construction 161 21
- Telecommunications 163 21

Tourism 1,881 99
Total 4,918 1312

108. New investment projects in US$ millions, by country of
1998-2007 (October) (source: CDC).

--------------------------- -------------------------
Country 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 (Oct.)
--------------------------- -------------------------Malaysia 22.6
17 1.6 28 na 3.6 7.8 10.6 2.5 15.3
Cambodia 110 98 28 47 21 44 15 78.5 116.8 192.8
USA 2.3 4.4 3.7 5.2 na na 2.1 2.2 4.3 1.5
Taiwan 79 29 16 35.6 5 1 4.6 4.1 16.4 10.0
Singapore 12 2.3 3.1 na 10 3.3 1.6 5.3 3.8 1
China 75 36 3.9 4.2 8 14 24 38 28.3 31.1
South Korea 4.0 na 10 2 7.6 1 4.1 16 4.5 17.29
Hong Kong 48 22 4 0.7 1 1 na 0.3 1.5 0.6
France 0.6 0.6 3 na na 1.7 0.6 0.4 na 0.3
Thailand 53 16 17 3.1 na 3.1 2.0 15 10.0 0.8
U.K. 0.4 1.5 6.5 1.5 0.4 0.5 1.5 1 1 1.5
Canada 2.1 0.2 1 na 2.2 na 1.7 0.6 1.5 na
Indonesia 10 0.4 3 na na na na na na na
Australia 1.4 0.02 0.8 na na 0.6 na 7 na 2.5
Japan 2 2.1 0.2 na 1.2 na 0.7 na 1 2.9
Other 8.3 2.8 1.3 1.7 13.6 na na na 8.1 45.5
----------------------------- --------------------
Total 430 233 103 129 69 74.3 66 379 209.7 323.1
----------------------------- --------------------

109. New investment projects in US$ millions, by sector, 1998-2007
--------------------------------------------- ------
Sector 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 (Oct.)
------------------------------ ---------------------
Industry 298 101 48 61 22.5 41 53.5 325 173.4 218.4

- Food 8.0 2.4 27 1.5 na 1.6 1 na 22 9.1
- Garments 91.6 49.5 28 17 12.6 42 19 54 41.9 32.5
- Petroleum 1 1 na na na na 1 200 na na
- Wood 92 na na 1 1 1.3 1 na na na

Agriculture 44 31.3 8.5 1 6.2 2.0 2.0 4.0 2.0 na

Services 22.1 55 10 5.2 18 5.5 5 32 16.3 82.2

- Construct 1.2 16.4 na na na na 3.0 31 6.0 na
- Telecom 13.4 22 na na 2.9 10 na na na 42.2

Tourism 67 45.5 36.5 61 22 26 5.5 18 18 22.5
------------------------------- -----------------
Total 430 233 103 129 69 74 66 379 210 323
------------------------------- -----------------

110. The CDC has registered approximately $55 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. In July 2007, General Electric opened a branch
office, and in January 2008 Cargill opened a representative office.

PHNOM PENH 00000318 015 OF 015

There are also U.S. investors in a number of Cambodia's garment

111. 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
(Singapore), Petronas Cambodia (Malaysia), Charoeun Pokphand
(Thailand), Siam Cement (Thailand), and Cambrew (Malaysia).

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.


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