Opportunities in Cambodia Briefing Presentation for the UK-ASEAN - - PowerPoint PPT Presentation

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Opportunities in Cambodia Briefing Presentation for the UK-ASEAN - - PowerPoint PPT Presentation

Nov 09, 2023 265 likes •555 views

Click to edit Master title style Opportunities in Cambodia Briefing Presentation for the UK-ASEAN Business Council June 20 2013 BANGLADESH | CAMBODIA | INDONESIA | LAO PDR | MYANMAR | SINGAPORE | THAILAND

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BANGLADESH | CAMBODIA | INDONESIA | LAO PDR | MYANMAR | SINGAPORE | THAILAND | VIETNAM

Opportunities in Cambodia Briefing

Presentation for the UK-ASEAN Business Council June 20 2013

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B A N G L A D E S H | C A M B O D I A | I N D O N E S I A | L A O P D R | M Y A N M A R | S I N G A P O R E | T H A I L A N D | V I E T N A M

From Indo-China, Singapore, Indonesia, Bangladesh and Beyond

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BANGLADESH | CAMBODIA | INDONESIA* | LAO PDR | MYANMAR | SINGAPORE | THAILAND | VIETNAM

* In exclusive association with Mataram Partners

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B A N G L A D E S H | C A M B O D I A | I N D O N E S I A | L A O P D R | M Y A N M A R | S I N G A P O R E | T H A I L A N D | V I E T N A M

Facts & Figures

DFDL PEOPLE INTERNATIONAL PRESENCE CAPABILITIES

  • 250 staff
  • 120+ advisers
  • 40% expatriate advisers
  • 10 regional partners
  • Established in 1994 in the

Mekong region

  • 12 offices in 8 countries:

Bangladesh, Cambodia, Indonesia, Myanmar, Laos, Singapore, Thailand, Vietnam

  • Asia Desks, focused on
  • utbound investment into

Southeast Asia:

  • India Desk
  • Japan Desk
  • China Desk
  • Full-service Legal & Tax

firm

  • Extensive experience with

local business cultures and practices with international standards

  • Core expertise: Energy,

Mining & Infrastructure, Real Estate, M&A, Corporate & Commercial, Tax & Customs, English Law Governed Transactions * In exclusive association with Mataram Partners

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B A N G L A D E S H | C A M B O D I A | I N D O N E S I A | L A O P D R | M Y A N M A R | S I N G A P O R E | T H A I L A N D | V I E T N A M

DFDL Organization

DFDL BUSINESS UNITS REGIONAL PRACTICE GROUPS ASIAN DESKS

SINGAPORE

THAILAND

VIETNAM INDONESIA LAOS MYANMAR BANGLADESH CAMBODIA

Singapore Bangkok, Phuket, Samui Hanoi Ho Chi Minh City Jakarta Vientiane Yangon Naypyidaw Dhaka Phnom Penh

Mergers & Acquisitions Corporate & Commercial Energy, Mining & Infrastructure Real Estate & Construction Tax & Customs China Desk India Desk Japan Desk

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B A N G L A D E S H | C A M B O D I A | I N D O N E S I A | L A O P D R | M Y A N M A R | S I N G A P O R E | T H A I L A N D | V I E T N A M

Part 1

Welcome to Cambodia

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Natural Resources

  • Oil and Gas
  • Mining

– Gemstones – Iron ore – Phosphates

  • Hydropower potential
  • 443 km coastline
  • 4.85 million hectares of unforested land
  • Only 2.5 million hectares under cultivation

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Economic Data

– Strong growth last decade but the impact of the financial crisis was strong in 2009 – Inflation is contained – Nominal GDP valued at USD 12.88 billion in 2011

  • 5%

0% 5% 10% 15% 2004 2005 2006 2007 2008 2009 2010 2011 2012

GDP

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Economic Climate

  • Predicted to have the second fastest growing economy in Southeast Asia
  • ver the next two years
  • Economic growth expected to reach between 6.7% - 7% in 2013
  • Sectors to Watch in 2013

̶ Agriculture ̶ Banks and MFIs ̶ Energy Infrastructure ̶ Mining (Hydrocarbons & Minerals) ̶ Tourism ̶ Garment Exports

  • Increased foreign investment targeting:

̶ Agriculture; Tourism; Energy; Mining; Telecoms; new niche markets in 2013 ̶ Banking and Finance Products

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Part 2

The Cambodian Legal Framework

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Recent History of Cambodian Legal Framework

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  • Grey zones
  • Implementation

issues

  • Legal & judicial
  • uncertainty. State of

Courts.

