LAW ON THE INVESTMENT
OF THE KINGDOM OF CAMBODIA

Chapter 1
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 2: The Council for the Development of Cambodia

Article 3.
The Council  for  the  Development  of  Cambodia  is the   sole and  one-stop service organization responsible for the rehabilitation, development and investment activities. The Council for the Development of Cambodia is the Royal Government's headquarters responsible for the evaluation and the decision making on all rehabilitation and development, and investment project activities. 

Article 4.
The Council for the Development of Cambodia comprises the following two executive Boards :

        1. The Cambodian Rehabilitation and Development Board
2. The Cambodian Investment Board

Article 5.
The organization and functioning of the Council for the Development of Cambodia shall be mentioned by Sub-Decree.

Chapter 3
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 investors/applicants within a period of forty five (45) days maximum following the date of submission of the complete investment application. 

Any Government officials who, without proper justification, refuse to review and respond to investors' application past the above mentioned period of time shall be punished by law. 

Chapter 4
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 which 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 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 5
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. 

Article 14.
Incentives shall consists of the following :

(1)  A corporate tax rate of 9% except for the exploration and exploitation of natural resources,
timber, oil, mines, gold, and precious stones which shall be set in separate 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 a Sub-Decree. 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 total production as stipulated in the above point (4) a. and for the investment projects which will be located in Special Promotion Zone as in (4) b. 

(5)    100% exemption of export tax, if any. 

(6)    The permission to bring into the Kingdom of Cambodia foreign nationals who are : 

-    Management personnel and experts
-    Technical personnel
-    Skilled workers
-    Spouses and dependents of the above
     personnel as authorized by the Council
     for the Development of Cambodia and
     in compliance with the immigration and
     labor law. 

Article 15.
The approval and incentives granted by the Council for the Development of Cambodia shall not be transferable or assigned to any third parties. 

Chapter 6
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 or in legal entities holding Cambodian citizenship.  Legal entity holding Cambodian citizenship
                is the legal entity in which more than 51% of the shares are 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 7
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                   population.   In the event of such hiring, appropriate documentation including the photocopies of the employee's                   passport, certificate and/or degree, and a resume 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, appropriate tax, in foreign currencies obtained through the banking system. 

Chapter 8
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 months, the dispute shall be brought by either party for : 

- conciliation before the Council which shall provide its opinion, or
- refer the matter to the court of the Kingdom of Cambodia, or
- refer to any international rules to settle the disputes as mutually agreed by the parties 

Article 21.
In the event a promoted company intends 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 investors' authorized directors. 

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, suitors and claims from the Ministry of Economy and Finance before the investor is allowed to officially dissolve his company according to the applicable commercial law. 

Article 23. 
Once the investor is allowed to officially dissolve his company 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 which 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 9
Final Provisions

Article 24.
Investments authorized under the previous "Law on Investment" of the State of Cambodia and its Sub-Decrees 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
Chairman

 Statistic:

CAMBODIAN INVESTMENT BOARD
Analysis of Capital by Country

Projects Approved from 01-Aug-94 through 31-Dec-94

COUNTRY	INVESTMENT AMOUNT	PERCENTAGES
Cambodia United States Singapore Malaysia China Indonesia Thailand United Kingdom Hong Kong Korea Taiwan Australia	$248,618,414 $193,197,480 $42,848,800 $42,405,960 $25,785,400 $25,725,000 $5,606,150 $3,880,000 $3,386,782 $1,742,400 $565,000 $336,630	41.85% 32.52% 7.21% 7.14% 4.34% 4.33% 0.94% 0.65% 0.57% 0.29% 0.10% 0.06%
TOTAL	$594,098,016	100%

CAMBODIAN INVESTMENT BOARD
Analysis of Capital by Country

Projects Approved from 01-Jan-95 through 31-Dec-95

COUNTRY	INVESTMENT AMOUNT	PERCENTAGES
Malaysia Cambodia France United States Singapore Canada Thailand United Kingdom Taiwan Hong Kong China Belgium Australia Portugal Korea Indonesia Japan India Vietnam New Zealand	$1,451,775,067 $411,275,412 $271,333,923 $109,784,500 $108,235,381 $39,200,000 $36,454,817 $23,011,149 $14,407,930 $12,603,461 $6,429,600 $1,860,000 $1,269,248 $1,000,000 $785,310 $656,000 $562,500 $340,000 $173,499 $11,270	58.28% 16.51% 10.89% 4.41% 4.34% 1.57% 1.46% 0.92% 0.58% 0.51% 0.26% 0.07% 0.05% 0.04% 0.03% 0.03% 0.02% 0.01% 0.01% 0.00%
TOTAL	$2,491,169,067	100%

CAMBODIAN INVESTMENT BOARD
Analysis of Capital by Country

Projects Approved from 01-Jan-96 through 31-Dec-96

COUNTRY	INVESTMENT AMOUNT	PERCENTAGES
Cambodia Malaysia Taiwan Thailand China Singapore Hong Kong United Kingdom Indonesia Netherlands Japan France Australia Switzerland United States Korea Canada Sri Lanka Germany Portugal	$198,532,563 $193,907,422 $163,726,505 $50,406,697 $37,318,703 $35,465,963 $34,304,655 $32,946,032 $13,496,318 $13,468,500 $11,018,950 $9,960,450 $7,864,690 $5,950,000 $4,787,260 $4,550,100 $2,730,000 $280,000 $93,000 $62,000	24.19% 23.62% 19.95% 6.14% 4.55% 4.32% 4.18% 4.01% 1.64% 1.64% 1.34% 1.21% 0.96% 0.72% 0.58% 0.55% 0.33% 0.03% 0.01% 0.01%
TOTAL	$820,869,807	100%

CAMBODIAN INVESTMENT BOARD
Analysis of Capital by Country

Projects Approved from 01-Jan-97 through 30-Apr-97

COUNTRY	INVESTMENT AMOUNT	PERCENTAGES
Korea Cambodia Hong Kong United States Malaysia Taiwan China Thailand Singapore United Kingdom Macao Australia France Canada Germany	$170,333,950 $59,561,296 $54,077,488 $23,561,499 $18,049,200 $13,044,470 $7,717,465 $5,919,398 $5,564,272 $933,117 $749,400 $280,000 $222,250 $150,000 $137,690	47.28% 16.53% 15.01% 6.54% 5.01% 3.62% 2.14% 1.64% 1.54% 0.26% 0.21% 0.08% 0.06% 0.04% 0.04%
TOTAL	$360,301,494	100%

CAMBODIAN INVESTMENT BOARD
Analysis of Capital by Sector

Projects Approved from 01-Jan-97 through 30-Apr-97

CAMBODIAN INVESTMENT BOARD
Analysis of Capital by Sector

Projects Approved from 01-Jan-96 through 31-Dec-96

CAMBODIAN INVESTMENT BOARD
Analysis of Capital by Sector

Projects Approved from 01-Jan-95 through 31-Dec-95

CAMBODIAN INVESTMENT BOARD
Analysis of Capital by Sector

Projects Approved from 01-Aug-94 through 31-Dec-94

DFDL Translation of Investment Sub-Decree

* * * * * * * *

Royal Government of Cambodia
No. 88 Ankr-BK

SUB-DECREE
ON
THE IMPLEMENTATION OF THE LAW ON INVESTMENT
IN THE KINGDOM OF CAMBODIA

___________________________________

THE ROYAL GOVERNMENT OF CAMBODIA

                    · Having seen the 1993 Constitution of the Kingdom of Cambodia

· Having seen the Royal Decree dated September 18, 1993 on the Appointment of the First Prime Minister and the Second Prime Minister

