SECOND GOVERNMENT-PRIVATE SECTOR FORUM

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A.   Government-Private Sector Forum

On July 5, 2000 a second government-private sector forum was held under the chairmanship of Prime Minister Samdech Hun Sen, and attended by members of the Royal Government, provincial and municipal governors, institutions, diplomats, dignitaries, domestic  and international investors. The purpose of the forum was to engage the government and private sector in a dialogue to tackle the concerns and issues affecting the investors.

The followings are the actions and decisions that were undertaken by the Royal Government:

Open Sky Policy

In line with the open sky policy of the Royal Government, direct flights from other countries to Siem Reap province will continue to be allowed. Airlines can also land and pick up passengers in Phnom Penh and fly to Siem Reap with the provisions that passengers stay in Siem Reap at least one night.

Tax Issues

1. The government shall facilitate the requests of import companies through the relaxing of import duty payment in the form of installment for companies with large tax burden. 

2. The issue of the 1% minimum tax and the 15% withholding tax is an issue to be considered in the preparation of the Year 2000 budget management law.

3.  Proper tax collection will become a stimulus for attracting foreign investors to contribute in the development of the country.

4. Expanding the tax-base is the preferred option than increasing the tax-rate as they will lead to an increase of tax evasion or tax fraud.

Cost of Doing Business

1. The Government is making effort to find way to solve the electricity rate issue and to seek a reasonable compromise that will be acceptable by all stakeholders, namely the Electricité du Cambodge, high consumption businesses and low consumption users.  

2.  All fees stipulated under various laws or legal provisions to be paid by businesses shall be publicly and transparently declared with the correct receipt issued.  Other extraordinary costs above the legally required amount shall be treated as irregular costs and offenders shall be legally liable.

Trade Facilitation

1. In order to facilitate the clearing of imported goods at border check points, the Customs and Camcontrol officials must cooperate closely to provide services even during week ends and holidays.

2.  The Customs and Camcontrol officials must set clear time-table to conduct joint inspections of imported and exported goods. The absence of an agency official during an inspection shall be deemed as a waiver and the inspection by the remaining agency officials shall be deemed valid.

3. The Ministry of Economy and Finance (Department of Customs) and the Ministry of Commerce (Camcontrol Department) shall seek news measures to streamline to the maximum the long procedures for clearing imported and exported goods.

4. When the PSI mechanism is implemented, custom duties shall be collected by the custom officials stationed at the border gates in line with the assessment made by SGS without further approval from the Customs head office in Phnom Penh. However, officials should regularly transmit their reports to their head office.

5. The government authorizes the Ministry of Commerce to recruit additional Camcontrol officials from the corps of existing civil servants to station at entry gates such as Kampong Som port and the dry port.

Foreign Direct Investment

1. The Council for Development of Cambodia and the Cambodia Investment Board shall act as a facilitator for investors on granting of tax exemption in principle, leaving the specialized requirement to the competent ministries and institutions.

2. All incentives for the telecommunication sector shall be discontinued, as the current Cambodian small market is saturated. The privatization of the telecommunication sector needs to be seriously considered.

3. The government proposed that business associations and clubs currently organized by country to restructure by sector for ease in their participation in the “monitoring mechanism”.

4. The Government mandated H.E. Keat Chhon, Sr. Minister, CDC First chairman, and H.E. Sok Chenda, CDC Secretary General to prepare the monitoring mechanism by establishing sectoral working group so that they can hold dialogue with the private sector in order to find ways to tackle issues on a timely basis and to provide recommendations for the third government-private sector forum which will be held at the end of December, 2000 or early January, 2001.