INVESTMENT ENVIRONMENTIn Cambodia

Phnom Penh, 7th November 2007

Presented bySok Chenda

Secretary General Council for the Development of Cambodia

Economic PerformanceEconomic Performance

0%

2%

4%

6%

8%

10%

12%

14%

16%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

GDP 4.10 9.20 6.50 5.30 5.70 5.00 12.60 9.20 7.70 6.20 8.60 10.0 13.4 10.8 9%Inflation 41% 17.90 3.50 10% 9.20 13.30 4.00 -0.80 0.20 3.30 1.20 3.90 5.80 4.70 4%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 est

Source: SNEC & MEF

Average growth for last 5 years is 9.8%

2006200620052005200420042003200320022002200120012000200019991999

513513454454386386342342325325307307288288282282GDP per capitaGDP per capita

Approved Investments by CountryApproved Investments by Country1994 1994 –– 11stst Half Half 20020077

1,666

248591

697

1,986

621

2,406

281 432

490

500

1,000

1,500

2,000

2,500

China

Hong Kong

Taiwan EU

Malays

iaUSA

Korea

Singapore

Thailan

dJa

pan

In Million USD Total USD 12,798 million

Investments by SectorInvestments by Sector1994 – 1st Half 2007

Industry35%

Agriculture8%

Service34%

Tourism23%

Council for the Development of Council for the Development of CambodiaCambodia

A One Stop ServiceA One Stop Service

Open Door PolicyOpen Door Policy

H.E Mr. Sok ChendaSecretary General

Secretary General CSEZBH.E Sok Chenda

Secretary General CRDBH.E. Mr. Chhieng Yanara

Public relations and investment promotionInvestment project evaluation and incentivesEnvironmental impact assessmentInter-ministerial coordinationPrivate investments strategies analysisLegal affairs and investment lawInvestment projects monitoringAdministration

Public relations and Aid coordination Documentation and informationManagement of bilateral aid AsiaManagement of bilateral aid EU& US Management of multilateral aid Management of aid from the UNNGO coordination and relationsProject evaluationAdministration

H.E Mr. Cham Prasidh, Senior Minister, Minister of Commerce

Vice Chairman

H.E Mr. Keat Chhon, Senior MinisterMinister of Economy and Finance

1st Vice Chairman

H.E Mr. Kong Vibol, First Secretary of StateMinistry of Economy and Finance

Vice Chairman

Secretary General CIBH.E. Mr. Suon Sitthy

Policy and planningOperation and managementProject analysis and registrationAdministration

Trouble Shooting

Committee

Samdech Hun SenPrime Minister of the RGC

Chairman

A One Stop ServiceA One Stop Service

Information & ApplicationInformation & ApplicationApprovalApprovalCustoms Duty & Tax Customs Duty & Tax ExemptionExemptionVisa & Work PermitVisa & Work PermitCompany RegistrationCompany Registration

Investment IncentivesInvestment Incentives

20% Corporate Tax 20% Corporate Tax Tax holidays: Trigger period +3years+n; 6y <TH<9y Tax holidays: Trigger period +3years+n; 6y <TH<9y Repatriation of profit (withholding tax)Repatriation of profit (withholding tax)Reinvestment of earning (special depreciation)Reinvestment of earning (special depreciation)FullFull Import Duty ExemptionImport Duty ExemptionNo Export TaxNo Export Tax

Investment ProtectionInvestment Protection

Equal treatment of all investorsEqual treatment of all investorsNo nationalization adversely affecting the No nationalization adversely affecting the property of investorsproperty of investorsNo price controls on products or servicesNo price controls on products or servicesNo requirement of local equity participationNo requirement of local equity participationNo restriction on No restriction on forexforex convertibilityconvertibilityFree remittance of foreign currencies abroad.Free remittance of foreign currencies abroad.

The Investment Law and Sub-decree contains a number of important guarantees for the investors:

AgroAgro--businessbusinessBasic agrarian economyBasic agrarian economyNatural endowments:Natural endowments:

Abundant landAbundant landRich fishery resourcesRich fishery resourcesTimber resources Timber resources

Organic cropsOrganic cropsValueValue--added emphasis/ added emphasis/ Food processingFood processingNew product developmentNew product development

Infrastructure: A definite prospect

Priority for infrastructurePriority for infrastructureInfrastructure rehabilitationInfrastructure rehabilitationMultilateral aid availabilityMultilateral aid availabilityDecentralizationDecentralizationRegional opportunitiesRegional opportunitiesASEAN & GMS integrationASEAN & GMS integrationPrivate Participation in Private Participation in Infrastructure (PPI): BOT, Infrastructure (PPI): BOT, BOO, etcBOO, etc……