· Having seen Royal Decree dated November 1, 1993 on the Appointment of the Royal Government of Cambodia

· Having seen Royal Decree No. NS/RKT/1094/83, dated October 24, 1994 and the Royal Decree No. NS/RKT/1094/90, dated October 31, 1994 on the reorganization of the Composition of the Royal Government of Cambodia

· Having seen Royal Decree No. NS/RKT/0897/147, dated August 7, 1997 on the reorganization of the Composition of the Royal Government of Cambodia

· Having seen the Law on the Organization and Functioning of the Council of Ministers, promulgated by the Royal Decree dated July 20, 1994

· Having seen Royal Decree No. 03 NS 94, dated August 5, 1994 on the Investment Law in the Kingdom of Cambodia

· Having see Sub-Decree No. 51 AK.BK dated June 26, 1995 on the Organization and Functioning of the Council for the Development of Cambodia

· Following the proposal of the Council for the Development of Cambodia and approval by the Council of Ministers at the plenary session on December 4, 1997.

------------------------------------------------------------------------------------------------------------

DECIDES THAT:
CHAPTER 1

GENERAL PROVISIONS

ARTICLE 1: THE TECHNICAL TERMS IN THIS SUB-DECREE SHALL HAVE THE FOLLOWING MEANINGS:

"Applicant" means a natural person or legal entity which meets the requirements set forth in Article 6.1(f) and which has submitted an Application to invest or to establish an Investment Enterprise. An Applicant may include any existing Investment Enterprise set forth in Articles 3.4 and 5.2.

"Application" means an Application to request authorization to receive Incentives according to the Investment Law in the Kingdom of Cambodia, promulgated by Royal Decree No. 03 NS 94, dated August 5, 1994, and shall consist of, at a minimum, those documents set forth in Article 6.1.

"Investor" means any natural person or legal entity who meets the qualifications set forth in Article 6.1(f) and Article 9, and who has invested or proposed to invest.

"Investment Enterprise" means either a Cambodian legal entity or a foreign legal entity that has been authorized to invest by the Council for the Development of Cambodia, under the Investment Law of the Kingdom of Cambodia and this sub-decree.

"Cambodian Legal Entity" means any legal entity incorporated and registered at the Ministry of Commerce under the Laws of the Kingdom of Cambodia and having a Cambodian natural person or legal entity holding more than 51% (fifty one percent) of the total capital.

"Foreign Legal Entity" means any legal entity that does not have Cambodian nationality and that is not incorporated under laws of the Kingdom of Cambodia.

"Incentives" means any one of the special privileges granted by the Royal Government to Investors in accordance with the criteria set forth in the Investment Law of the Kingdom of Cambodia and other regulations.

"Investment" means all investment projects that receive any Incentives from the Royal Government in accordance with the laws and regulations on investment.

"Annex" means an Annex to this sub-decree and is part of this sub-decree.

"Capital Goods" means tangible assets with a use period of more than one year.

"One Stop Service" refers to the Cambodian Investment Board which is a mechanism with the role to examine, discuss, and give advice to the Council for the Development of Cambodia in order to review and decide on the private investment project.

ARTICLE 2: APPLICABILITY AND PURPOSE OF THIS SUB-DECREE

1. 2. Applicability: This sub-decree applies to all investments, investment activities and all Investment Enterprises that received authorization and Incentives from the Council for the Development of Cambodia.

   3. Purpose: This sub-decree covers the implementation of the Investment Law of the Kingdom of Cambodia and is intended to encourage, manage and coordinate all activities and investments by Cambodian and Foreign Investors in the Kingdom of Cambodia.

ARTICLE 3: SECTORS FOR INVESTMENT

1. 1. Investment Sectors: The list of investment sectors that shall receive Incentives or shall not receive Incentives is specified in Annex 1 of this sub-decree. This Annex may be amended from time to time.

   2. Restriction on Certain Sectors: The restriction on certain investment sectors shall be set by sub-decree, based upon national security, social safety and economic necessity.

   3. Prohibited Investment Sector: Any investment activities that are contrary to the provisions of the laws in force shall be prohibited.

   4. Existing Investment Enterprise: For existing Investment Enterprises, when there is a restriction on certain sectors as set forth in Article 3.2 above, the Royal Government shall have the duty to create a mixed committee comprised of the Royal Government and Investors in order to fairly resolve this problem, with the approval of both sides. Each party shall appoint an appraiser, and the fair price shall be the average of the prices determined by the appraisers. Where the difference of the amounts determined by the appraisers exceeds 15% of the two greater amount, a third independent appraiser shall be appointed by the two previous independent appraisers, to determine the fair price between the two different assessed prices. The Investor shall accept implementation in accordance with this final price without protest.

ARTICLE 4: ELIGIBLE INVESTORS

1. 1. Foreign Investment: The Royal Government welcomes all investment from foreign nationals on all economic sectors, except for some activities, which are prohibited under the provision of law, regulations, notifications or sub-decrees.

   2. Use of Nominees: No natural person or legal entity that has Cambodian nationality shall act for or represent, either directly or indirectly, a natural person or a legal entity that has foreign nationality for the purpose of avoiding the implementation of this sub-decree, and facilitate any natural person or legal entity that has foreign nationality with the intent to avoid the effect of any restrictions or prohibitions on the activities of a natural person or legal entity that has foreign nationality.

CHAPTER 2

INVESTMENT APPLICATION AND APPROVAL

ARTICLE 5: INVESTMENT APPLICATION

1. 1. Authorization from the Council for the Development of Cambodia: Pursuant to Article 3 of the Investment Law of the Kingdom of Cambodia and Article 2 of this sub-decree, Investors who wish to receive investment Incentives shall have prior approval from the Council for the Development of Cambodia.

   2. Existing Investment Enterprises: Any Investment Enterprise which has been established prior to the effective date of this sub-decree, regardless of whether or not it has already commenced commercial operations in the Kingdom of Cambodia, and which wishes to have the investment Incentives must file an Application with the Council for the Development of Cambodia. This investment Application is only an additional procedure to [obtain] the Incentives.

   3. Applications: Duly completed Applications shall be signed and submitted by the Applicant or by an authorized representative of the Applicant to the Council for the Development of Cambodia for its review and decision. The power of attorney shall be valid and attached to this Application.

