INVESTMENT ENVIRONMENT In Cambodia Phnom Penh, 7 th November Presented by Sok Chenda Secretary General Council for the Development of Cambodia

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1 INVESTMENT ENVIRONMENT In Cambodia Phnom Penh, 7 th November 2007 Presented by Sok Chenda Secretary General Council for the Development of Cambodia

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3 16% 14% 12% 10% 8% 6% 4% 2% 0% Economic Performance Average growth for last 5 years is 9.8% est 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% GDP % Inflation 41% % % GDP per capita Source: SNEC & MEF

4 Approved Investments by Country 2,500 2, st Half ,406 1,986 1,666 In Million USD Total USD 12,798 million 1,500 1, China Hong Kong Taiwan EU Malaysia USA Korea Singapore Thailand Japan

5 Investments by Sector st Half 2007 Agriculture 8% Service 34% Industry 35% Tourism 23%

6 Council for the Development of Cambodia A One Stop Service Open Door Policy

7 Samdech Hun Sen Prime Minister of the RGC Chairman Trouble Shooting Committee H.E Mr. Cham Prasidh, Senior Minister, Minister of Commerce Vice Chairman H.E Mr. Keat Chhon, Senior Minister Minister of Economy and Finance 1 st Vice Chairman H.E Mr. Kong Vibol, First Secretary of State Ministry of Economy and Finance Vice Chairman H.E Mr. Sok Chenda Secretary General Secretary General CSEZB H.E Sok Chenda Policy and planning Operation and management Project analysis and registration Administration Secretary General CIB H.E. Mr. Suon Sitthy Public relations and investment promotion Investment project evaluation and incentives Environmental impact assessment Inter-ministerial coordination Private investments strategies analysis Legal affairs and investment law Investment projects monitoring Administration Secretary General CRDB H.E. Mr. Chhieng Yanara Public relations and Aid coordination Documentation and information Management of bilateral aid Asia Management of bilateral aid EU& US Management of multilateral aid Management of aid from the UN NGO coordination and relations Project evaluation Administration

8 A One Stop Service Information & Application Approval Customs Duty & Tax Exemption Visa & Work Permit Company Registration

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11 Investment Incentives 20% Corporate Tax Tax holidays: Trigger period +3years+n; 6y <TH<9y Repatriation of profit (withholding tax) Reinvestment of earning (special depreciation) Full Import Duty Exemption No Export Tax

12 Investment Protection The Investment Law and Sub-decree contains a number of important guarantees for the investors: Equal treatment of all investors No nationalization adversely affecting the property of investors No price controls on products or services No requirement of local equity participation No restriction on forex convertibility Free remittance of foreign currencies abroad.

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15 Basic agrarian economy Natural endowments: Abundant land Rich fishery resources Timber resources Agro-business Organic crops Value-added added emphasis/ Food processing New product development

16 Infrastructure: A definite prospect Priority for infrastructure Infrastructure rehabilitation Multilateral aid availability Decentralization Regional opportunities ASEAN & GMS integration Private Participation in Infrastructure (PPI): BOT, BOO, etc

17 Regional opportunities Thailand Laos Triangle Development Zone Tourism Center Eco-Tourism SEZ

18 Physical Infrastructures: Work in progress Asian Highway A1: Build and Rehabilitate Bangkok Phnom Penh Vung Tao Road Rehabilitate RN7 from Southern Laos to Sihanoukville Deep Seaport Upgrade and Expand Sihanoukville Port Upgrade and Expand Phnom Penh, Siem Reap and Sihanoukville Airports

19 GMS: Infrastructure Improvement As of 1992 As of 2004 Projected by 2012

20 GMS Flagship Projects North-South Economic Corridor East-West Economic Corridor Southern Economic Corridor

21 Tourism Natural beauty World Heritage Monuments Open Sky Policy to Siem Reap Ability to attract add-on trips Novelty value

22 Visitors to Cambodia 1, ,600 1,400 Thousand (000) ,200 1, Tourism Vision as of September 2007 YEAR Visitor Arrivals 1,770,000 2,200,000 3,120,000

23 Manufacturing & Export Competitive labor cost Tax incentives Market access Regional arrangement

24 Diversification of the economy Promote industries and services currently not available in Cambodia to diversify the growth base The Government adopted a Sub-decree on the Establishment and Management of Special Economic Zone (SEZ) in Dec 2005 SEZ will include export processing zones and free trade zones

