The World Bank just released its annual Investing Across Borders report, and the section on Cambodia makes for interesting reading. Overall, I’d say Cambodia comes out looking pretty good – an extremely open economy, decent access to land, albeit a slow process for opening a company.

The authors looked to four areas affecting foreign investment:

  • Restrictions on foreigner ownership across sectors: Cambodia scores a perfect 100 on every sector except electricity transmission and ports.
  • Ease and speed of setting up a foreign-owned business: 45 out of 100 on their index, versus a regional average of 57.
  • Acquisition of industrial land: No ownership rights for foreigners, but lease rights are very strong. Also, land can be leased much quicker than the regional or global average
  • Arbitration of commercial disputes: The report gives decent scores for the arbitration law, but it’s waiting for the National Arbitration Center to launch before it’s actually implemented.

One measure that could have been included is of rule of law, or effectiveness of the court system. That’s often the top concern of investors I’ve met with, as they’re skittish about putting money in a place which is perceived by many to have weak legal investment protection. I guess the arbitration measure is meant to capture this, but arbitration is only one means to resolving a dispute.

Further, Cambodia currently has NO commercial arbitration at all (see the post below). The report seems to score Cambodia based on the text of the as-yet unimplemented Law on Commercial Arbitration. A fictitious exercise if you ask me.