ARTICLE 6: REQUIREMENTS FOR APPLICATION

Application Documents: A completed Application shall be comprised of the following documents:

1. A completed Application in the form prescribed by the Council for the Development of Cambodia and signed by a duly authorized representative of the Applicant, including a valid copy of the power of attorney.
2. A letter stating the intention of the Applicant to invest in the Kingdom of Cambodia with a brief summary about the Investor, the investment project, the objectives of the Investors, and any other requests related to the investment project to be submitted to the Council for the Development of Cambodia.
3. Documents relating to the incorporation of the Investment Enterprise, such as the Memorandum of Association and Articles of Association of the Enterprise that are in compliance with laws currently in force in the Kingdom of Cambodia.
4. A detailed study of the economic and technical feasibility of the Investment Enterprise, including a summary of the manufacturing technology of the Investment Enterprise.
5. Such other information relating to the proposed investment as the Council may require.
6. Details of the qualifications of the Applicant include the following:

1. 1. Technical capacity.
   2. Marketing capacity.
   3. Human resources and managerial capacity.
   4. Financial capacity.

1. 2. Application Fee: After finding that the Investor has completed the formalities as set forth in 6.1, the Council for the Development of Cambodia shall issue to the Investor a receipt of the Application within a period not to exceed twenty four (24) hours, and the investor shall pay the Application fee as follows:

1. If the investment project is less than or equal to US$ 1 million:

   - shall pay US$ 100 (One Hundred) at the time the Application is first submitted.

   - shall pay US$ 500 (Five Hundred) upon receipt of the approval in principle to invest.

2. If the investment project is more than US$ 1 million:

- shall pay US$ 200 (Two Hundred) at the time the Application is first submitted.

- shall pay US$ 1,000 (One Thousand) upon receipt of the approval in principle to invest.

This Application fee shall go to the national budget.

6.3 Feasibility Study: The feasibility study shall address certain important matters as follows:

1. Markets for the products of the Investment Enterprise.
2. Estimated technical needs, pricing techniques and competition for the products of the Investment Enterprise.
3. Techniques for manufacturing including the quantity of domestic or foreign raw materials to be used.
4. Import and export ratios.
5. Employment ratios for Cambodian and foreign nationals.
6. Financial and technical analysis of the project including the cost of production and proposed retail pricing.
7. Earnings of local and foreign currency, and the ability to satisfy foreign exchange needs.
8. An environment impact study including detailed plans for dealing with and disposing of all waste.
9. Plan for human resource training.

4. 5. Request of Additional Information: Before authorizing an Investment, the Council for the Development of Cambodia may request additional information from the Investor at most within fifteen (15) working days. The Investor shall inform the Council for the Development of Cambodia within fifteen (15) working days, starting from the date the request by the Council for the Development of Cambodia is received.

6.5 Completed Application: An Application shall be regarded as complete when all required documents have been submitted and all requested information has been provided to the Council for the Development of Cambodia. The notification on the change of name or address or both shall be submitted to the Council for the Development of Cambodia within fifteen (15) working days after this change. Failure to submit such notification is grounds for automatically suspending review of the Application.

ARTICLE 7: APPROVAL OR REVOCATION OF RIGHTS AND INTERESTS IN WHOLE OR IN PART BY THE COUNCIL FOR THE DEVELOPMENT OF CAMBODIA.

7.1 Approval Period:

1. The Council for the Development of Cambodia shall give notice of its decision to approve or reject the Application within forty five (45) working days, starting from the date the Council for the Development of Cambodia receives a completed Application as per the Flow Chart attached at the end of this sub-decree.
2. Investment Enterprises shall deposit money in the account of the Council for the Development of Cambodia at the National Bank of Cambodia according to the following terms:

• 2% of the total investment capital that is less than or equal to US$ 1,000,000.
• 1.9% of the total investment capital that exceeds US$ 1,000,000 and less than or equal to US$ 10,000,000.
• 1.8% of the total investment capital that exceeds US$ 10,000,000 and less than or equal to US$ 20,000,000.
• 1.7% of the total investment capital that exceeds US$ 20,000,000 and less than or equal to US$ 30,000,000.
• 1.6% of the total investment capital that exceeds US$ 30,000,000 and less than or equal to US$ 40,000,000.
• 1.5% of the total investment capital that exceeds US$ 40,000,000.

This deposit shall be returned when the Investment Enterprise has implemented 30% of its project.

7.2 Modification of the Application: The Council for the Development of Cambodia may require an Applicant to modify the Application and any documents related to the Application, and the Applicant shall resubmit the Application to the Council for the Development of Cambodia after modifying it within fifteen (15) working days. For Applicants, which fail to make the modification as required by the Council for the Development of Cambodia, the Council for the Development of Cambodia shall not review that Application.

7.3 Approval or Rejection: Approval of an Investment shall be notified in writing by the Council for the Development of Cambodia by the issuance of an investment license to the Applicant. Rejection of an Application shall also be notified in writing by the Council for the Development of Cambodia, and clearly specify the reasons for the rejection by the Council for the Development of Cambodia.

7.4 Revocation of Right and Interest, and Seizure of Deposit: The Council for the Development of Cambodia shall have the right to revoke any right and interest in whole or in part, as well as to seize the deposit in any of the following events:

1. The investment project was not implemented in accordance with the schedule stated in the Application and [or?] if the implementation of the investment project has not commenced within 6 (six) months after the issuance of the investment license.
2. Paid-up capital of 25% of the total registered capital declared in the Application to the Council for the Development of Cambodia or an equivalent value of capital assets has not been deposited within 30 (thirty) days from the day the approval was granted.
3. The total investment [registered?] capital has not been fully used up [paid-up?] within 3 years after the date of incorporation of the Investment Enterprise.
4. The deposit stated in 7.1 (b) shall be automatically regarded as state property if the Investment Enterprise has not implemented the project within 6 (six) month after the investment license has been granted.
5. Any Investment Enterprise that does not notify the Council for the Development of Cambodia on the change of name or address ten (10) days prior to this change.
6. The [Investment] Enterprise changed its production and business objectives without authorization from the Council for the Development of Cambodia.
7. The [Investment] Enterprise merged with other enterprises or transferred ownership.
8. In reference to a request from a competent institution for serious violation of the laws in force [by the Investment Enterprise].

7.5 Notice of Revocation, Rights and Interests: The Council for the Development of Cambodia shall notify the Investor in writing of its decision to revoke the rights and interests, in whole or in part.

6. 7. Procedures for Revocation of Rights and Interests: Before undertaking the revocation of rights and interests, in whole or in part, the [Investment] Enterprise has not responded on time to the Council for the Development of Cambodia within the fixed time period of 30 (thirty) days after the Enterprise has been notified, the Council for the Development of Cambodia shall implement the following procedures:

• Issue another letter reminding the Enterprise (15 days).
• Issue another warning letter to the Enterprise (15 days).
• Penalize by suspending the rights and interests for 60 (sixty) days.
• Revoke definitively the rights and interests.

6. 7. Right to Appeal: After receiving notice on the revocation of the rights and interests, in whole or in part form the Council for the Development of Cambodia, the Investment Enterprise may appeal in writing within 25 (twenty-five) days starting from the date of notification by the Council for the Development of Cambodia.

