I N 1994 governmental responsibility for investment activities in Cambodia was

transferred from the National Committee for Investment (NCI) to the Council for

the Development of Cambodia (CDC). This was made clear in the Investment Law of

August 5, 1994 which specifically states that the CDC is the "sole and one-stop

service organization responsible for rehabilitation, development and investment

activities."

Recently, a sub-decree on the organization and functioning

of the CDC was issued. By this sub-decree, the membership of the CDC is

formalized, the roles and responsibilities of each of the CDC's departments is

set out in detail, and a framework for the "one-stop service" aspect of the CDC

is established.

The clarification of the role of the CDC is welcome and

extremely timely, particularly in the investment sector. According to the latest

figures published by the Cambodian Investment Board, over 70 private investment

projects were approved by the CDC in the first six months of 1995. This

represents in excess of $400 million in investment and over 16,000 new jobs.

When compared to previous years, 1995 has to date been extremely

encouraging.

In an atmosphere of rapid growth, having a coordinated and

efficient body supervising the investment and development process is essential.

For investors and representatives of aid-giving countries to be aware of how

such a body is structured and the scope of its jurisdiction is even more

essential.

The Structure of the CDC

The CDC is composed of the following individuals who meet monthly to discuss

business:

The two Prime Ministers (both co-chairmen); the senior minister in

charge of Rehabilitation and Development (vice-chairman); the senior minister in

charge of Culture, Arts, Land Management and Urbanization; and the ministers of

Public Works and Transport, Foreign Affairs, Economy and Finance, and Planning;

and the secretary-generals of the CDC, the Cambodian Rehabilitation and

Development Board, and the Cambodian Investment Board.

The co-chairmen,

vice-chairman, and three CDC secretary-generals form the executive committee

which supervises and regulates the daily operations and has formal fortnightly

meetings.

In an interesting move, the sub-decree has given the Second

Prime Minister the position of co-chairman (the chairmanship was previously held

by the First Prime Minister alone). It also provided for each of the

secretary-generals to be assisted by a deputy secretary-general - most likely

from the opposite political party.

The General Secretariat of the CDC

The General Secretariat is the overseeing body of the CDC and is under the

direct supervision of the secretary-general of the CDC. It has four

divisions:

• Legal and Dispute Resolutions
• Finance and Administration
• Personnel Management
• Strategic Planning

Cambodian Rehabilitation and Development Board (CRCB)

The CRDB is the body charged with the supervision of public sector investment

and the responsibility of acting as the focal point for relations between the

government and donor countries, international organizations and NGOs.

Internally, the CRDB is also responsible for coordinating the use and allocation

of external aid among government ministries and institutions.

Cambodian Investment Board (CIB)

The CIB is the body that most private investors will deal with. Its role is

to promote and coordinate private sector investment, to initiate and manage

special development zones, to propose laws and regulations for creating a more

attractive investment climate in Cambodia and to coordinate relations between

investors and the relevant government ministries. The CIB also makes

recommendations regarding environmental impact assessments and the granting of

investment incentives to projects.

While the CDC is officially the sole

body governing investment and development in Cambodia, it is accountable to the

Council of Ministers and projects which involve any of the following factors

must be submitted to the council for its approval:

• a capital investment of over $50 million,
• politically sensitive issues,
• the exploration and exploitation of mineral and natural resources,
• the possibility of a negative impact on the environment,
• long-term strategy,
• Build-Own-Transfer (BOT), Build-Own-Operate-Transfer (BOOT),

  Build-Own-Operate (BOO), or Build-Lease-Transfer (BLT) projects.

One-Stop Service

In establishing the CDC one of the primary concerns of the government was to

create a body which would allow "one-stop shopping" for those involved in

investment, rehabilitation and development activities. In other words, to create

an organization to act as the central coordinator of activities and relations

between government ministries, investors, NGOs and donor countries.

The

sub-decree sets out the basic framework of how the concept of one-stop service

is to function within the CDC. Details on the organization of the process are to

be given in internal regulations of the CDC.

The main structure of the

plan is to have officials from relevant government ministries appointed to the

CDC to assist in coordinating interministerial decisions. The officials

appointed must hold the rank of department chief or deputy chief, be considered

competent in their work and have the ability to communicate in foreign

languages, particularly English. Their authority must be delegated from the head

of their respective institutions.

Officials from the Ministry of Foreign

Affairs and International Cooperation, the Ministry of Economy and Finance, the

Ministry of Planning and the Cabinet of the Council of Ministers will be

appointed to the CRDB. Similarly, representatives will be appointed to the CIB

from the Ministry of Economy and Finance, the Ministry of Commerce, the Ministry

of Planning and the Cabinet of the Council of Ministers. Should a decision

require the input of other ministries, the secretary-general of the CRDB or CIB

may request such ministries to appoint an appropriate representative on an ad

hoc basis.

The appointed representatives will meet regularly with

officials of the CDC. Decisions resulting from such meetings will be conveyed to

the secretary-general of the CDC for submission to the executive committee of

the CDC.

If the one-stop service planned by the CDC is eventually

established to a level where it is truly effective it will be most welcome. In

practice, however, after a brief period of centralization when the CDC was first

created, we have not yet seen any great changes in the status quo. At, present,

contact with the individual ministries remains an important part of establishing

and operating investment and development projects in Cambodia. Apart from being

inefficient and expensive for the investor or international organization

involved, such lack of coordination results in overlapping paperwork and

confused jurisdiction within the government itself.

The only way that the

concept of one-stop service will succeed is with full cooperation and support of

the ministries and institutions of the Cambodian government. For a variety of

reasons it is widely recognized that this support has not been evident to date.

Until it is received the CDC will never attain its full potential as a

centralizing body. It is for this reason that the presence of the Second Prime

Minister and the cross-party appointments in deputy secretary-general positions

may prove extremely beneficial to the CDC. A true centralizing body must be

bipartisan.

Michael Popkin is a lawyer in the Phnom Penh office of Dirksen Flipse

Doran and Le.