O N 12 October 1994, with Harold Payne, a tax specialist partner with Arthur Anderson in Perth, Western Australia,

I conducted an "Open Space" forum on "Business Investment in Indochina and Thailand". There

was a wide range of attendees from the Government, private sector interests, lawyers and accountants. It might

be interesting to assess how the findings of the forum look with the benefit of a year's hindsight.

The Investment Laws of Cambodia, Laos, Vietnam and Thailand were analysed. In summary, the brevity and simplicity

of the Lao PDR and Cambodian 1994 Investment Laws, when compared with those of Thailand and Vietnam, was considered

amajor advantage.

Conversely, the absence of the "fine print" of a sub-decree, which would enable potential investors to

understand the criteria applied by the Cambodia Investment Board (CIB) in reviewing an investment application and

thus structure their applications to secure maximum benefits, was a point of serious criticism.

Set out below are some of the issues which the Forum decided would most influence a decision to invest in a country;

along with the concensus as to how Cambodia looked in October 1994; followed with my assessment as to how Cambodia

stands one year later.

Is there a reasonable assurance of the personal safety of expatriate staff?

1994: This is a major negative factor.

1995: Personal security much improved.

What of the risk of foreign exchange losses through devaluation?

1994: Currency stable; inflation low.

1995: Currency stable; inflation low.

Is there reliable energy and telecommunications?

1994: Poor on both counts.

1995: Poor, but steps in hand for improved power generation by the middle of 1996. Telecommunications still very

poor.

Are there reliable and secure transport links?

1994: Travel to key provinces very risky.

1995: Road surfaces much improved, and less risk involved.

Is there stability in the Government's major policies?

1994: Coalition government seen as shaky.

1995: Politically, there is more stability.

Are there restrictions on expropriation or nationalisation?

1994: Policy unclear.

1995: Clear policy statements to protect against expropriation.

Is there clear legal independence and regulatory framework?

1994: Legal independence and regulatory process not clear.

1995: Situation not much improved.

Is there a government policy to encourage investors?

1994: Situation not clear.

1995: Strong positive statements to "talk up" investors.

What is the availability of experienced practitioners to provide advice?

1994: Limited number of practitioners.

1995: Several law and CPA firms now available.

What of the security of land tenure (lease or purchase)?

1994: New Investment Law not yet tested.

1995: Several major developments now underway.

What is the access to fair dispute resolution and non-corrupt judiciary?

1994: Courts not seen as objective or uncorrupt.

1995: Little apparent improvement, but First Prime Minister has said the issue is a priority.

What of the simplicity and clarity in the regulatory and law-making process?

1994: Problems perceived in all aspects.

1995: Improved, but information dissemination and access to copies of new laws and regulations still difficult.

Are visa and exit/entry requirements trouble free?

1994: Restrictions in visas and intra-Ministerial conflict apparent.

1995: Situation much improved.

Are there discretionary interventions by government officials?

1994: Much anecdotal evidence of abuse and corruption.

1995: Less anecdotal evidence, but corrupt actions persist at all levels despite Prime Ministers' strictures.

Are the Commercial and Corporate Laws clear, flexible and impartial?

1994: Mostly non-existent and, if present, unclear and uncertain.

1995: Little progress made.

What is the absorbtion capacity of the government to make decisions and delegate tasks?

1994: Perceived as a major problem.

1995: Still a problem, but a growing number of staff with the confidence to tackle tasks.

What is the availability of qualified local contractors and partners?

1994: Limited number with adequate experience.

1995: Improved sense of confidence as time passes and experience is developed.

Are there freedoms for investors to decide about with whom and on what basis to contract for goods and services?

1994: Generally more freedom than elsewhere in the region.

1995: Comparatively, the least restrictions in the region.

Is the government genuinely committed to a free market?

1994: The Constitution and policy papers say so but the situation still unclear.

1995: Experience is showing that Cambodia leads the region.

There are growing grounds for confidence that investors will enjoy success here. They face less restrictions and

certainly have greater and speedier access to Ministers than in any other country in the Mekong Region.

I thought the recent testinomy by Assistant Secretary of State for East Asian and Pacific Affairs, Winston Lord,

to the U.S. House Subcommittee on Asia and the Pacific, on 21 September 1995, (reported verbatim in the Phnom Penh

Post Oct 6-19, 1995), struck a nice balance.

It addressed the positive achievements, which those of us from countries with a longer history of democracy than

Cambodia can easily and often overlook. It also did not flinch from pointing out those areas where much needs to

be done.

If the government can persist with its open market initiatives, while also summoning the political will to address

issues which are overlaid with vested interests, I predict the investment climate will flourish and prosperity

promoted which we wish for all Cambodians, particularly the less-advantaged majority.

- (Michael Kennedy is a commercial lawyer in Phnom Penh. He has previously been a legal consultant for the Royal

Government, and has frequently contributed comment on laws and legal matter in the Phnom Penh Post).