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Logo of Phnom Penh Post newspaper Phnom Penh Post - So you want to buy State property?

So you want to buy State property?

A BASIC premise of Communist systems is the public ownership of property. Depending

on the country, the amount of land or other property owned by the State can vary

widely. Many formerly Communist countries did not allow any private ownership; some

allowed limited private ownership in strictly defined spheres.

In Cambodia during the Khmer Rouge period, the State owned everything and there was

no private ownership. After 1979, private ownership returned in a limited way with

the State owning all land, although inheritable interests in it were recognized for

those tenanting the land. In 1989 land ownership was further liberalized to allow

for individual and corporate ownership. Numerous factories, warehouses and many businesses,

nationalized in the 1970s, are still owned by the State.

Since the 1993 elections, the government of Cambodia has been committed to privatizing

state-owned property. The extent of this commitment is demonstrated in various laws

and sub-decrees issued by the government.

In 1993 the government began its privatization efforts. The Ministry of Economy and

Finance was delegated the authority to carry out privatization efforts.

The Ministry of Economy and Finance began its privatization endeavor by requesting

that all ministries, provinces, district and municipal authorities submit to it a

list of their assets. This attempt to ascertain what the government actually owned

was fairly successful, with the ministry becoming sufficiently knowledgeable to determine

what assets were available for sale or lease and which should be prioritized for

this purpose. Each year the ministry prepares a register of enterprises or activities

to be transferred to the private sector, as well as a calendar specifying the program's

previous achievements and further strategies for privatization.

In addition, the ministry requires that each public institution appoint one person

to monitor public properties. The usual person responsible for negotiations with

investors waiting to purchase a public asset is the Chief of the Financial Department

for the Chief of Administration of the institution managing the public asset.

A 1994 law specified the types of properties that may be privatized. These "types"

comprise virtually every form of property there is, including industrial, commercial

and service enterprises, joint ventures in which one partner is a public enterprise,

industrial or commercial public activities, and all tangible, intangible or financial

assets held as public property. The only stated exceptions to these prospects for

privatization are activities related to defense or security, and cultural patrimonies,

presumable activities such as the National Museum or Angkor Wat.

The Privatization Committee established by the Ministry of Finance is intended to

actually administer the government's privatization efforts. Its composition, specified

in a government declaration, is 14 members representing various ministries and government

offices. The Committee is chaired by His Excellency Chhay Than, Undersecretary of

State at the Ministry of Finance. Mr Kang Leang Khan, the Ministry's Deputy Director

of the State Property Department, is the secretary and chairman of the Secretariat

of the Privatization Committee.

The guardian ministry (that ministry or institution which oversees the property)

must submit a request for privatization to the Privatization Committee, along with

a schedule regarding the actual transfer.

The Council for the Development of Cambodia (CDC), in addition to the Privatization

Committee, may become involved in privatizing certain projects. Additionally, for

large scale enterprises and activities considered of crucial interest to the country,

the preliminary approval of the Co-Prime Ministers is needed before the Privatization

Committee will make a decision.

Cambodian laws also specify a bidding procedure for privatization. This procedure

is carried out by a committee that will oversee the bidding process; all aspects

of the process must be done secretly to ensure confidentiality of information. Members

of this committee include the Under-Secretary of State of the Ministry of Finance,

a representative of the Council of Ministers, a representative from the guardian

ministry of the property being privatized and the director of the enterprise being

privatized.

Prior to the bidding process, the value of a public asset must be determined by independent

experts designated by the guardian ministry and agreed to by the Privatization Committee.

The experts' valuation is sent directly to the Privatization Committee for opening

at the time of reviewing bids.

The rights of foreign persons or companies to participate in privatization are specifically

protected by sub-decree although these individuals remain subject to the prohibition

on foreigners owning land. With the exception of land ownership, all public properties

are available to the foreign investor.

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

international law firm with offices in Cambodia, Laos and Vietnam.

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