25 Special Economic Zones The main rationale of establishing SEZs is to: Provide investors with adequate infrastructure and supportive facilities Effectively respond to the challenge of diversifying the Cambodian an economy and to promote demand-driven driven development, such as export promotion Enhance competitiveness of garment industry and other labor intensive nsive activities Promote agro-industry, food processing Promote assembling industry Promote electronic and electric appliances industries The following growth poles have been identified for industrial development: d Poipet and Koh Kong (at the Cambodian-Thai border) Bavet and Phnom Den (at the Cambodian-Vietnamese border) Phnom Penh Sihanoukville Sihanoukville Port has harbour facilities and dry ports which have been developed to enhance its competitive edge as an international commercial gateway

26 Samdech Hun Sen Prime Minister Chairman of CDC Cambodian Special Economic Zones Board CSEZB Secretary General Deputy Secretary General Policy and Planning Department Structure at CDC and at each SEZ Trouble Shooting Committee -Chairmen of the CDC Chairman -Minister of the Council of Ministers Member -Minister of Economy and Finance Member -Minister of Commerce Member -Minister of Land Management, Urbanism and Construction Member -Minister of Environment Member -Minister of Industry, Mines and Energy Member -Minister of Public Works and Transportation Member -Minister of Labor and Vocational Training Member -Secretary General of the CDC Member -Secretary General of the CSEZB Secretary Zone Developer (Private Company) - Administration - Finance - Operation - Promotion - >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> - >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Special Economic Zones Administration (One-Stop Service) - Representative of the Cambodian Special Economic Zone Board Chairman -Representative of the Custom and Excise Department Member -Representative of CAMCONTROL Member Operation and Management Department Project Analysis and Registration Department - Representative of the Ministry of Commerce Member - Representative of the Ministry of Labor and Vocational Training Member Administration Department

27 One Stop Service Special Economic Zone Administration (SEZA) company registration and investment license export/import permit Work permit and Labor books (both workers and expatriate) SEZA will provide on site immediate legal and administrative assistance

28 Infrastructure/Utilities in SEZ Internal roads in connection to public roads Dry port/bonded warehouse Telecommunications Electricity Industrial water supply Waste water treatment plant Dormitory and canteen

29 Investment Incentives in SEZ up to 9 years tax holiday 0% rate on Value-Added Tax Full Import Duty Exemption: raw materials, machinery, equipment No Export Tax employment of foreign expatriate authorized up to 10% of all employees, staff and workers permanent visa for families and investors Long time lease up to 99 year Free repatriation of profit

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31 Reasons to invest in Cambodia Open economy Sound Macroeconomic Environment Competitive Investment Incentives One Stop Service Fast-Track Investment Approval Process (28 days) Low Labor Cost Access to ASEAN and World Markets Preferential Trading Status Strategic Location

32 2007 Index of Economic Freedom by Heritage Foundation/Wall Street Journal Cambodia ranks 102 out of 170 countries Category : Mostly Free Score : 100=most free Trade policy :47.2 (high level of protectionism) Fiscal Burden: 94.2 (lost cost of government) Government intervention in the economy : 85.1 (moderate level) Monetary policy : 81.1 (very low level of inflation) FDI : 50 (moderate barriers) Banking and Finance : 50 (low level of restriction) Wages and Finance : 67.7 (low level of intervention) Property rights : 30 (low level of protection) BACK

33 Regional and Global Integration Member of WTO ( ) ASEAN - AFTA/CEPT AIA Greater Mekong Subregion-GMS WIPO, WCO Implement the International Accounting Standard Member of MIGA, ICSID and other international organizations

34 Cambodia has embraced the globalization process as part of its outward looking economic development strategy. ACCESS TO THE U.S. MARKET ACCESS TO THE EUROPEAN MARKET JOINING ASEAN JOINING WTO

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36 Invest in Cambodia Invest in Cambodia and you and you have and have Invest 14 in you million Cambodia have consumers and you have 240 million consumers 553million virtually at your doorstep consumers at your doorstep

37 Myanmar Yangon Thailand Bangkok Hanoi Laos o Vientiane Kunming Vietnam Southern China Manila 1h:30 in average. CAMBODIA Phnom Penh The Philippines Brunei Kuala Lumpur Begawan Malaysia Jakarta Singapore Indonesia

38 Thank you for your attention