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At the 05th of October 2017, Ministry of Labor and Vocational Training issued an announcement about the determination of minimum wage for employees in textile, garment and footwear sector in 2018.  According to the announcement, the tripartite Labor Advisory Committee consisting of representatives of employees, employers and the royal government of Cambodia had discussed about the minimum wage in 2018 based on the seven determinants. Following the discussion, the representatives of employees set the minimum wage at $170, representatives of employer at $162 and the government at $165. As a result of deliberation, the minimum wage in 2018 is set at $170 effective from the 01st of January 2018.

Furthermore, the announcement elaborates that other benefits that the employees used to enjoy will remain the same. Plus other benefits, on average, the employee will receive at least $187 to $198. Besides, the government also lessens the burden of the employers by allowing them to suspend the installments of tax on profit for five years (2018 to 2022) and removing export management fee with the Ministry of Commerce.

On the same date, Ministry of Labor and Vocational Training further enforces the announcement by issuing Prakas No. 396 on the Determination of Minimum Wage for Employees in Textile, Garment and Footwear Sector in 2018. Article 1 of the Prakas states that the minimum wage for employees in textile, garment and footwear sector is officially set at $170 per month. According to Article 2, for employees in probationary period, the minimum wage is set at $165 per months and after the probationary period, they will receive $170 per months. In addition to that, other benefits will remain the same and the minimum wage will take effect at 01st of January 2018 according to Article 3 and 4.

Source: Prakas No. 396 on dated 05 October 2017 on the Determination of Minimum Wage for Employees in Garment and Footwear Sector in 2018

Last modified on Friday, 13 October 2017 08:32

Ministry of Economic and Finance (MEF) has issued the Prakas No. 559 dated May 25, 2017 on the instruction of the implementation for VAT on non-taxable supplies in accordance with the Article 57 of the Law on Taxation amended by the Law on Financial Management 2017. This Prakas aims to clarify the goods and services those are non-taxable supplies in order to ensure the consistency of VAT implementation.
The Prakas applies to the self-assessment taxpayers in making non-taxable supplies below:

1. Public postal service
2. Hospitals, clinics, medical and dental services, and the sale of medical and dental goods incidental to the performance of such services
3. The services of transportation of passengers by a wholly state owned public transportation system
4. Insurance services
5. Primary financial services
6. The importation of materials for personal use those are exempt from customs duties in accordance with the customs provisions
7. Non-profit activities for serving the public interest
8. Educational service
9. Electric power and clean water
10. Unprocessed agricultural products
11. Solid and liquid waste removal or collection services

The Prakas specifically defined the term of “primary financial services” and includes certain kind of transactions and services which fall under the term as follow:
- The deposition operations and granting loans except fees relating to such granting loans.
- The initial securities public offering in the market, securities trade or other financial instruments, and the clearing and settlement services in the securities market.
- Money Exchange Service
- Security Service
- Trading of Unshaped Gold
NOTE: There was a significant event that the public misunderstand and misinterpreted that this Prakas was issued to impose VAT on above 11 goods and services supplies. Regardless, the Prakas was issued to clarify that the aforementioned goods and services supplies are exempted from VAT and they are called “non-taxable goods and services supplies”.

Last modified on Thursday, 29 June 2017 08:50

On May 22, 2017, National Bank of Cambodia (“NBC”) issued an Instruction No. T7.017.420 SJN in purpose to make a caution to all Bank, Financial Institution, and Credit Operator for stop accepting the Identity Card or Family Book or Resident Book as collateral. Last year, on March 11, NBC already issued an Instruction No. T7.016.210 SJN for informing those institutions after NBC observed and found that the Identity Card or Family Book or Resident Book was accepted and taken as collateral to secure the loan in some Bank, Financial Institution, and Credit Operator.

Since now, NBC has acknowledged that several Banks, Financial Institutions, and Credit Operators are still accepting the Identity Card or Family Book or Resident Book in securing and release loan. This action is illegal under the Code of Civil and other regulation in force. Under Instruction No. T7.016.210 SJN, NBC has explained that the Identity Card or Family Book or Resident Book has no any economy value to be the collateral. Those documents are just the legal documents issuing by competent authority to identify a person and population statistic. NBC already warned that if any banks, financial institutions and credit operators fail to comply with laws and regulations in force, that institution shall be punished under the Law on Banking and Financial Institution.

Under the Instruction No. T7.017.420 SJN on May 22, 2017, NBC wants to instruct those Banking and Financial Institution to get more attention for complying with Instruction on March 11, 2016 and Law on Banking and Financial Institution effectively. In its letter mentioned that if any banks, financial institutions and credit operators fail to comply, they would face with penalties such as withdrawal the licenses or the Registration Permit or stop the business activity in accordance with Article 52 and Article 56 of Law on Banking and Financial Institution.

It comes to a big surprise for financial analysts and all microfinance institution (MIFs) themselves after National Bank of Cambodia (NBC) issued a Prakas to order all MFIs under its supervision impose no more than 18% interest rate to all kinds of loan from 1st April this year.

The Prakas is known as Prakas No. B7.017.109.P.K on Annual Interest Rate Ceiling Limitation issued on 13th March 2017. This Prakas aims to help reducing poverty by curbing any higher interest rates for Borrowers.

In Article 5 of the Prakas has specified that all New Loans including Restructured Loans and Refinancing which is signed from this 1st April 2017 shall apply the new rule of Annual Interest Rate Ceiling Limitation. The Prakas is expected to be complied otherwise shall be subjected to the penalties as stipulated in Article 52 of Law on Banking and Financial Institutions.