KRAM DATED AUGUST 5, 1994
ON INVESTMENT
We,
His Majesty Norodom
Sihanouk,
King of
Cambodia,
orders:
Article 1: Promulgate
officially the Law on Investments of the Kingdom of Cambodia adopted by the
National Assembly on August 4, 1994.
Article 2: This Kram shall
be rendered in force from the date of its signature.
Made in Phnom Penh, August
5, 1994
In the Name of the King and
by His Order
Interim Head of State
CHAPTER I:
GENERAL PROVISIONS
Article 1:
This Law governs all
investments projects made by investors who are Cambodian citizens and/or
foreigners within the Kingdom of Cambodia.
Article 2:
Investor can be either a
natural person or a legal entity.
CHAPTER II:
THE COUNCIL FOR THE DEVELOPMENT OF CAMBODIA
The Council for the
Development of Cambodia is the sole and one-stop service organization
responsible for the rehabilitation, development and the oversight of investment
activities. The Council for the Development of Cambodia is the Royal
Government’s General Staff responsible for the evaluation and the decision
making on all rehabilitation, development and investment project activities.
Article 4:
The Council for the
Development of Cambodia comprises the following two operational Boards:
Article 5:
The organization and
functioning of the Council for the Development of Cambodia shall be established
by Anukret.
CHAPTER III:
INVESTMENT PROCEDURES
Article 6:
Investors have to submit
investment applications to the Council for the Development of Cambodia for
review and decision.
Article 7:
The Council for the
Development of Cambodia shall provide a response as to its decision to all
investor/applicants within a period of a maximum of forty five (45) days
following the date of submission of the complete investment application.
If without proper
justification, any Government officials who refuse to review and respond to
investors application past the above mentioned period of time shall be punished
by law.
CHAPTER IV:
INVESTMENT GUARANTEES
Article 8:
Investors shall be treated
in a non-discriminatory manner as set by law, except for ownership of land as
set forth in the Constitution of the Kingdom of Cambodia.
Article 9:
The Royal Government shall
not undertake nationalization policy that shall adversely affect private
properties of investors in the Kingdom of Cambodia.
Article 10:
The Royal Government shall
not impose price control on the products or services of investors who have
received prior approval from the Government.
Article 11:
In accordance with the
relevant laws and regulations issued and published to the public by the
National Bank of Cambodia, the Royal Government shall permit investors with
investments in Cambodia to purchase foreign currencies through the banking
system and to remit abroad these currencies for the discharge of financial
obligations incurred in connection with their investments. This concerns the
following payments:
1.
Payment for imports and repayment of principal and interest on international loans.
2.
Payment of royalties and management fees;
3.
Remittance of profits;
4.
Repatriation of invested capital in compliance with Chapter 8.
CHAPTER V:
INVESTMENT INCENTIVES
Article 12:
The Royal Government shall
make available incentives to encourage investments in such important fields as:
1.
Pioneer and/or high technology industries,
2.
Job creation,
3.
Export-oriented,
4.
Tourism industry,
5.
Agro-industry and Transformation industry,
6.
Physical infrastructure and energy,
7.
Provincial and rural development,
8.
Environmental protection, and
9.
Investments in Special Promotion Zone (SPZ) as shall be created by Law.
Article 13:
Incentives shall include the
exemption, in whole or in part, of duties and taxes.
Incentives shall consist of
the following:
1.
A corporate tax rate of 9% except the tax rate on the exploration and
exploitation of natural resources, timber, oil, mines, gold, and precious
stones which shall be set in other laws.
2.
A corporate tax exemption of up to 8 years depending on the characteristics of
the project and the priority of the government which shall be mentioned in an
Anukret. Corporate tax exemption shall take effect beginning from the year the
project derives its first profit. A 5-year loss-carried forward shall be
allowed. In the event the profits are being reinvested in the country, such
profits shall be exempted from all corporate tax.
3.
Non-taxation on the distribution of dividends or profits or proceeds of
investments, whether they will be transferred abroad or distributed in the
country.
4.
100% import duties exemption on construction materials, means of production,
equipment, intermediate goods, raw materials and spare parts used by:
a.
An export-oriented project with a minimum of 80% of the production set apart
for export, and
b.
Located in a designated Special Promotion Zone (SPZ) listed in a development
priority list issued by the Council;
c.
Tourism industry
d.
Labor-intensive industry, transformation industry, agro-industry,
e.
