The business community welcomed crucial progress towards the creation of the eagerly-anticipated Commercial Court set to be empowered to deal with domestic trade disputes, and widely seen as a viable medium to build business and investment confidence.
On January 21, Minister of Justice Koeut Rith signed legislation establishing the Commercial Court Organising Committee.
And on June 24, the Ministry of Justice, Cambodia Chamber of Commerce (CCC) and other relevant stakeholders held a virtual consultation session looking to speed up the process of setting up the court.
CCC vice-president Lim Heng told The Post on June 30 that the ministry and private sector agreed on three key points.
The first were the locations for the initial branches, in the capital and Siem Reap and Preah Sihanouk provinces.
The second concerns capacity-building for judges, while the third goes into court procedures, he said, without providing further details.
“We do expect that the Commercial Court will be established by the end of the year or early next year.
“The court will play a significant role in building trust and confidence among businessmen and investors,” Heng said.
Association of Banks in Cambodia chairman In Channy welcomed the initiative, saying that most business spats currently go through traditional courts, which takes time to resolve.
“It’s very good that the government of Cambodia, through the Ministry of Justice, has this important initiative to address the calls from stakeholders highlighting the need for a commercial court.
“Experience shows that using traditional courts takes quite some time to settle business disputes since people are applying to three levels of court. Business disputes need to be settled by commercial court,” he said.
He noted that the Cambodian economy has logged strong growth over the last two decades and will continue to expand every year, attracting many investors globally.
“Investors need a commercial court to settle business disputes quickly, and timely.
“We know that nobody wants to take advantage over others in business, but in case of disputes, people can choose commercial arbitrage or business court for trade settlement as soon as possible since time is valuable for everyone – they need to move fast and seize more business opportunities,” Channy said.
American Chamber of Commerce in Cambodia president Anthony Galliano said these were all “good steps” that would ultimately lead to increased faith in the rule of law, which he said can only benefit investor confidence in the country and attract more foreign direct investment (FDI).
“International investors have generally demonstrated a strong preference towards the Singapore Arbitration Centre for dispute resolution in commercial contracts. Although The National Commercial Arbitration Centre was launched in 2013, large international investors still gravitate towards offshore arbitration.
“With another choice of jurisdiction though, the concern would be potential perplexity of choice. Thus harmonisation may be the most productive path,” he said.
World Bank on June 17 projected Cambodia’s economic growth to accelerate to 4.0 per cent this year after contracting 3.1 per cent in 2020, thanks to a fast rollout of Covid-19 vaccines and the revitalisation of global demand.
World Bank senior economist for Cambodia Ly Sodeth told a press conference on June 17 that approved FDI projects had seen increased sectoral diversification, and had grown by 4.3 per cent year-on-year, reaching $3.6 billion last year.
Tourism took the lion’s share of FDI at $1.75 billion, followed by energy ($588 million), healthcare ($358 million), garments ($220 million), telecoms ($102 million), agriculture and agro-processing ($110 million) and electronics ($50 million), he said.
“While countercyclical public investment is important to economic recovery, private investment is also key for the revival of the private sector.
“Rising gross fixed investment [GFI] helps underpin economic recovery,” he said, adding that GFI shot up to 24.6 per cent of gross domestic product (GDP) last year, from 16.2 per cent in 2010, as economic growth gained steam following the 2008-2009 global financial crisis.
“The share of private investment – boosted in part by strong FDI – in total investment increased to 64.6 per cent in 2020, up from 32.8 per cent in 2011, reflecting upbeat investor confidence,” Sodeth added.