CHAPTER 3

TRANSFER OF SHARES

ARTICLE 8: RESTRICTION ON TRANSFERS

8.1 Procedures for the Request to Transfer Shares: Each Application for the transfer of shares shall clearly specify the identities and nationalities of each party involved in the Investment Enterprise. Where an Applicant is not a natural person, the Application shall clearly identify the ownership structure of such Applicant with sufficient details to enable the Council for the Development of Cambodia to identify the shareholders or other related parties. The request to transfer shares shall indicate the relative ownership interest of each party in the Investment Enterprise.

8.2 Transfer of Share: Each Investor has the right to transfer its shares in the Investment Enterprise to other Investors in the Investment Enterprise. If the other shareholders do not wish to purchase these shares, the transferring Investors shall have the right to transfer the shares to a third party.

The transferring Investor must receive a prior written authorization from the Council for the Development of Cambodia at least 30 (thirty) days before transferring the shares.

8.3 Limits on the Transfers of Shares: An Investment Enterprise, which is a Foreign Legal Entity, does not have the right to become an owner of land. All investing members of a Cambodian Legal Entity which is the legal owner of land in the Kingdom shall be prohibited from transferring their shares in a Cambodian Legal Entity if the effect of such transfer would cause the Investment Enterprise to become a Foreign Legal Entity. A Cambodian natural person or Cambodian Legal Entity, which is the legal owner of land in the Kingdom, shall also be prohibited from registering any transfer of shares, which would cause the Investment Enterprise to become a Foreign Legal Entity.

CHAPTER 4

PART I

FORMS OF INVESTMENT

ARTICLE 9: AUTHORIZED FORMS OF INVESTMENT

Authorized forms of investment include:

• 100% (One Hundred Percent) local source of capital.
• 100% (One Hundred Percent) foreign source of capital.
• Joint Ventures.
• Build-Operate-Transfer (BOT).
• Business Cooperation Contract (BCC).
• Other forms authorized by law.

PART II

JOINT VENTURES

ARTICLE 10: FORMATION OF JOINT VENTURES

A Joint Venture Enterprise is established upon the basis of a business contract on a definite project between Investment Enterprises of any nationality or between the government and an Investment Enterprise. An investment partner of the Joint Venture may have the right to hold an unlimited number of shares, but foreign participation cannot be more than 49% (forty-nine percent) in the event the Investment Enterprise intends to become an owner of land.

ARTICLE 11: THE CAPITAL OF A JOINT VENTURE ENTERPRISE

11.1 Capital Property [In Kind Contribution]: The value of property contributed to the joint venture shall be calculated on the basis of the market value of the property. If the Council for the Development of Cambodia deems the price of the property belonging to any party is higher than the estimated market value, the Council for the Development of Cambodia has the right to use the estimated market value as the value of the capital contribution in the joint venture, for the purpose of assessing the Application.

11.2 Assets: Any plant, machinery or equipment that an Investor wishes to contribute to the joint venture or the joint venture proposes to purchase must guarantee the safety of laborers and is under the Investor's responsibility before the law.

11.3 Land: A Cambodian Investor may contribute land as shares of a joint venture. The determination of the value of the land shall be agreed upon by the parties to the joint venture.

PART III

OTHER FORMS OF INVESTMENT ENTERPRISE

ARTICLE 12: FORMS OF AGREEMENTS

1. Business Cooperation Contract (BCC): This is an agreement between an Investor in Cambodia and public legal entity to implement a production activity or a business activity in Cambodia, and share the income received without creating another new legal entity.

   A trading contract or an economic agreement with an exchange of goods feature is not a Business Cooperation Contract (BCC) as identified above.

2. Build-Operate-Transfer Agreement (BOT): This form of investment is separately detailed in the sub-decree on Build-Operate-Transfer.

CHAPTER 5

FOREIGN CURRENCY

ARTICLE 13: BANK ACCOUNTS

1. 1. Opening of Bank Account: On receipt of an investment license, an Investment Enterprise must open a bank account in the Kingdom of Cambodia at a bank recognized by the National Bank of Cambodia.

   2. Payments: An Investor must make all payments in relation to the Investment Enterprise through the bank account opened in accordance with this Article 13.

ARTICLE 14: LOANS – RATIO OF DEBT AND CAPITAL

An Investment Enterprise shall not be authorized to borrow a cumulative amount of money from third parties or banks which exceeds three times the equity of the Investment Enterprise, except for priority projects as determined by the Royal Government.

ARTICLE 15: REPATRIATION OF FUNDS OVERSEAS

The repatriation of funds overseas shall comply with the Royal Decree regarding the Management of Foreign Exchange No. Chs/RKM/ 0897/03, dated August 22, 1997 and all provisions set and announced by the National Bank of Cambodia. This repatriation includes:

1. Payment for imports and overseas transfer of the principal and interest on loans.
2. Payment of royalties and management service fees.
3. Remittance of profit after payment of all financial obligations, taxes and related expenses.
4. Remittance of investment capital overseas according to the company's installment payment plan.
5. Money appropriately saved or remaining after salary expenditures.

CHAPTER 6

OWNERSHP AND USE OF LAND

ARTICLE 16: OWNERSHIP

1. 1. Ownership: Ownership of land serving the purpose of an investment activity that is granted to a Cambodian natural person or Cambodian Legal Entity shall comply with the Land Law of the Kingdom of Cambodia, promulgated by Decree No. 100 Kr, dated October 13, 1992.

   2. Registration of Ownership: In registering land ownership, the Investor shall complete the formalities at the land office where the immovable property is located.

   3. Restriction on Ownership: In accordance with the Constitution of the Kingdom of Cambodia, a foreign natural person and Foreign Legal Entity may not become an owner of land in the Kingdom of Cambodia.

ARTICLE 17: LAND USE

1. 1. The Investor is Cambodian: Aside from ownership, Cambodian Investors have the right to use land in various forms such as: concessions, leases, borrowing, transfer, donations and etc.

   2. The Investor is a foreigner: Foreign Investors may use land through long term leases for up to 70 years, and possible extension. The use of land, including all rights of ownership above the land shall be implemented in accordance with the law.

   3. Lease of Land: A foreign individual or foreign legal entity shall be authorized to lease land in the Kingdom of Cambodia, provided the lease agreement is authenticated and has specific leasing conditions, mutual agreement on the market price of the rent and has a specific period.

A natural person or legal entity who obtained authorization to lease land from the state may sublease it to another individual or legal entity through a subletting agreement, provided there is approval from the competent institution, and after the lease agreement from the state has been implemented for a period of 3 (three) years, except in special and clear cases.

CHAPTER 7

CUSTOMS DUTIES AND TAXES

ARTICLE 18: PRINCIPLE

18.1 Tax Liability: All Investment Enterprises shall be liable for taxes and shall follow all provisions of the laws regarding finance and tax. The tax rate on profits from exploration, exploitation or primary processing of natural resources such as timber, oil, natural gas, ore, gold, and precious stones shall be set in accordance with paragraph 2 of Article 20 of the Tax Law. Investment Enterprises may be granted a tax concession as specified in Annex 3.

