The Council of Ministers, or Cabinet, is due to meet on July 9 to consider the Draft Law on Investment, which is expected to come into force by year’s end.
Investors feel confident that the law will provide more favourable conditions than those granted by the current legal framework, enhancing the competitiveness of small- and medium-sized enterprises (SME) and bringing in more foreign investment.
The government’s top executive organ said in a statement that it is set to hold a virtual plenary session on July 9, chaired by Prime Minister Hun Sen.
Cambodia Chamber of Commerce (CCC) vice-president Lim Heng told The Post that the CCC was a key source of input on some of the extra perks that the new law will extend.
He said he hopes that a feature that the trade body suggested to the Council for the Development of Cambodia (CDC) would be approved, which would allow the capital-provincial investment sub-committee to approve projects with capital investment of less than $10 million, to secure new investments nationwide and increase the competitiveness of local factories and manufacturing enterprises.
If given the go-ahead, this would attract greater investment flows concentrating on the provinces, which are important potential sources of production and raw-material imports for use in industry, he said.
“We have seen that copious amounts of factories and enterprises are concentrated in Phnom Penh, requiring raw materials to be transported [there] and then moved again for export, at high costs,” Heng said.
More investors would opt to set up industrial businesses outside of the capital if projects with less than $10 million in capital investment could be approved at the provincial level, he claimed.
The existing investment law only allows the sub-committee to greenlight projects with under $2 million in capital investment, according to Heng.
“This will also benefit the workers there, by cutting down migration, and may help alleviate the poverty of locals,” he said, adding that he expects the law to go into effect by the end of this year.
Federation of Associations for Small and Medium Enterprises of Cambodia (Fasmec) president Te Taingpor welcomed and voiced support for the new law, expressing hope that it would further enhance the competitiveness of local SMEs.
“Although the tourism sector has not yet reopened, food demand remains high, as corroborated by food-processing [businesses’] consistently strong performances during the Covid-19 crisis.
“The government’s goal is to prop up SMEs as the backbone of the national economy,” he said.
Ly Ly Food Industry Co Ltd (Lyly Food) CEO Keo Mom said she was eagerly looking forward to welcoming more investors in the upcoming years, as a result of the improved investment climate created by the new law.
“I congratulate the government for always [finding ways to] allure investors into the country,” she said.
She said the law would further encourage investment in the thriving processing and semi-processing industries.
“I do hope that the law will be more favourable for SMEs, job creation and contribute to economic growth,” Mom said.
According to Heng, the new law will introduce stronger incentives towards the use of domestic products typically churned out by SMEs primarily for export, the sourcing of local raw materials – some of which will be government subsidised, and human resource training.
“If too much investment comes in, we will face a lack of human and technical resources,” he cautioned.
The CDC signed off on 70 projects with a total capital investment of $2.428 billion in the first half of this year.
This is according to calculations by The Post based on CDC statements issued via Facebook throughout the January-June period.
The CDC approved 29 investment projects in textiles, garments, footwear and travel products with a capital investment of $194.71 million.
In 2019, investment approvals logged $9.40 billion, of which China invested $2.75 billion, followed by Hong Kong at $912.
55 million and Japan at $298.84 million, according to the CDC.