Thailand LaosRegional opportunities

Tourism Center

Eco-Tourism

Triangle Development Zone

SEZ

Physical Infrastructures: Physical Infrastructures: Work in progressWork in progress

Asian Highway A1: Build and Rehabilitate Asian Highway A1: Build and Rehabilitate Bangkok Bangkok –– Phnom Penh Phnom Penh –– VungVung Tao RoadTao Road

Rehabilitate RN7 from Southern Laos to Rehabilitate RN7 from Southern Laos to Sihanoukville Deep SeaportSihanoukville Deep Seaport

Upgrade and Expand Sihanoukville PortUpgrade and Expand Sihanoukville Port

Upgrade and Expand Phnom Penh, Siem Upgrade and Expand Phnom Penh, Siem Reap and Sihanoukville AirportsReap and Sihanoukville Airports

GMS: Infrastructure Improvement 1992-2012

As of 1992As of 2004Projected by 2012

North-South Economic Corridor

East-West Economic Corridor

Southern Economic Corridor

GMS GMS Flagship Flagship ProjectsProjects

TourismTourismNatural beautyNatural beauty

World Heritage MonumentsWorld Heritage Monuments

Open Sky Policy to Siem ReapOpen Sky Policy to Siem Reap

Ability to attract Ability to attract ““addadd--onon”” tripstrips

Novelty valueNovelty value

177 220260 219

287

368466

604

786

701

1055

1421 1770

1400

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

as of S

eptem

ber 20

07

Visitors to CambodiaVisitors to Cambodia

Thousand (000)

Tourism Vision 2010Tourism Vision 2010

3,120,0002,200,0001,770,000Visitor Arrivals201020082006YEAR

Manufacturing & ExportManufacturing & Export

Competitive labor costCompetitive labor costTax incentivesTax incentives

•• Market accessMarket access•• Regional arrangementRegional arrangement

Diversification of the economyDiversification of the economy

Promote industries and services currently not available in Cambodia to diversify the growth base

The Government adopted a SubThe Government adopted a Sub--decree on the Establishment decree on the Establishment and Management of Special Economic Zone (SEZ) in Dec 2005and Management of Special Economic Zone (SEZ) in Dec 2005

SEZ will include export processing zones and free trade zonesSEZ will include export processing zones and free trade zones

Special Economic ZonesSpecial Economic ZonesThe main rationale of establishing The main rationale of establishing SEZsSEZs is to:is to:

–– Provide investors with adequate infrastructure and supportive faProvide investors with adequate infrastructure and supportive facilitiescilities–– Effectively respond to the challenge of diversifying the CambodiEffectively respond to the challenge of diversifying the Cambodian economy an economy

and to promote demandand to promote demand--driven development, such as export promotiondriven development, such as export promotion–– Enhance competitiveness of garment industry and other labor inteEnhance competitiveness of garment industry and other labor intensive nsive

activitiesactivities–– Promote agroPromote agro--industry, food processingindustry, food processing–– Promote assembling industryPromote assembling industry–– Promote electronic and electric appliances industriesPromote electronic and electric appliances industries

The following growth poles have been identified for industrial dThe following growth poles have been identified for industrial development:evelopment:–– PoipetPoipet and and KohKoh Kong (at the CambodianKong (at the Cambodian--Thai border)Thai border)–– BavetBavet and Phnom Den (at the Cambodianand Phnom Den (at the Cambodian--Vietnamese border)Vietnamese border)–– Phnom PenhPhnom Penh–– SihanoukvilleSihanoukville

SihanoukvilleSihanoukville Port has Port has harbourharbour facilities and facilities and ““dry portsdry ports”” which have been which have been developed to enhance its competitive edge as an international codeveloped to enhance its competitive edge as an international commercial mmercial gatewaygateway

Zone Developer(Private Company)

- Administration- Finance- Operation - Promotion- >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>- >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Special Economic Zones Administration

(One-Stop Service)

- Representative of the CambodianSpecial Economic Zone Board Chairman

-Representative of the Custom and Excise Department Member

-Representative of CAMCONTROL Member

- Representative of the Ministry of Commerce Member

- Representative of the Ministry of Labor and Vocational Training Member

Samdech Hun SenPrime Minister

Chairman of CDC

Cambodian Special Economic Zones Board

“CSEZB”

Policy and Planning Department

Operation and Management Department

Project Analysis and Registration

Department

Administration Department

Trouble Shooting Committee-Chairmen of the CDC Chairman-Minister of the Council of Ministers Member -Minister of Economy and Finance Member -Minister of Commerce Member -Minister of Land Management, Urbanism and Construction Member

-Minister of Environment Member -Minister of Industry, Mines and Energy Member -Minister of Public Works and

Transportation Member-Minister of Labor and Vocational

Training Member -Secretary General of the CDC Member -Secretary General of the CSEZB Secretary

