The Securities and Exchange Committee of Cambodia (“SECC”) has issued a Prakas on Licensing and Managing of Collective Investment Scheme Activities dated May 29, 2018 (“Prakas”). This Prakas is made to govern the business objective concerning the Collective Investment Scheme and its stakeholder for being effective, transparent and efficiency. It also stated the condition and procedure to provide license/approval, and the renewal of such lincese/approval and determind the certian oblication after recieving the license/approval. In according to this Prakas, they provide license to several type of establishments to conducts business activities which in line of Collective Investment Scheme. They are Fund Management Company, Fund Management Representative, Crowdfunding Representative, Distribution Company, and Funding Selling Representative… etc. Each establishment has two years license and three years-renewal. Abovementioned establishments is under the supervision of the Securities and Exchange Committee of Cambodia.

Source: Prakas on Licensing and Managing of Collective Investment Scheme Activities, dated June 29, 2018

According to the annual general assembly of Cambodia Microfinance Association’s decision, the Association agreed to reduce time it takes for collateral to be returned from 10-15 days to three working days after they have fulfilled their obligation. It is noted that in 2017 the MFI sector’s portfolio is recorded $4 billion, which is equal to 25.5 percent increase.  The high proportion of the loans were taken by agricultural sector.

Source: Khmer Times, 23^th February 2018

According to the announcement made on the 3^rd of January 2018, the National Bank of Cambodia (NBC) has decided to revoke license of 11 Rural Credit Institutions or Operators. The NBC states that the reason for such decision is that these Institutions did not comply with the existing laws and regulations, and it also requests relevant authorities to take measures as appropriate. According to Chea Serey , director general of the NBC, “the closure of these 11 operators won’t have any impact on the industry as their size is negligible.”

Source: NBC’s Announcement & the Phnom Penh Post, 04 January 2018

At the 05^th 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 01^st 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 01^st 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

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.

On December 1, The National Bank of Cambodia “NBC” issued a Prakas requiring all Micro-Finance Institutes (MFIs) to adopt measures to promote the usage of the national currency – Riel.  The implementation of this Prakas shall extend for three years.  Cambodian microfinance institutions are willing to comply with the new regulation which requires them to hold at least 10 percent of their loan portfolio in the currency of the Kingdom of Cambodia.

The Ministry of Labour and Vocational Training (“MLVT”) has issued a Prakas determining the minimum wage for workers in the textile, garment and footwear industry for the year 2017.  This Prakas was published on September 29^th 2016 - “Prakas No. 414/16”.  This Prakas was finalized subsequent to the meeting of The Labour Advisory Committee of Ministry of Labour and Vocational Training at the 8^th mandate. This Prakas will become enforceable from January 1^st, 2017.  The range of its enforceability shall extend to the following industries: textile, garment and footwear .

Cambodia’s economy is still healthy with GDP growth recorded 6.9 in 2017 as it has climbed to another level of economy status. This has been contributed by three sectors, namely tourism, construction and export. The increase in tourists by 10.4 percent in 2017 is attributed to direct regional flight and government’s policy. Also, the construction sector has reached a robust growth by going up 27 percent and number of machinery factories triples while export of textile contracts due to global market and local hurdles. Nevertheless, Cambodia is ranked 94 out of 137 in competiveness and this is caused by poor human resources, infrastructure and so on. This has indicated that Cambodia can no longer rely on old momentum for growth like garment and current export base like US and Europe, which is fragile to price and country shock.

Cambodia can diversify its economy by producing goods with market potential such as sugar, palm oil and so on. Also, it can divert tourists to other potential destination like northeast provinces, which is ecotourism destination. In addition to that, Cambodia can improve its infrastructure by facilitating ways of transportation, reduce electricity cost and improve human resources by prioritizing science, math and soft skills in its education system. Furthermore, reforming regulatory framework for tax and corporations can be an opportunity while corruption, policy stability and logistics cost are still concerns for business. 