2. 3. Limitations: Full or partial tax exemption on taxes and customs duties granted by the Council for the Development of Cambodia shall apply only to taxes on profit, customs duties and certain taxes on imported goods listed in this sub-decree. This exemption excludes the following:

1. Liability of the employees of an Investment Enterprise or the obligation and liability of an Investment Enterprise as required by the provisions on salary tax.
2. Tax liability on turnover that will be replaced by value added tax, specific tax on certain goods and servers other than the taxes paid at the time of import, or other taxes other than profit tax and customs duties, as specified in the respective laws of the Kingdom of Cambodia.

An Investment Enterprise may not use the 9% tax rate on profit or provisions on the five (5) years loss carry forward for losses originating prior to January 1, 1997, unless authorization to use the rate or the loss carry forward is mentioned in an approval document of the Council for the Development of Cambodia.

2. 3. Starting Year and the Rule for the Five Years Loss Carry Forward: The deduction of losses according to the provisions on the five years loss carry forward in Article 14.2 of Investment Law, shall be determined by the rules in Article 17 of the Tax Law.

ARTICLE 19: PROFIT TAX

19.1 Starting Year of Exemption on Profit Tax: Exemption on profit tax as stated in Article 14.2 of the Investment Law shall begin on the first year the Investment Enterprise obtains taxable profit, without regard to the provisions on loss carry forward that are set forth in the provisions on profit tax or the Investment Law, but other provisions on profit tax shall be taken into account in order to determine taxable profit.

19.2 Determination of Tax Exemption Period: The matrix coefficient conditions shall be satisfied at the latest at the end of the second year of the commercial operation of the Investment Enterprise, and the matrix coefficient conditions shall be maintained during the remaining exemption period. The Council for the Development of Cambodia may reduce or extend the exemption period on profit tax that has already been granted, but his shall not exceed eight years if the conditions used in determining the coefficient of the investment project have been changed.

19.3 Prepayment of Profit Tax for the Investment Enterprise: The prepayment of profit tax as set forth in Article 31 of the Amendment to the 1995 Financial Management Law, relating to turnover realized prior to January 1, 1997 and the prepayment of profit tax as set forth in Article 28 of the Tax Law, regarding turnover realized after December 31, 1996 shall apply to Investment Enterprises that received an Incentives of 9% rate on profit tax, as set forth in Article 14.1 of the Investment Law. The prepayment of profit tax shall not apply to an Investment Enterprise that has been exempted from profit taxes, as set forth in Article 14.2 of the Investment Law.

19.4 Reinvestment of Profit: As set forth in Article 14.2 of the Investment Law, for Investment Enterprises that are liable for profit tax during any taxable year, the amount of positive taxable profit during that taxable year may only reduced by the amount of money used to invest in the factory and equipment to increase the production capacity of that Investment Enterprise in that year only. The invested amount used for the reduction cannot exceed the amount of taxable profit prior to this reduction. As the basis for depreciation, the depreciation of assets acquired from the investment above is the value of the assets minus the amount of money that was reduced from the taxable profit.

19.5 Distribution of Profit: The distribution of profit is any distribution that is stated in paragraph 8, Article 3 of the Tax Law. Such distribution shall not be taxable under Article 26 of the Tax Law, but shall be taxable under the conditions set forth in Article 23 of the Tax Law. This tax is a tax on profit to be paid in advance.

ARTICLE 20: CUSTOMS DUTIES AND TAXES ON IMPORT

20.1 Exemption of Customs Duties and Taxes: The Council for the Development of Cambodia may grant exemption of customs duties and taxes [levied] at the time of import, according to the limit, type of investment, and type of goods as specified in Annex 2.

20.2 Diversion or Sale or Capital Goods, Material and other Goods Exempt from Customs Duties and Taxes: Materials or goods other than Capital Goods which have been imported duty free and tax free and have not been used in the investment project, and are later sold or taken out of the [Investment] Enterprise in any way, shall be automatically subject to customs duties and taxes and shall be subject to other custom penalties. New Capital Goods and any Capital Goods which have been used for less than 5 (five) years, and have been imported duty free and tax free, and later sold or taken out of the [Investment] Enterprise in any way, shall automatically be subject to customs duties and taxes and shall by subject to other custom penalties, except for Capital Goods which have been properly depreciated in accordance with the Tax Law. For Capital Goods used for five consecutive years or more from the date they were imported and then were sold or taken out of the [Investment] Enterprise in any way, customs duties and taxes shall apply to the remaining un-depreciated value of the Capital Goods by using the straight line method.

20.3 Dissolution or Reorganization of the Enterprise: If during the first five years of production, the Investment Enterprise ceases operation or makes distribution or transfers is assets due to dissolution or complete reorganization of the Investment Enterprise, the exemption for customs duties and taxes in this Chapter shall be annulled and the Investment Enterprise shall fully pay the customs duties and taxes exempted. After the first five years of production, if the Investment Enterprise ceases operation or makes distribution or transfers its assets due to dissolution or complete reorganization of the Investment Enterprise, such act shall be regarded as a diversion of assets as set forth in Article 20.2 of this sub-decree.

ARTICLE 21: EFFECTIVE DATE OF DUTY AND TAX EXEMPTION

The effective date of an exemption from profit tax, customs duties and taxes [levied] at the time of import is the date of approval by the Council for the Development of Cambodia, but not before the date the Enterprise is registered at the Tax Department and at the Customs Department in accordance with the registration procedure required by these offices and the Tax Department has given a tax identification number. The Council for the Development of Cambodia is responsible for providing appropriate documents to the Tax Department and the Customs Department including:

1. One copy of all information that the Investor has given during the Application process and all contracts entered into between the Investor and the Council for the Development of Cambodia.
2. Approval documents of the Council for the Development of Cambodia, including all information relating to the financial flow of the investment work, tax concession, and a detailed list of all goods that received exemption from customs duties and taxes [levied] at the time of import.

Within one week after receiving a completed Application for registration and other information required by this Article, the Tax Department shall provide the tax identification number of the Investment Enterprise to the Council for the Development of Cambodia. The Council for the Development of Cambodia is the one responsible for giving the tax identification number to the Investment Enterprise and explaining any other requirements regarding the use of the tax identification number. This Article shall also apply to existing Investment Enterprises.

ARTICLE 22: MINIMUM TAX FOR INVESTMENT ENTERPRISE

The minimum tax as stated in Article 32 of the Law Amending the 1995 Financial Management Law on turnover realized prior to January 1, 1997 and the minimum tax as stated in Article 24 of the Tax Law on turnover realized by after December 31, 1996 shall apply to all Investment Enterprises whether such enterprises received an Incentives of a 9% rate on profit as set forth in Article 14.1 of the Investment Law or received exemption from profit tax as set forth in Article 14.2 of the Investment Law.

ARTICLE 23: OBLIGATIONS OF INVESTMENT ENTERPRISES

23.1 Submissions of Tax Declaration Document: All enterprises that receive approval from the Council for the Development of Cambodia under the Investment Law, whether they are exempt from profit tax as set forth in Article 14.2 of the Investment Law, shall submit to the Tax Department monthly tax and yearly tax declaration for the profit tax, salary tax, turnover tax that will be replaced by the value added tax, specific tax on certain goods and services and other taxes commencing from the date the enterprise received approval.

