Cambodia Investment Review
The International Business Chamber (IBC) has hosted an ‘Update on the 19th Government-Private Sector Forum– 19th G-PSF,’ reinforcing the Royal Government of Cambodia’s commitment to fostering a dynamic business and investment climate. The forum hosted on the 13th of November 2023 brought together senior government officials and prominent industry leaders, on a spectrum of topics, ranging from the refinement of policy reforms to addressing the practical challenges faced by the private sector.
H.E. Dr. Phan Phalla, Secretary of State of the Ministry of Economy and Finance provided an overview of the Royal Government’s strategies designed to streamline business operations and bolster economic growth. His presentation emphasized on a series of initiatives, reflecting the Royal Government’s endeavor to simplify, facilitate and optimize business processes for IBC members.
In his address, H.E. Dr. Phan Phalla also highlighted the Royal Government’s dedication to maintaining an ongoing and constructive dialogue with the private sector. He underscored the importance of regular and frequent communication beyond the G-PSF, pointing out the availability and utility of the 14 established working groups (now 15 working groups) for the private sector to express their concerns and suggestions.
“The private sector’s input is invaluable, and we want to ensure that there are ample opportunities for their voices to be heard, not just during these large-scale events but throughout the year,” as emphasized by H.E. Dr. Phan Phalla.
Among the key reforms highlighted by H.E. Dr. Phan Phalla were:
- Online Business Registration Portal: Acknowledging the successes of the online business registration system (CamDx) in reducing time and costs, H.E. Dr. Phan Phalla addressed the needs to streamline further commercial processes and administrative reforms and review all licenses and permits in each sector in order to remove overlapping licenses and permits.
- Labor Compliance Reform: The Royal Government had introduced a joint inspection team to reduce the burden of multiple inspections from different ministries. This move aimed to ensure that non-tax compliance checks are managed efficiently, and only through the Ministry of Labor.
- Taxation Facilitation: Responding to concerns about tax collection practices, the Royal Government proactively worked on a new standard operating procedure for tax auditors, seeking various inputs and approvals from the business community.
- Logistics and Transportation Support: Initiatives included the implementation of a pre-arrival processing and simplification of customs clearance formalities for postal, small parcel and e-commerce goods b dividing those items into four categories, as well as the increase in the weight allowance for trucks from 40 to 45 tons to reduce logistics and transportation costs.
- Tourism Support: The government opted on tax debts forgiven for hotel, guesthouses, restaurants and travel agencies operating in Siem Reap, coupled with favorable loan request conditions and loan restructuring options from the SME Bank and other commercial banks.
- Agriculture Sector Boost: The Royal Government announced the continued tax exemptions and supports for the agriculture sector, recognizing its crucial role during the pandemic and in empowering rural communities.
- Banking and Finance Adjustments: The reserve requirement for commercial banks had been reduced from 9% to 7% for the next 12 months to enhance liquidity and encourage credit growth.
- Real-Estate Sector Reform: The long-term leasing mechanism had been revisited and will be promoted to stimulate the real estate demand in the current market.
Government’s Commitment to Addressing More Complex Challenges
H.E. Dr. Phan Phalla further elaborated on the Royal Government’s commitment to addressing more complex challenges such as improvements in railway services, electricity, logistics, and trainings for skilled workers. These issues are to be incorporated into a four-year reform program aimed to enhance the competitiveness, diversification, and resilience of the Cambodian economy.
Reflecting on the government’s approach, H.E. Dr. Phan Phalla remarked, “We highly value the input from the private sector. Maintaining a close connection is vital, and we are committed to improving the investment climate based on the recommendations from major development banks and their reports.”
The IBC forum highlighted the Cambodian Royal Government’s proactive approaches to addressing the concerns of the private sector, with a clear focus on implementing these measures efficiently and transparently. These initiatives are seen as a pivotal moment in Cambodia’s journey towards a more robust and investor-friendly business environment, signaling a positive economic outlook for both domestic and foreign investors.