Source: Khmer Times, 28^th February 2018

The draft law on the Chamber of Commerce is being reviewed by the Cambodia Chamber of Commerce. Once completed, the draft law will be sent to the Council of Minister for approval. It is noted that the new legislation will enable Cambodia to set up chambers of commerce in other countries and overseas investors to open branches in Cambodia. According to Mr. Lim Heng, vice president of the Cambodia Chamber of Commerce, the legislation will facilitate the private sector to obtain information on doing business in Cambodia. He added that Cambodia will set up offices in bigger countries with sizeable Cambodia population like Europe, United States and Canada. It is worth mentioning that currently Cambodia has commercial centres in Macaue, Nanning, Guangzhou and Beijing.

Source: Khmer Times, 01 February 2018

On the 5^th of December 2017, the National Bank of Cambodia (NBC) announced that Crypto Currency like BitCoin and related instruments are not permitted by the laws, and the NBC does not recognize it. Crypto Currency advertisement and operation will put public at risk since it can be used as means for money laundering, financial termism and black market.  The NBC prohibits all banks and financial institutions from performing any transactions related to Crypto Currency and other related instruments, which is not recognized by the NBC.

Source: Letter issued by the National Bank of Cambodia on December 5, 2017.

On 15^th of November 2017, the Ministry of Economy and Finance (MEF) issued a Prakas to reduce withholding tax on interest from local microfinance institutions (MFIs) from 14 percent to 10 percent. The new Prakas aims at shrinking the expendable interest rates that MFIs take on loans from abroad to ensure the sustainability of microfinance sector. Also, the withholding tax rate reduction applies only on loans acquired abroad. It is known that the remaining 4 percent will be paid by the government.

Experts said that “This Prakas is clearly intended to provide benefits to the people by reducing the cost of microfinance loans and MFIs on which these savings will be passed on to clients to be ensured.” This reflects the fact that the government has understood the MFIs’ Operations burden and the timeline for the reduction which will finish by the end of 2018, another expert said. He added that this period of time will give the MEF enough room to amend the fiscal policy, especially if a new government is formed after next year’s election. 

Source: The Phnom Penh Post, 15 November 2017

On July 07, 2017, Ministry of Commerce has issued a Prakas No: 172 MOC/PK to modify the Prakas No: 047 MOC/SM dated January 23, 2013 concerning the price tag in Riels currency. This new Prakas was issued to impose all Traders, Venders, and Service Providers in Cambodia to put the price tag in Riels currency on their selling products and services. The Prakas is purposed to promote the transparency of the national currency over the goods, product, and service charged in Cambodia.

However, some business area, called “Duty Free”, which are licensed by the Government to have price tag in foreign currency, they are required to have an approval from Municipal or Provincial Department of Commerce of the place of business. The approval is valid for one year and it is subject to be renewable. The approval shall be submitted with the required documents where consist of Application Form, Certificate of Incorporation, latest Patent Certificate, ID Card or Passport, and three of 4 X 6 photos. All Duty Free Shops who held an approval to have price tags in foreign currency has duty to pay the public free as stipulated in Public Official Fee of Ministry of Commerce.

On March 20th, Securities and Exchange Commission of Cambodia (SECC) issued an announcement to inform the public that SECC temporally stop accepting application for licensing a New Central Counterparty License to Derivatives Trading Firms. Notwithstanding, SECC still encourage persons who want to be a Derivative Brokerage firm and unlicensed Derivative Brokerage firm promptly apply the application. Those who are unlicensed Derivative Brokerage firms failed to get the license from SECC are warned to faced legal action.

For the public information, SECC listed the current four licensed Central Counterparty companies and six licensed Brokerage.

In the same announcement, SECC added that it will carry on accepting the application for licensing a New Central Counterparty License to Derivatives Trading Firms in the future with the date will be specified in another announcement.