The existing enterprises shall have a period of ninety (90) days after this sub-decree comes into force and effect in order to comply with the provisions of this chapter, and after this period expires, penalties set out in Article 24 of the sub-decree shall be applied.

23.2 Providing Information related to the Import of Capital Goods, Materials and Other Goods: The importation of Capital Goods, materials and other goods which is part of an approved investment project shall complete all customs clearance formalities. Within thirty (30) days of import, the Investment Enterprise shall submit to the Tax Department and the Council for the Development of Cambodia an appropriate certified copy of the custom clearance documents, including a document specifying the value of the goods [issued] by a government appointed agent.

23.3 Providing Other Information: The Council for the Development of Cambodia and the Investment Enterprise shall provide to the Tax Department and the Customs

Department every month, and no later than on the 15^th day of the next month, the following:

1. Actual investment flows of the approved investment project.
2. List detailing the actual import of goods approved for the investment project.
3. List detailing overseas transfer of profit or interest as a result of the investment activities.
4. List detailing payment to local sources of the profit and interest as a result of the investment activities.
5. Any change in the representative address of the Investment Enterprise or information related to the initial Application submitted to the Council for the Development of Cambodia or the Application for a tax identification number.

All information that the Council for the Development of Cambodia or the Investment Enterprise must provide shall bear the tax identification number issued by the Tax Department in order to identify the enterprise.

ARTICLE 24: PENALTY

In the event the Investment Enterprise fails to carry out the obligations set forth in Article 23 of this sub-decree, the Investment Enterprise shall be subject to penalties set forth in the Financial Law and the Tax Law. In addition, the Investment Enterprise that fails to submit a tax declaration and certified documents or fails to provide information to the Tax Department as required by the Financial Law and the Tax Law shall be subject to a revocation of all tax and custom duty exemptions granted under the Investment Law, and shall immediately pay all taxes and customs duties that were exempted, as well as profit tax that was reduced due to the implementation of the Incentives on profit tax rate as set forth in Article 14 of the Investment Law.

CHAPTER 8

EMPLOYMENT

ARTICLE 25: EMPLOYMENT OF FOREIGN NATIONALS

The employment of foreign nationals at all institutional enterprises in the Kingdom of Cambodia shall be carried out according to the Labor Law and the Immigration Law.

ARTICLE 26: EMPLOYMENT OF CAMBODIAN CITIZENS

26.1 Employment of Cambodian Nationals: If the employees have the same or similar experiences and skill, the Investment Enterprise shall give priority to the employment of Cambodian Nationals.

26.2 Employment Contract: All employment contracts shall be carried out in accordance with the provisions of the Labor Law.

CHAPTER 9

PROTECTION OF INTELLECTUAL PROPERTY

ARTICLE 27: INTELLECTUAL PROPERTY

27.1 Preparation of Application Form: The Investor may request the protection of intellectual property by submitting the forms to the intellectual property registration office at the competent ministry.

27.2 Implementation of the Law: All matters related to trademarks, patents, copyrights and other professional achievements shall be carried out in accordance with the laws related to the intellectual property law.

CHAPTER 10

FINAL PROVISIONS

ARTICLE 28: The Co-Ministers in charge of the Council of Ministers, the Minister of the Ministry of Economy and Finance, the Council for the Development of Cambodia, the ministers of all ministries and the heads of all relevant institutions shall be responsible for effectively carrying out this sub-decree.

ARTICLE 29: This sub-decree is legally effective starting from date of signing.

Phnom Penh, December 29, 1997

First Prime Minister Second Prime Minister

[Signed] [Signed]

UNG HUOTH (Seal) HUN SEN

ANNEX 1

IS PART OF SUB-DECREE NO. 88 ANKR BK

DATED DECEMBER 29, 1997

PART A

LIST OF INVESTMENT AREAS FOR WHICH INCENTIVES ARE GRANTED

1. CROP PRODUCTION

1. 1. Paddy farming from 1,000 hectares and above
   2. All types of cash crops from 500 hectares and above
   3. Vegetables from 50 hectares and above

1. LIVESTOCK PRODUCTION

1. 1. Livestock from 1,000 heads and above
   2. Dairy farming from 100 heads and above
   3. Poultry and eggs from 10,000 heads and above

1. FISHERIES

1. 1. Fish hatcheries from 2 hectares and above
   2. Shrimp farming and other fisheries production from 10 hectares and above

1. MANUFACTURING AND PROCESSING OF FOOD & RELATED PRODUCTS

Investment Capital equivalent to USD500,000 and above

1. 1. Beverages
   2. Fats and Oils
   3. Sweet products (dessert)
   4. Meat products
   5. Dairy products
   6. Preserved fruits and vegetables
   7. Flour made products
   8. Bakery products
   9. Animal feeding products

1. PRODUCTS FOR TEXTILE MILL

Investment Capital equivalent to USD1,000,000 and above

1. 1. Cotton weaving mill and thread mill
   2. Embroidery cloth mill
   3. Carpet mill
   4. Other weavings

1. MANUFACTURE OF GARMENTS AND OTHER TEXTILES

   Investment Capital equivalent to USD500,000 and above

2. MANUFACTURE OF FURNITURES AND FIXTURES

Investment Capital equivalent to USD500,000 and above

1. 1. Household furniture
   2. Office furniture
   3. Manufacturing of building partitions and fixtures

1. MANUFACTURE OF PAPERS AND ALLIED PRODUCTS

Investment Capital equivalent to USD1,000,000 and above

1. 1. Tree plantation for making papers and paper mill
   2. Paper
   3. Paperboard mill
   4. Paperboard containers

1. MANUFACTURE OF CHEMICALS AND ALLIED PRODUCTS

Investment Capital equivalent to USD500,000 and above

1. 1. All types of chemicals including agricultural chemicals
   2. Plastics and other synthetic rubber
   3. Drugs
   4. Cleaning products
   5. Paints and allied products

1. MANUFACTURE OF RUBBER AND MISSCELLANEOUS PLASTICS

   Investment Capital equivalent to USD500,000 and above

2. MANUFACTURE OF LEATHER & OTHER PRODUCTS

   Investment Capital equivalent to USD500,000 and above

3. MANUFACTURE OF ALL FABRICATED METAL PRODUCTS

   Investment Capital equivalent to USD500,000 and above

4. MANUFACTURE OF ELECTRICAL AND ELECTRONIC DEVICES

   Investment Capital equivalent to USD500,000 and above

5. MANUFACTURE OF TRANSPORTATION DEVICES

1. 1. Motor vehicles and spare parts
   2. Aircraft and spare parts
   3. Construction and means of water transportation
   4. Railroad devices and means of railroad transportation
   5. Bicycles and motorcycles

1. CONSTRUCTION OF ROADS AND BRIDGES
2. EXPLOITATION OF ORE, METALS, STONES, PETROLEUM AND GAS
3. MANUFACTURE OF MACHINERY AND INDUSTRIAL EQUIPMENT