Physical Infrastructure and energy industry
These
100% exemption of duties and taxes mentioned above shall be in effect according
to the terms of the agreement or requirement book of the investment projects
which will produce goods for export in minimum of 80% of overall productivities
as stipulated in the above point (4) a and for the investment projects which
located in Special promotion Zone (SPZ) as in (4) b.
Beside
the kinds of investment projects in the above points (4) a and (4) b the 100%
exemption of duties and taxes shall only be authorized for an arrangement of
construction period of enterprises, factories, building and the first year of
operation of business production.
5.
100% exemption of export tax, if any;
6. The permission to bring into the Kingdom
of Cambodia foreign nationals who are:
Article 15:
The approval and incentives
granted by the Council for Development of Cambodia shall not be transferred or
assigned to any third parties.
CHAPTER VI:
LAND OWNERSHIP AND USE
Article 16:
In accordance with the
Constitution and relevant laws and regulations pertaining to the ownership and
use of land:
1.
Ownership of land for the purpose of carrying on promoted investment activities
shall be vested only in natural persons holding Cambodian citizenship or in
legal entities in which more than 51% of the equity capital are directly owned
by natural persons or legal entities holding Cambodian citizenship.
2.
Use of land shall be permitted to investors, including long-term leases of up
to a period of 70 years, renewable upon request. Upon such use may include the
right of ownership of real and personal property situated on the land as may be
permitted by the law.
CHAPTER VII:
EMPLOYMENT PRACTICES
Article 17:
Investors in the Kingdom of
Cambodia shall be free to hire Cambodian nationals and foreign nationals of
their choosing in compliance with the labor and immigration law.
Article 18:
The investors shall be
allowed to hire foreign employees who are listed in Article 14 (6) provided that:
1.
The qualification and expertise are not available in the Kingdom of Cambodia
among the Cambodian populace. In the event of such hiring, appropriate
documentation including the photocopies of the employee’s passport, certificate
and/or degree, and a curriculum vitae shall be submitted to the Council;
2.
Investors shall have the obligation to provide adequate and consistent training
to Cambodian employees,
3.
Promotion of Cambodian staff to senior positions will be made over time;
Article 19:
Foreign employees shall be
allowed to remit abroad their wages and salaries earned in the Kingdom, after
payment of appropriate tax, in foreign currencies obtained through the banking
system.
CHAPTER VIII: DISPUTES AND DISSOLUTION
Article 20:
Any dispute relating to a
promoted investment established in the Kingdom by a Cambodian or a foreign
national concerning its rights and obligations set forth in the Law shall be
settled amicably as far as possible through consultation between the parties in
dispute.
Should the parties failed to
reach an amicable settlement within two month from the date of the first
written request to enter such consultations, the dispute shall be brought by
either party for:
Article 21:
In the event a promoted
company intend to end its activity in the Kingdom of Cambodia, it will have to
inform the Council through either a registered letter or a hand delivered
letter stating the reasons of such a decision, which letter shall be signed by
the investor or his attorney-in fact.
Article 22:
In the event of a proposal
for a dissolution of a company without judicial procedures, the investor shall
provide proofs to the Council that the company has properly settled its
potential creditors, complainants and claims from the Ministry of Economy and
Finance before the investor is allowed to officially dissolve his company or
enterprise according to the applicable commercial law.
Article 23:
Once the investor is allowed
to officially dissolve his company or enterprise either within the judicial
procedures or not, the investor can transfer the remaining proceeds of its
assets overseas or use them in the Kingdom of Cambodia. However, in the event
that the dissolving company had used machinery and equipment that were imported
duty free for less than five years, the company will have the obligations to
pay the duties applicable to those machinery and equipment.
CHAPTER IX: FINAL PROVISIONS
Article 24:
Investments authorized under
the previous "Law on Investment" of the State of Cambodia and its
anukrets shall be subject to the same benefits and obligations as stated under
this Law. This law is not retroactive.
Article 25:
In the case where the
promoted company violates or fails to comply with the conditions stipulated by
the Council, the Council shall have the power to withdraw the rights and
benefits granted to him, in whole or in part.
Article 26:
This Law shall be
promulgated immediately.
This law is adopted by the
National Assembly of the Kingdom of Cambodia in Phnom Penh on August 4, 1994
during the extraordinary session of the first legislature.
Phnom Penh, August 4, 1994
The Acting Chairman of the
National Assembly
Loy Sim Chheang