1995-2005 Assessment

  • Lack of law in key areas
  • Governmental discretion
  • Non-enforcement of laws and

regulations

  • Lack of transparency
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What has changed since 2005?

Changes

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Impact of WTO Accession

  • Numerous positive implications for investors:
  • 1. Adoption of a complete legal framework; Civil Code, umbrella laws
  • 2. WTO accession; agreements supersede national law;
  • 3. Greater transparency and internationalized standards; mining;

transactional;

  • 4. Improvements in judicial and quasi-judicial process; binding arbitration

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  • 1. Rule of Law
  • a. Enforceability of Foreign Judgments
  • Choice of Law: Cambodian court applies Cambodian law.
  • No treaty on the enforcement of foreign judgments.
  • Foreign court judgment is not recognized nor enforceable.
  • Mitigant: Foreign Arbitration.

Rule of Law

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  • b. Alternative Dispute Resolution
  • Negotiation is common, advisable and preferred.
  • First arbitrators of National Arbitration Center were selected in Nov

2011 but are still not in operation.

  • Foreign arbitral awards are recognized and may be enforced.
  • Cambodian court is required to refer the case to arbitration if it is

subject to a binding arbitration agreement. Political endorsement.

Rule of Law

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Rule of Law - Civil Code

  • c. Civil Code
  • The Civil Code came into force on 21 December 2011.
  • The Civil Code has a significant impact on contractual relationships and

generally on Cambodia’s legal framework.

  • The Law on Enforcement of the Civil Code terminated Decree 38

(except carriage contract) and some provisions of the Land Law (such as the immovable security provisions).

  • Continuing legal relations occurring before 21 December 2011 and still

existing thereafter are enforceable pursuant to the Civil Code.

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Rule of Law - Civil Code

  • The Civil Code introduces the concept of the formation of a contract

based on an offer and acceptance.

  • Unlike the Contract Law, no writing is generally required, except for

some specific contracts such as loans with interest or contracts for the sale of immovable property.

  • Under the Civil Code, even where the declarations of intention of both

parties are made without any defects, the contract shall be void in the following cases (a) where the contents of the contract violate a mandatory provision of law; or (b) where the contents of the contract contravene the public order and good customs.

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Rule of Law - Civil Code

  • Security rights are limited to those established under the Civil Code or

in special laws, and no other type of real security may be created.

  • Under the Civil Code, five types of security rights can be established: (i)

rights of retention (general possessory), (ii) preferential rights (secured interest; priority), (iii) pledge, (iv) hypothec (tangible movable/immovable) and (v) security right by way of transfer of title (intangible movable).

  • Immovable assets can be subject to (i) rights of retention, (ii)

preferential rights, (iii) pledge, and/or (iv) hypothec.

  • Secured transactions can be governed by either the Civil Code or the

Law on Secured Transactions at the choice of the parties.

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  • 2. Commercial Contracts
  • New draft law on commercial contracts has been finalized.
  • Comprehensive new Civil Code applies to both commercial and civil

contracts.

  • Contract: offer + acceptance. Basic principles.
  • Contract with Cambodian party, both Khmer and English languages are

highly recommended.

  • Foreign governing law is possible in most cases.
  • Assignment is possible, unless otherwise restricted.