   Investment Capital equivalent to USD1,000,000 and above

4. MANUFACTURE OF CONSUMER GOODS

19. CONSTRUCTION OF HOTELS

Starting from three star standard and above

20. INTERNATIONAL STANDARD MEDICAL COMPLEX – INTERNATIONAL STANDARD EDUCATIONAL FACILITIES AND VOCATIONAL TRAINING CENTERS

21. INFRASTRUCTURE CONSTRUCTION FOR USE IN THE CULTURE AND ARTS AREA

22. PRODUCTION AND BUSINESS ACTIVITIES FOR THE PROTECTION OF THE ENVIRONMENT

PART B

LIST OF INVESTMENT AREAS WHICH WILL NOT RECEIVE INCENTIVES

1. ALL TYPES OF TRADING ACTIVITIES
2. ALL FORMS OF TRANSPORTATION SERVICES
3. DUTY FREE SHOPS
4. RESTAURANTS, KARAOKE, AND OTHER NIGHT CLUBS AND MASSAGE PARLORS THAT ARE NOT LOCATED IN AN INTERNATIONAL STANDARD HOTEL
5. BUSINESS CENTERS
6. PRESS RELATED ACTIVITIES AND MEDIA NETWORKS (RADIO, TV, NEWSPAPER)
7. RETAIL AND WHOLESALE
8. PROFESSIONAL SERVICES  

ANNEX 2

IS PART OF SUB-DECREE NO. 88 ANKR BK

DATED DECEMBER 29, 1997

EXEMPTION FROM TAXES AND CUSTOMS DUTIES

2. TYPES OF INVESTMENT EXEMPTED FROM CUSTOMS DUTIES AND TAXES:

1. An investment with the objective to export a minimum of 80% of the total products
2. Investment that is located in a Special Development Zone
3. Investment in the tourism industry
4. Investment in labor intensive industry, processing industry and agro-industry
5. Investment in physical infrastructure and energy production

However, in the case of Investment within (3), (4) and (5) above, the exemption form customs duties shall only be for the period for constructing the enterprise, factory, buildings and for the first year of commercial production/operation.

2. TYPES OF IMPORTED GOODS THAT ARE EXEMPTED FROM CUSTOMS DUTIES AND TAXES:

1. Construction materials for the Investment Enterprise
2. Machinery used directly in the production process
3. Other equipment used directly in the Investment Enterprise other than administrative equipment, transportation and distribution equipment which is not used directly in the production lines
4. Spare parts for machinery and equipment in point 2 and 3
5. Raw materials and semi-finished products used directly in the production process, and
6. Packaging material

1. TYPES OF EXPORTED GOODS THAT ARE 100% EXEMPTED FROM CUSTOMS DUTIES:

• Finished products

ANNEX 3

IS PART OF SUB-DECREE NO. 88 ANKR BK

DATED DECEMBER 29, 1997

TAX CONCESSIONS

MATRIX CALCULATION

Each criteria corresponds to a scale value: Such value can be in monetary value, a number or a percentage.

Each value corresponds to a coefficient: The total coefficients shall be used to determine the location of the tax holiday scale in order to obtain the number of years exempt from tax, which correspond to such coefficient.

However, the calculated value does not always correspond exactly to all of the values in the scale. In such case, the calculation is made by an interpolation method by taking any figure closest to the calculated value. If the total coefficient if closer to the highest figure in the horizontal row and is less than two percent of the high figure, then the following horizontal row of the table shall be used to calculate the number of years to be exempted from tax.

Definition of Economic Criteria:

Location: In order to boost and encourage disadvantaged regions, the Kingdom of Cambodia shall be divided into four regions as follows:

Region 1: Phnom Penh, Kandal Province, Siem Reap Province and Sihanoukville.

Region 2: Kampong Cham, Kampong Chhnang, Kampong Speu, Kampot, Prey Veng, Svay Rieng and Takeo Provinces.

Regions 3: Battambang, Kampong Thom and Pursat Provincess.

Region 4: Banteay Mean Chey, Krachie, Koh Kong, Mondul Kiri, Preah Vihear, Rattanakiri and Stung Treng Provinces.

Any provinces located in a region with the highest number shall be deemed as a more disadvantaged region than another region with a lower number.

Investment Value: This capital shows the value of the investment (in United States Dollars) capitalized as immovable and movable properties such as land improvement, construction, fixtures, machinery, equipment, motor vehicles, furniture, and office stationary.

Number of Persons Employed: The number of Cambodian citizens employed at full production.

Export: This criteria expressed in percentage by the ratio of the exported products divided by the total products (by quantity or volume).

Value Added: The value added is determined by the value of the total products minus the value of the semi-finished products. The semi-finished products include the products and services purchased from abroad and used by the enterprise for its production activities: raw materials, semi-finished products, finished products, supplies, utilities, telephone and fax, leases (land, buildings, and lease of other equipment), transportation, commercial advertising services, brokerage services, other fees and services purchased from abroad.

Use of Domestic Resources: Expressed in a percentage equal to the ration of the purchase value of the domestic resources divided by the total value of the investment.

Training and Development of Human Resources: The number of Cambodian employees divided by the number of days for training Cambodian employees. Managers shall be doubled.

Social Criteria:

• Employed of women: percentage of the labor force.
• Employed of the disabled: percentage of the labor force.

ANNEX 1

IS PART OF SUB-DECREE NO. 88 ANKR BK

DATED DECEMBER 29, 1997

PART A

LIST OF INVESTMENT AREAS FOR WHICH INCENTIVES ARE GRANTED

1. CROP PRODUCTION

1. 1. Paddy farming from 1,000 hectares and above
   2. All types of cash crops from 500 hectares and above
   3. Vegetables from 50 hectares and above

1. LIVESTOCK PRODUCTION

1. 1. Livestock from 1,000 heads and above
   2. Dairy farming from 100 heads and above
   3. Poultry and eggs from 10,000 heads and above

1. FISHERIES

1. 1. Fish hatcheries from 2 hectares and above
   2. Shrimp farming and other fisheries production from 10 hectares and above

1. MANUFACTURING AND PROCESSING OF FOOD & RELATED PRODUCTS

Investment Capital equivalent to USD500,000 and above

1. 1. Beverages
   2. Fats and Oils
   3. Sweet products (dessert)
   4. Meat products
   5. Dairy products
   6. Preserved fruits and vegetables
   7. Flour made products
   8. Bakery products
   9. Animal feeding products

1. PRODUCTS FOR TEXTILE MILL

Investment Capital equivalent to USD1,000,000 and above

1. 1. Cotton weaving mill and thread mill
   2. Embroidery cloth mill
   3. Carpet mill
   4. Other weavings

1. MANUFACTURE OF GARMENTS AND OTHER TEXTILES

   Investment Capital equivalent to USD500,000 and above

2. MANUFACTURE OF FURNITURES AND FIXTURES

Investment Capital equivalent to USD500,000 and above

1. 1. Household furniture
   2. Office furniture
   3. Manufacturing of building partitions and fixtures

1. MANUFACTURE OF PAPERS AND ALLIED PRODUCTS

Investment Capital equivalent to USD1,000,000 and above

1. 1. Tree plantation for making papers and paper mill
   2. Paper
   3. Paperboard mill
   4. Paperboard containers

