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
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
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
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
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
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
The Royal Government will impose minimal tax, or
perhaps even introduce the idea of tax exemption for certain
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
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
However, civil war has resulted in us now being dependent on
foreign food aid. We are trying to address the situation.
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
Another area the First Premier is zeroing in for
economic growth is tourism, being one of the major potential revenue
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
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
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
Once established, all queries on investment
will be undertaken and decisions made within 21 days from receipt of the
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.
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
However, although we are out woo foreign investments, the
government will still maintain its responsibility to protect the interests of
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.