The following was excerpted from a speech by H.R. Ly Thuch,

Cabinet Director of H.R.H. Samdech Krom Preah Norodom Ranariddh, delivered at "A

Seminar on the Market Economy in Cambodia," which was held on Jan. 13 at The

Preah Sihanouk Raj Academy in Phnom Penh.

 

Allow me to congratulate the Khmer International Relations Institute for its

initiative and untiring efforts in successfully organizing and holding the

"Seminar on the Market Economy in Cambodia".

The Seminar could not have

been more timely as our country enters into an era of peace which provides us

with a challenge to convert this opportunity into lasting prosperity for the

country and all its people.

We are set to be a rapidly growing country as

we emerge into the world limelight after having undergone nearly 20 years of

civil war and a holocaust of immense dimensions.

In our efforts at

modernization and the full adoption of a free market economy in Cambodia, we

will need the help of all our friends, near and far, in rebuilding our country

to come on par with that of our neighbors.

The best means of doing this

is through a partnership of growth where on the one hand, foreign investors

participate through the infusion of capital and know-how, while we as host on

the other hand provide land, manpower and other resources.

This is a

clear 'win-win' situation for both investor and host and is the best formula

that will help us kick-start our economy.

As such, the first step in

rebuilding our economy is to encourage a healthy flow of capital into the

country.

Foreign investors should be made to see that the country has a

myriad of attractions and resources to offer, ranging from its extremely

friendly people who are eager to learn and its abundance of raw

materials.

To top off the attractive incentives the country has to offer,

the Royal Government of Cambodia, on the initiation of First Prime Minister His

Royal Highness Prince Norodom Ranariddh, has come up with a bold program which

offers investment security to foreign investors.

This is part of a

concerted effort to bring in much-needed foreign investment and His Royal

Highness Prince Ranariddh will be devoting much of his time, efforts and energy

towards the rehabilitation, rebuilding and reconstruction of this

nation.

Towards this end, His Royal Highness through his Cabinet has

given instructions to the Finance Ministry to review the country's tax

structure, with a view of awarding tax exemption to certain industries while

selected others might be given pioneer status for a limited period of

time.

These moves are designed to make our country more attractive as a

destination for foreign investors.

While saying that, I must also make

mention that we want genuine investors who are prepared to go long term with us

and help us rebuild this nation, while they themselves profit from the

undertaking.

However, we do not welcome those who simply want to come

here to exploit us.

We must always bear in mind that all countries in

this region are actively vying for foreign investments and the situation at the

macro level is one of competition among countries to make themselves attractive

to these foreign investors.

In this context, we categorically state that

the Royal Government encourages foreign investments here and we will not

initiate or enforce rules and regulations which restrict, hinder or discourage

foreign investments.

The Royal Government will impose minimal tax, or

perhaps even introduce the idea of tax exemption for certain

industries.

These could include raw materials, equipment related to

rehabilitation and reconstruction of the country, such as construction machinery

and equipment spare parts.

All industries related to these will be free

from import duty wherever applicable. In addition, import tax will be levied at

a minimal rate.

The First Prime Minister has also announced a profit tax

of between 15 to 20 per cent and that foreign investors can transfer their funds

abroad after tax.

Besides this, foreign investors will also be able to

obtain 10-year resident status, while others will be awarded easy access to

multiple entry visas.

The tax structure for business enterprises will be

reviewed if and when necessary, after careful evaluation to determine its

competitiveness and effectiveness.

Among the industries singled out for

special emphasis are the rehabilitation and revamping of the nation's irrigation

and agricultural systems and network. Prince Ranariddh would like agriculture to

take equal emphasis to other development projects as it is the lifeline of the

nation.

His Royal Highness has hopes of the nation being self-sufficient

in food by 1994.

Cambodia was self-sufficient in its food products

during the sixties and was even the first exporter of rice in

region.

However, civil war has resulted in us now being dependent on

foreign food aid. We are trying to address the situation.

In working

towards achieving self-sufficiency in food, the First Prime Minister is looking

into ways at improving the irrigation system, including the rehabilitation and

reconstruction of dams and waterways to facilitate improved and sustained

farming methods.

Another area the First Premier is zeroing in for

economic growth is tourism, being one of the major potential revenue

earners.

His Royal Highness wants to develop the tourism industry and in

this respect, has indicated his willingness to award casino licenses to

deserving parties with condition that the casino be situated in a comprehensive

integrated tourist complex and not be for the sole reason of change games.

Strict laws will be imposed to prohibit Cambodians from patronizing the

casino.

Meanwhile, Pochentong airport as the main gateway into the

country, will be given a new lease of life.

In the area of foreign trade,

exports (for 1993) from this nation up to last November, amounted to an

estimated U.S. $150 million.

The government hopes to reduce trade

imbalance from the current ratio of U.S. $1 in export for every U.S. $8

imported, to a more respectable ratio of U.S. $1 to every U.S. $3 to U.S. $4 in

imports.

If the steps taken prove successful, we will be embarking on

projects on a long-term basis of five years to further develop economy, trade,

commerce and industry.

To facilitate foreign investment, the Royal

Government will be establishing a one stop agency to handle all

investment-related aspects.

Once established, all queries on investment

will be undertaken and decisions made within 21 days from receipt of the

inquiries.

The agency will be established under the administration of the

National Investment Committee which, under the Chairmanship of Prince Ranariddh,

will look into the encouragement of private sector investment.

The

National Investment Committee will also have the task of promoting the country

and identifying suitable investment opportunities, potential sites and outline

sectoral investments in labor-intensive industries which will be given

priority.

However, although we are out woo foreign investments, the

government will still maintain its responsibility to protect the interests of

the nation.

His Royal Highness has emphasized that although foreign

investments are highly encouraged, the government is still committed to the

rehabilitation and development of the nation.