Commercial Contracts

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Laws on Anti-corruption/Anti-bribery

  • 4. Laws on Anti-corruption/Anti-bribery
  • Previous practice and background: Criminal Code (1992)
  • New laws: Criminal Code (2009)/Anti-corruption Law

(2010)/Amendment to the Anti-corruption Law (2011)

  • Specific offenses (Article 605 delivery of bribery)
  • Anti Corruption Unit
  • Reform and government policy
  • Status of the implementation of the law
  • Actual practice vs official fees

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  • 5. Recently Adopted Laws
  • Law on Public Procurement (14 January 2012)
  • Law on Enforcement of Civil Code enacted by the National Assembly
  • n 6 April 2011 and came into force on 21 December 2011
  • Criminal Code (2009) and Amendment to the Anti-corruption Law

(2011)

  • Anti-Money Laundering Law (2008)
  • Code of Civil Procedures (2007)

Recently Adopted Laws

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Recently Adopted Laws

  • Law on Secured Transactions enacted on 24 May 2007, to promote

economic activity through a unified set of rules on securing obligations with collateral. ‘On-line’ aspects

  • Law on Concession adopted on 19 October 2007
  • Law on Commercial Enterprises (2005)

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General Commercial considerations for Investors

Considerations for Investors

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Key Investment Phases & Considerations

  • Evaluation of business potential and partnering
  • Legal, Tax & Financial Due Diligence. Key issues.
  • Legal & Contractual Structuring
  • Investment Registration/Selection of business form
  • Obtaining industry-specific operating (upstream) licenses
  • Obtaining general (downstream) licenses

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Forms of Business Entities

  • Choice of business form – commercial registration
  • Representative Office/Branch Office
  • Limited liability company
  • Industry-specific operating license requirements
  • Banks, insurance, telecommunications, pharmaceuticals, mining etc.
  • Other licenses/authorizations required:
  • Tax registration (including VAT registration)
  • Labor registration
  • Patent Tax Certificate

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Comparison of Available Forms

Form Definition Pros Cons

Limited liability company Company – shareholders’ liability limited to capital contribution

  • Widely accepted
  • KHR 4 M

approx USD 1,000

  • Flexible forms
  • Taxable activity in Cambodia
  • Higher reporting and administrative burden
  • Approvals required for share transfers and

change of directors and change of directors [APPLY TO ALL FORMS] Branch office Division of offshore parent company

  • Simplifies internal, legal

and accounting structure

  • Not eligible for investment incentives
  • Exposes parent to liabilities of branch
  • Not available to all industries
  • Taxable activity in Cambodia

Represent-ative Office Local representative of

  • ffshore company
  • Rapid approval with

minimum legal documentation

  • No taxable activity in

Cambodia

  • Not eligible for investment incentives
  • Limited scope of permitted activities
  • Lacks legal definition
  • Cannot invoice on its own account
  • Cannot engage in business activities in

Cambodia Business Cooperation Contract Contractual relationship with government entity

  • No legal entity required
  • Eligible for investment

incentives

  • Limited availability
  • Liability of contracting parties unclear,

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Sum Up

  • Cambodia legal and regulatory landscape has been completely revamped

following WTO accession: 40-50 new fundamental laws and regulations in 5-6 years!

  • Faced with such legislative growth: implementation issues!
  • Judicial System / Enforcement: slowly improving!
  • Most open to foreign investment; political will plus incentives.

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B A N G L A D E S H | C A M B O D I A | I N D O N E S I A | L A O P D R | M Y A N M A R | S I N G A P O R E | T H A I L A N D | V I E T N A M * In exclusive association with Mataram Partners

Thank you

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Rashed Idrees

Partner, Cambodia, Singapore, Bangladesh and Indonesia Managing Director, Singapore, Bangladesh and Indonesia rashed.idrees@dfdl.com

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Excellence . Creativity . Trust

Since 1994

BANGLADESH | CAMBODIA | INDONESIA | LAO P.D.R | MYANMAR | SINGAPORE | THAILAND | VIETNAM www.dfdl.com

Excellence · Creativity · Trust

Since 1994

BANGLADESH | CAMBODIA | INDONESIA | LAO P.D.R. | MYANMAR | SINGAPORE | THAILAND | VIETNAM www.dfdl.com