Sweeping legal reforms are necessary if the economy is to develop, the Cambodian

Investment and Trade Conference heard.

Ministers and government officials joined donors and business leaders May 15-16 to

discuss the country's potential as a place to do business.

The government acknowledged that reforming and upgrading the legal and judicial systems

was essential if Cambodia is to attract investment. Senior Minister Sok An said the

Governance Action Plan would prioritize judicial reform.

"The objective is to bring about the rule of law in Cambodia, a necessary condition

for a vibrant business community," said Sok An. "We recognize it is slower

than other reforms, but we will give it a big push."

Robert Hagemann, country head of the International Monetary Fund, said that without

"significant rapid progress in judicial and legal reform, investment will remain

anemic".

Indications were that the government recognizes that. In a seminar on law, Sok Siphana,

secretary of state at the Ministry of Commerce, said legal reform was "a blocking

factor of economic development".

Under the country's "antiquated penal code", he said, economic disputes

could result in criminal charges by using the breach of trust provision.

"That to me is the most atrocious deterrent to any investor," Siphana said.

He announced that a commercial arbitration act would soon be introduced to resolve

disputes, saying Cambodia had to show "the willingness to have the appropriate

rules".

The conference also touched on a broad range of investment concerns, including public

sector reform, export issues, infrastructure, electricity, and tourism. The government

repeatedly stated its desire to open the country to more foreign companies.

In his opening speech, Prime Minister Hun Sen spoke of the government's "goodwill

and strong commitment to build up a foundation for genuine cooperation with the private

sector, both domestic and foreign, with the view to improving the living standards

of the Cambodian people".

Finance minister Keat Chhon said the government would make "every effort"

to attract more private investment, which he felt was "vital" if Cambodia

was to achieve its development objectives. Foreign direct investment as measured

by the Asian Development Bank fell to only $120 million in 2001, continuing a slide

that has gone on for several years.

Minister of Commerce Cham Prasidh spoke of "super fast tracking" tariff

reductions to encourage investment. The country is looking to join the World Trade

Organization as soon as 2003; shortly afterwards it will lose certain trade privileges

such as garment quotas to the United States.

Prasidh told the Post May 23 that the government wanted to diversify its exports

away from the reliance on garments. One focus was agro-industry. Cambodia and Thailand

had been researching its potential over the past two years, and were approaching

"the final stage". Investors were being sought.

He said processing and packaging of fruits and cereals would add value to the country's

agricultural exports. More than 100 projects to achieve that are on the cards.

The project would need final approval from the Council of Ministers, said Prasidh.

Land for export zones in ten Cambodian provinces had been identified for development,

predominantly by Thai investors.

He also said the government wanted to see improved cooperative schemes as well as

large scale agriculture for export.