T OURISM is a multi-billion dollar business around the world and, except for a few

downswings when events like the Gulf War occur, it grows every year. Many countries

around the world depend on tourism to earn hard currency and Cambodia is no exception

in seeing tourism as one way to earn significant revenue.

What does make it difficult for Cambodia is the fact that it is competing in a part

of the world that has been promoting the tourist sector in other countries for decades.

In addition, the infrastructure of surrounding Southeast Asian countries is better

developed than Cambodia's and those countries do not have Cambodia's reputation for

insecurity, if not outright danger.

Facing these problems, and attempting to meet them with additional resources and

incentives, the government is using several approaches, some of which are of immediate

interest to businesses investing in Cambodia.

The Council for the Development of Cambodia, the body charged with promoting foreign

investment in the country, has listed tourism as one of the promoted sectors to which

it will award tax and other financial incentives. To qualify for these incentives,

it is necessary to convince the Council that the project is truly tourist oriented

- and not simply a project aimed at the growing (although still small) expatriate

presence in the country, particularly in Phnom Penh. Thus, a hotel project, in order

to meet these criteria, must truly be a hotel for tourists and not simply service

apartments for expatriate business people.

The main tourist areas of Cambodia are Phnom Penh, Siem Reap and Sihanoukville. In

recognition of the world class importance of Angkor Wat, and its potential to become

a major tourist attraction for any tourist coming to Southeast Asia, the Cambodian

Government established the Authority for the Protection and Management of Angkor

and the Region of Siem Reap (APSARA), an inter-ministerial body with financial and

administrative autonomy. The Board of Administrators is composed of the ministers

of relevant Ministries as well as the Governor of Siem Reap Province. APSARA is mandated

to have specialized departments which include an Office for Land Transactions and

an Urban Affairs Office to control town planning in the area. APSARA and the Supreme

Council on National Culture, which was established in 1993 to assume management of

the Khmer cultural heritage, work together on zoning and cultural heritage protection

in Siem Reap.

In addition to these government authorities, several decrees are of relevance to

the investor developing a tourist project in Siem Reap. In particular, protected

zones have been established in which any hotels and other commercial development

are prohibited. All land within these zones is under the supervision of APSARA which

is responsible for all development and commercialization of the land. One designated

area of 560 hectares is a "hotel zone", with the land owned by the Kingdom

of Cambodia. No right of use or ownership in the land can be granted or transferred.

This hotel zone is managed by APSARA.

In addition to land use regulations in Siem Reap, of which investors should be aware

prior to entering into any negotiations regarding land, there are also general guidelines

for the tourist industry in Siem Reap. The overriding principle is "quality

tourism" which means an avoidance of mass tourism while increasing tourist revenue

by appealing to a clientele more willing to invest larger sums of money in its visits

to the area.

The priority need to establish a basic infrastructure in trained personnel, information

systems and physical structures such as hotels and restaurants, has been recognized

by the government and, in particular, by the Ministry of Tourism (a member of APSARA).

In February 1996 this Ministry issued a series of regulations covering hotels, restaurants,

tourist guides and tourist issues in general. These regulations show an increasing

sophistication on the part of the authorities with regard to tourist demands and

minimal expectations that should be met. For example, the regulations require that

tour guides must be licensed annually and must reach a foreign language proficiency

acceptable to the Ministry. For the first time, a licensing procedure is also introduced

for tourist vehicles, such as the buses and mini-vans used by various travel agencies.

More important to the investor are the hotel regulations. In addition to the regulatory

requirement that all businesses in Cambodia be registered with the Ministry of Commerce,

hotels, restaurants, dance halls and similar businesses must also be licensed by

the Ministry of Tourism. There is a fixed procedure for license application and the

business must also have the consent of the National Board of Territorial Development,

Urbanization and Construction (or its sub-committees in the relevant town or province)

and a fire management system approved by the Ministry of Interior. Detailed information

about the business must be provided to the Ministry of Tourism which is also entitled

to inspect the business at appropriate times. The license is valid for one year,

renewable upon annual payments for the authorization permit. There are additional

requirements regarding hygiene and food safety for restaurants, and uniforms are

required for both hotel and restaurant staff.

In addition to the above specific regulations, another regulation requires that any

business operating in an "attractive tourist place" must be authorized

by the Ministry of Tourism. The regulation does not specify the areas covered by

this regulation so selective enforcement may occur. Again, one year licenses, renewable,

are issued by the Ministry of Tourism to these businesses.

Awareness of these various regulations, and the rationale behind them, may assist

the business in obtaining all required documentation with a minimum of confusion.

- (Roberta Thami is an attorney associated with Dirksen, Flipse, Doran &

Le, an international law firm with offices in Phnom Penh.)