You are currently browsing the monthly archive for February 2010.
The Phnom Penh Post reports on the ongoing controversy over tourist boats. Renting a boat along the riverside for a sunset cruise is one of my favorite ways to end the day. But if critics are right, the price is about to go up. The newly formed Association of Phnom Penh Water Tourist Transport argues they’ll bring order to bookings, which I admit can be pretty haphazard and frustrating at times. Critics say it’s a cartel that will lead to higher fares.
Both could be proved right, and we’d end up with a central booking monopoly. Orderly, but more expensive. What’s needed is antitrust or competition law, to ban such price fixing. But even in countries with such laws, enforcement is far from perfect. There’s been some foreign technical assistance to draft such a law, but to my knowledge, it’s still a long way away.
Excellent post over at The Mirror about the gulf between law and implementation of law. On public understanding of law, he writes:
“But there are obviously also cases where it is surely quite difficult for the public to understand the complexity of some legislation – and if it is not easy to understand the rules, there is a lower motivation to follow them – though this is normally wrong not to follow the law.”
He’s absolutely right that many people will throw up their hands in exasperation if laws are too complex to understand. While some technical laws might be difficult for the lay-person to fully grasp, in general I’ve found Cambodian laws to be fairly clear and straightforward. Foreign technical experts are often involved in drafting legislation, and as a result Cambodian laws often reflect general legal principles common to most other countries.
In my view, the greatest barrier to following the law is access – it’s simply too difficult to find legal documents. Astonishingly, there’s no comprehensive legal database or library anywhere in the country. There have been no fewer than seven foreign aid projects involved in compiling laws, but unfortunately nothing sustainable and up-to-date has come out of it. Yesterday, I met with a foreign expert working through a university here in Phnom Penh who is working to create just such an online database. I’m hopeful that in the near future we’ll have better access to laws, which should provide more motivation to follow them.
Many of you might have the notion that incorporating a company in Cambodia is difficult, but that couldn’t be further from the truth. The Ministry of Cambodia is developing a fine tuned system for company incorporation in Cambodia and, provided you follow the rules, you could soon be on your way to making your fortune in the land of Angkor.
The first thing to do when forming a company is to decide what sort of business you want to form. Depending on the type of business you set up, the licensing requirements and amount of capital required are different. For example, a tour company requires a tourism license and at least $5000 in capital. If you’re ambitious and want to form a bank, you’ll require a banking license and a mere two million in cash as capital.
We often recommend to our clients that you set up a basic import / export company first and then add the required licensing once the company has been incorporated. The reason for this is simple; while you are waiting for the licensing to be processed you may make preparations to start your business.
In order to form a company, you need to provide the Cambodian government with certain information, such as the names of directors and shareholders, company name, address, company bank account and lease agreement.
Government fees vary depending on who you work with and the speed that you want the incorporation processed. A general import / export company can be incorporated for under $1500, including taxes, patents and the registration for an office lease agreement. Of course, solicitor’s fees and licensing fees are additional to this. From start to finish, a company can be incorporated in as little as two months provided you have all the required documents and can provide the Ministry of Commerce with these.
If you are experienced in doing business in Cambodia, then it is possible to process the application yourself, especially if you can speak Khmer and have knowledge of how the Ministry works. If not, then it is highly recommended you go through an agent or attorney. Although the process for incorporating a company isn’t difficult, you may find that there are long delays or increased costs for your lack of knowledge.
Looking around Phnom Penh, the ideas for potential income earners seem endless; entertainment for families, specialist shops, restaurants, quality media, improved construction materials, the list continues. But the first step to making your fortunes is to incorporate your company.
For more information on setting up a company, see our Guide to Business in Cambodia.
a blank page… where to begin?
Cambodia is in the midst of establishing a modern legal system and solidifying the rule of law. Part of this will require better access to legal information, particularly English-language materials accessible to foreign investors. This blog is one small step in that direction. Our posts will be a mix of substantive legal information, updates on legislation, and news reports on legal affairs. We hope you find this blog informative, and feel free to leave comments on anything we post!