LIKE most nationality laws, the draft nationality law now before the National Assembly
allows foreigners to become naturalized Cambodian citizens upon satisfaction of certain
conditions. Two of the more important conditions are seven year residency in Cambodia
prior to naturalization, and the ability to speak and write Khmer.
Unlike most nationality laws, the draft nationality law of Cambodia allows foreigners
to, in essence, purchase Cambodian citizenship. A foreigner investing $500,000 can
become a Cambodian citizen without satisfying the seven year residency requirement,
but must still satisfy the language and other requirements. A foreigner who donates
$400,000 to the state budget can obtain citizenship without satisfying either the
residency or language requirements.
Few other nationality laws take the same approach as Cambodia. We have reviewed the
nationality laws of South Korea, Japan, Singapore, Lao PDR, Malaysia, Burma, USA,
UK, Australia, India, and France. None contain similar provisions. Most countries
deal with the issue of investment promotion by providing for special, more lenient
visa or residency rules for foreign investors during the period of investment.
Some countries do allow foreigners, in exceptional cases, to waive the usual naturalization
conditions and obtain citizenship. India, for example, allows such waiver for foreigners
rendering distinguished service to India in science, philosophy, art literature,
world peace or human progress - investment notably left out. France will waive its
residency requirement, if the applicant's citizenship would be of exceptional value
and interest to France. The French law is similar to Article 13 of the Cambodian
A few developing nations reportedly also grant citizenship to investors or donors
in a manner similar to Cambodia's draft law, although we have yet been able to locate
the laws themselves for verification.
So why does Cambodia need to adopt special citizenship provisions rejected by most
other countries? Does Cambodia need to encourage foreign investment and enlarge the
state budget more so than other countries?
The answer to both of these questions is a strong yes. For reasons obvious to most,
including Cambodia's small market, recent history, and competitive neighbors, Cambodia
must encourage inbound investment and capital flow - both into the country and into
the state treasury.
Given that Cambodia needs to encourage investment and fill the state coffers, does
Cambodia really need to sell its citizenship to accomplish these goals? This is a
much more difficult question, deserving a much more involved response.
The main motive for a foreigner to donate or invest substantial sums to become a
citizen of Cambodia would be to enjoy certain economic rights reserved exclusively
to Cambodian citizens. The economic right most coveted by foreigners is land ownership.
The right to own land would undoubtedly be a substantial benefit to most foreigners
with an interest in Cambodia. Given the present difficulties and uncertainties in
the Cambodian legal system, becoming the legal, registered owner of land could be
a valuable benefit for foreigners who invest funds in projects involving land or
other real property.
On the other hand, citizenship need not be given to foreigners to give them stronger
protections regarding land ownership. Cambodian law currently permits foreigners
to own a 49% interest in land through a Cambodian company in which the foreigner
owns 49% of the shares. This right is protected by Article 44 of the Constitution.
This 49% interest could be much better protected by a good company law and contract
law, as well as better enforcement mechanisms through in-country arbitration and
Another measure that could significantly protect foreign investment involving land
would be to allow foreigners to own buildings on land which is held under a long
term lease. The Investment Law would currently permit this type of ownership, but
there has been no move to authorize such ownership at the Cambodian Investment Board
or land offices.
Another important method for protecting a foreign investment involving real property
would be to set up a transparent and comprehensive system for the registration and
enforcement of real property security. Foreigners could then take a security interest
in land that is clearly enforceable in Cambodia, thereby protecting their investments
involving real property.
One of the easiest ways to encourage investment through land ownership is not readily
available in Cambodia. Some countries, such as Thailand, prohibit foreign ownership
of land in general, but allow foreign ownership for certain major investment projects
on a case by case basis. Cambodia's constitution would prohibit this.
All of these measures would go a long way toward encouraging foreign investment.
However, given that enacting and implementing such measures may be time consuming
and politically difficult, allowing foreigners to purchase citizenship through investment
or donations may be the only possible alternative to entice foreign investment by
granting greater land ownership rights.
Finally, if we assume that selling Cambodian citizenship is desirable, how can naturalization
be regulated under the draft law to avoid undesirable investors and donors. Because
the law is very general, its implementation will determine the quality and quantity
of foreigners allowed to take advantage of the special exceptions.
One concern of the government probably will be to discourage investment solely in
land (i.e. speculation). Including the value of the land as part of the required
$500,000 of investment capital will make it much easier for foreigners to satisfy
the nationality law and become citizens. If this is permitted, a foreigner's purchase
of a plot of land for $500,000 will make the foreigner eligible to become a citizen
of Cambodia, and thereby become the registered owner of the land.
Strictly enforcing and verifying that the $500,000 of investment capital is spent
on an existing investment project, would also restrict eligibility for naturalization.
Until now, there has been a big difference between the amount of investment capital
pledged by the investor, and the amount of capital truly invested.
A rigorous implementation of the language requirement would also restrict those eligible
to become citizens, regardless of the size of the investment. Of course, under the
draft law, any foreigner wishing to avoid the language requirements, can donate,
rather than invest, $400,000 to the government.
Other important regulatory issues include: Will the investment capital be registered
capital of the investment company, or general investment capital? Can such capital
be raised through offshore and/or local loans? If, for example, the investment project
has five investors in a project with $2.5 million capital, are all five persons eligible
for citizenship? What happens when a shareholder in an investment project with over
$500,000 capital sells his or her equity after having been granted citizenship?
Critics worry that the law will attract the wrong type of investors or donors. It
is true that most major investments are undertaken by large offshore companies, where
there is no individual investor who can become a citizen of Cambodia. Thus, the law
is likely to attract investment from individuals, rather than corporations. However,
as discussed above, speculative investment in land alone can be discouraged under
Critics also fear that wealthy criminals will be attracted by the lenient citizenship
rules. This risk could be reduced by expanding Art 8(b) of the draft law to require
a standard background check of the individual in their home country and with Interpol.
Few international criminals would risk this heightened scrutiny by applying for Cambodian
citizenship if the law were vigorously and consistently applied.
Finally, when engaging in such debates, it should be remembered that there is nothing
inherently immoral or corrupt about foreign ownership of land. Most developed countries
allow foreign ownership with few restrictions. The main reason for such restrictions
in developing countries is to save land for citizens, who may not have the same financial
means as foreigners.
David Doran is the resident managing partner of Dirksen Flipse Doran & Le's
Phnom Penh office, and has been writing on Cambodian legal issues since 1992.