Secretary General

Deputy Secretary General

Structureat CDC and at each SEZ

One Stop ServiceOne Stop ServiceSpecial Economic Zone Administration (SEZA)Special Economic Zone Administration (SEZA)

company registration and investment license company registration and investment license export/import permit export/import permit Work permit and Labor books (both workers and Work permit and Labor books (both workers and expatriate)expatriate)SEZA will provide on site immediate legal and SEZA will provide on site immediate legal and administrative assistance administrative assistance

Infrastructure/UtilitiesInfrastructure/Utilitiesin SEZin SEZ

Internal roads in connection to public roads Internal roads in connection to public roads Dry port/bonded warehouse Dry port/bonded warehouse TelecommunicationsTelecommunicationsElectricityElectricityIndustrial water supplyIndustrial water supplyWaste water treatment plantWaste water treatment plantDormitory and canteen Dormitory and canteen

Investment IncentivesInvestment Incentivesin SEZin SEZ

up to 9 years tax holidayup to 9 years tax holiday0% rate on Value0% rate on Value--Added Tax Added Tax FullFull Import Duty Exemption: raw materials, machinery, Import Duty Exemption: raw materials, machinery, equipmentequipment……No Export TaxNo Export Taxemployment of foreign expatriate authorized up to employment of foreign expatriate authorized up to 10% of all employees, staff and workers10% of all employees, staff and workerspermanent visa for families and investorspermanent visa for families and investorsLong time lease up to 99 yearLong time lease up to 99 yearFree repatriation of profitFree repatriation of profit

Reasons to invest in CambodiaReasons to invest in Cambodia

Open economyOpen economySound Macroeconomic EnvironmentSound Macroeconomic EnvironmentCompetitive Investment IncentivesCompetitive Investment IncentivesOne Stop Service One Stop Service –– FastFast--Track Investment Track Investment Approval Process (28 days)Approval Process (28 days)Low Labor CostLow Labor CostAccess to ASEAN and World MarketsAccess to ASEAN and World MarketsPreferential Trading StatusPreferential Trading StatusStrategic LocationStrategic Location

2007 Index of Economic Freedom2007 Index of Economic Freedomby Heritage Foundation/Wall Street Journalby Heritage Foundation/Wall Street Journal

Cambodia ranks 102 out of 170 countriesCambodia ranks 102 out of 170 countriesCategory : Mostly FreeCategory : Mostly FreeScore : 100=most freeScore : 100=most free–– Trade policy :47.2 (high level of protectionism)Trade policy :47.2 (high level of protectionism)–– Fiscal Burden: 94.2 (lost cost of government)Fiscal Burden: 94.2 (lost cost of government)–– Government intervention in the economy : 85.1 (moderate level)Government intervention in the economy : 85.1 (moderate level)–– Monetary policy : 81.1 (very low level of inflation)Monetary policy : 81.1 (very low level of inflation)–– FDI : 50 (moderate barriers)FDI : 50 (moderate barriers)–– Banking and Finance : 50 (low level of restriction)Banking and Finance : 50 (low level of restriction)–– Wages and Finance : 67.7 (low level of intervention)Wages and Finance : 67.7 (low level of intervention)–– Property rights : 30 (low level of protection)Property rights : 30 (low level of protection)

BACK

Regional and Global IntegrationRegional and Global Integration

Member of WTO (13.10.2004)ASEAN - AFTA/CEPT – AIAGreater Mekong Subregion-GMSWIPO, WCOImplement the International Accounting StandardMember of MIGA, ICSID and other international organizations

JOININGWTO

JOININGASEAN

ACCESS TOTHE U.S.MARKET

ACCESS TO THEEUROPEANMARKET

Cambodia has embraced the globalization process as part of its outward looking economic development strategy….

Invest in Cambodia and you

have 14 million consumers

Invest Invest in Cambodia in Cambodia and you and you

havehave 14 million14 million consumers consumers Invest in Cambodia and you

have 240 million consumers

virtually at your doorstep

Invest Invest in Cambodia in Cambodia and you and you

havehave 240 million240 million consumers consumers

virtually at your doorstepvirtually at your doorstep

Invest in Cambodia and you have

553millionconsumers at your

doorstep

Invest in Cambodia Invest in Cambodia and youand you havehave

553million553millionconsumers at your consumers at your

doorstepdoorstep

.

Phnom PenhThe Philippines

Singapore

Indonesia

MyanmarSouthern China

ManilaBangkok

Kunming

Yangon

Brunei

Jakarta

Begawan

Hanoi

Laoso Vientiane

CAMBODIA

Malaysia

Kuala Lumpur

ThailandVietnam

1h:30 in average

Thank you for your attentionThank you for your attention