1. MANUFACTURE OF CHEMICALS AND ALLIED PRODUCTS

Investment Capital equivalent to USD500,000 and above

1. 1. All types of chemicals including agricultural chemicals
   2. Plastics and other synthetic rubber
   3. Drugs
   4. Cleaning products
   5. Paints and allied products

1. MANUFACTURE OF RUBBER AND MISSCELLANEOUS PLASTICS

   Investment Capital equivalent to USD500,000 and above

2. MANUFACTURE OF LEATHER & OTHER PRODUCTS

   Investment Capital equivalent to USD500,000 and above

3. MANUFACTURE OF ALL FABRICATED METAL PRODUCTS

   Investment Capital equivalent to USD500,000 and above

4. MANUFACTURE OF ELECTRICAL AND ELECTRONIC DEVICES

   Investment Capital equivalent to USD500,000 and above

5. MANUFACTURE OF TRANSPORTATION DEVICES

1. 1. Motor vehicles and spare parts
   2. Aircraft and spare parts
   3. Construction and means of water transportation
   4. Railroad devices and means of railroad transportation
   5. Bicycles and motorcycles

1. CONSTRUCTION OF ROADS AND BRIDGES
2. EXPLOITATION OF ORE, METALS, STONES, PETROLEUM AND GAS
3. MANUFACTURE OF MACHINERY AND INDUSTRIAL EQUIPMENT

   Investment Capital equivalent to USD1,000,000 and above

4. MANUFACTURE OF CONSUMER GOODS

19. CONSTRUCTION OF HOTELS

Starting from three star standard and above

20. INTERNATIONAL STANDARD MEDICAL COMPLEX – INTERNATIONAL STANDARD EDUCATIONAL FACILITIES AND VOCATIONAL TRAINING CENTERS

21. INFRASTRUCTURE CONSTRUCTION FOR USE IN THE CULTURE AND ARTS AREA

22. PRODUCTION AND BUSINESS ACTIVITIES FOR THE PROTECTION OF THE ENVIRONMENT

PART B

LIST OF INVESTMENT AREAS WHICH WILL NOT RECEIVE INCENTIVES

1. ALL TYPES OF TRADING ACTIVITIES
2. ALL FORMS OF TRANSPORTATION SERVICES
3. DUTY FREE SHOPS
4. RESTAURANTS, KARAOKE, AND OTHER NIGHT CLUBS AND MASSAGE PARLORS THAT ARE NOT LOCATED IN AN INTERNATIONAL STANDARD HOTEL
5. BUSINESS CENTERS
6. PRESS RELATED ACTIVITIES AND MEDIA NETWORKS (RADIO, TV, NEWSPAPER)
7. RETAIL AND WHOLESALE
8. PROFESSIONAL SERVICES

ANNEX 2

IS PART OF SUB-DECREE NO. 88 ANKR BK

DATED DECEMBER 29, 1997

EXEMPTION FROM TAXES AND CUSTOMS DUTIES

2. TYPES OF INVESTMENT EXEMPTED FROM CUSTOMS DUTIES AND TAXES:

1. An investment with the objective to export a minimum of 80% of the total products
2. Investment that is located in a Special Development Zone
3. Investment in the tourism industry
4. Investment in labor intensive industry, processing industry and agro-industry
5. Investment in physical infrastructure and energy production

However, in the case of Investment within (3), (4) and (5) above, the exemption form customs duties shall only be for the period for constructing the enterprise, factory, buildings and for the first year of commercial production/operation.

2. TYPES OF IMPORTED GOODS THAT ARE EXEMPTED FROM CUSTOMS DUTIES AND TAXES:

1. Construction materials for the Investment Enterprise
2. Machinery used directly in the production process
3. Other equipment used directly in the Investment Enterprise other than administrative equipment, transportation and distribution equipment which is not used directly in the production lines
4. Spare parts for machinery and equipment in point 2 and 3
5. Raw materials and semi-finished products used directly in the production process, and
6. Packaging material

1. TYPES OF EXPORTED GOODS THAT ARE 100% EXEMPTED FROM CUSTOMS DUTIES:

• Finished products

ANNEX 3

IS PART OF SUB-DECREE NO. 88 ANKR BK

DATED DECEMBER 29, 1997

TAX CONCESSIONS

MATRIX CALCULATION

Each criteria corresponds to a scale value: Such value can be in monetary value, a number or a percentage.

Each value corresponds to a coefficient: The total coefficients shall be used to determine the location of the tax holiday scale in order to obtain the number of years exempt from tax, which correspond to such coefficient.

However, the calculated value does not always correspond exactly to all of the values in the scale. In such case, the calculation is made by an interpolation method by taking any figure closest to the calculated value. If the total coefficient if closer to the highest figure in the horizontal row and is less than two percent of the high figure, then the following horizontal row of the table shall be used to calculate the number of years to be exempted from tax.

Definition of Economic Criteria:

Location: In order to boost and encourage disadvantaged regions, the Kingdom of Cambodia shall be divided into four regions as follows:

Region 1: Phnom Penh, Kandal Province, Siem Reap Province and Sihanoukville.

Region 2: Kampong Cham, Kampong Chhnang, Kampong Speu, Kampot, Prey Veng, Svay Rieng and Takeo Provinces.

Regions 3: Battambang, Kampong Thom and Pursat Provincess.

Region 4: Banteay Mean Chey, Krachie, Koh Kong, Mondul Kiri, Preah Vihear, Rattanakiri and Stung Treng Provinces.

Any provinces located in a region with the highest number shall be deemed as a more disadvantaged region than another region with a lower number.

Investment Value: This capital shows the value of the investment (in United States Dollars) capitalized as immovable and movable properties such as land improvement, construction, fixtures, machinery, equipment, motor vehicles, furniture, and office stationary.

Number of Persons Employed: The number of Cambodian citizens employed at full production.

Export: This criteria expressed in percentage by the ratio of the exported products divided by the total products (by quantity or volume).

Value Added: The value added is determined by the value of the total products minus the value of the semi-finished products. The semi-finished products include the products and services purchased from abroad and used by the enterprise for its production activities: raw materials, semi-finished products, finished products, supplies, utilities, telephone and fax, leases (land, buildings, and lease of other equipment), transportation, commercial advertising services, brokerage services, other fees and services purchased from abroad.

Use of Domestic Resources: Expressed in a percentage equal to the ration of the purchase value of the domestic resources divided by the total value of the investment.

Training and Development of Human Resources: The number of Cambodian employees divided by the number of days for training Cambodian employees. Managers shall be doubled.

Social Criteria:

• Employed of women: percentage of the labor force.
• Employed of the disabled: percentage of the labor force.

THE MATRIX COEFFICIENT CRITERIA FOR INCENTIVES

 

Tourism-Industry/Hotels (T.H.)

TH 1	Standard	3*	4*	5*
	Coefficient	20	60	100

TH 2	Rooms	100	150	200	250	300	350	400	450	500	500
	Coefficient	10	20	30	40	50	60	70	80	90	100