Doing Business in Cambodia

What are the challenges?

Challenges doing business in Cambodia

Foreign companies must be prepared to encounter challenges when doing business in Cambodia. It ranks 135^th out of 190 global economies in the World Bank’s Ease of Doing Business Report 2018: http://www.doingbusiness.org/data/exploreeconomies/cambodia, and the World Economic Forum’s Global Competiveness Report for 2017-18 cites corruption and an inadequately-educated workforce as the main problematic factors for doing business in Cambodia: http://reports.weforum.org/global-competitiveness-index-2017-2018/countryeconomy-profiles/#economy=KHM.

Although not without its problems, Cambodia’s economy continues its process of rapid expansion and modernisation. The economy has experienced strong, positive growth over the last 15 years.

Cambodia is a unique country, which provides a number of opportunities across different sectors for both UK companies already operating in Southeast Asia and those new to the region.

Success, however, does require a strong understanding of local social and business culture and doing business in Cambodia takes patience and perseverance. Companies should be prepared to invest time and resources in regular visits over a period of months, sometimes years, before seeing returns – it can take time to develop the necessary relationships before any financial returns materialise. Companies should recognise this and plan their business entry strategy accordingly.

[Source – ASEAN/DIT/FCO/gov.uk]

 

Business risk

Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world. In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

Foreign businesses should be aware that the risks of encountering bribery or attempted bribery are relatively high in Cambodia. Visit the Business Anti-Corruption portal at: http://www.business-anti-corruption.com/country-profiles/cambodia for advice and guidance about corruption in Cambodia and some basic but effective procedures you can establish to protect your company from the corruption risks.

Read the information provided on the UK Government’s website on bribery and corruption at: https://www.gov.uk/anti-bribery-policy.

Cambodia is ranked 161^st out of 180 countries in Transparency International’s latest 2017 Corruption Perceptions Index (CPI). See: https://www.transparency.org/news/feature/corruption_perceptions
_index_2017

Intellectual property (IP)

Intellectual Property Rights (IPR), as intangible assets, are a key factor in the competitiveness of your business in the global economy. IPR can protect your innovation from competitors and can also be an important source of cash flow through licensing deals or selling IP. IPR infringement can lead to loss of business, revenue, reputation and competitive advantage unless you take steps to protect your IP both in the UK and abroad.

Cambodia is a member of the World Trade Organization (WTO) and is thus a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which sets international standards for various aspects of IP – see: https://www.wto.org/english/thewto_e/countries_e/cambodia_e.htm. It is also a signatory to a number of international IPtreaties administered by the World Intellectual Property Organization (WIPO).

Businesses are encouraged to learn more about IP issues relevant to their specific industry sector and to consider defensive measures early in their plans to enter the Cambodian market.

Cambodia is part of the ASEAN Patent Examination Co-operation (ASPEC), a regional patent work-sharing programme among nine participating ASEAN Member States (AMS). The purpose of this programme is to share search-and-examination results between the participating offices to allow applicants in participating countries to obtain corresponding patents faster and more efficiently. ASPEC is free of charge and operates in English.

Businesses are generally encouraged to learn more about IP issues relevant to their specific industry sector and to consider defensive measures early in their plans to enter the Cambodian market.

Useful information on protecting your IP in Cambodia can be can be found at:

• The Intellectual Property Office – the UK Government agency providing free and impartial advice on protecting and registering your IP in the UK and abroad. See: https://www.gov.uk/government/organisations/intellectual-property-office.

• The ASEAN IPR SME Helpdesk – a project funded by DG Enterprise and Industry of the European Commission to provide free information and training for European SMEs in the ASEAN region. See: http://www.ipr-hub.eu/.

• The Cambodian Department of Intellectual Property: http://cambodiaip.gov.kh/default.aspx?lang=en.

[Source – FCO Overseas Business Risk/gov.uk]

 

Getting paid in Cambodia

You may wish to talk to a specialist about finance, including how to get paid in Cambodia. This could be a bank, an accountant or you can contact the DIT team in Cambodia at: https://www.gov.uk/world/organisations/department-for-international-trade-cambodia#contact-us for help to find a financial adviser in Cambodia.

Your contract will specify the terms for payment. However, if there is any dispute you will need to go through the Cambodian legal system for resolution.

Payment risks in Cambodia

Cambodia adopted its first secured transactions law—enabling the use of movable property as collateral and ensuring that secured creditors’ claims have priority in case of debtor default—and launched an online unified collateral registry.

UKEF helps UK companies get paid by insuring against buyer default.

Be confident you will get paid for your export contract. Speak to one of UKEF’s export finance advisers at: https://www.gov.uk/government/publications/find-an-export-finance-manager for free and impartial advice on your insurance options, or contact one of UKEF’s approved export insurance brokers at: https://www.gov.uk/government/publications/uk-export-finance-insurance-list-of-approved-brokers/export-insurance-approved-brokers.

Currency risks when exporting to Cambodia

If you have not fixed your exchange rate you have not fixed your price.

You should consider whether the best option for you is to agree terms in pounds Sterling or US Dollars in any contract. You should also consider getting expert financial advice on exchange rates (sometimes called FX).

[Source – DIT/gov.uk]

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