Doing Business 2020 Cambodia Economy Profile Cambodia Page 1 Doing Business 2020 Cambodia Economy Profile of Cambodia Doing Business 2020 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Employing workers Flexibility in employment regulation and redundancy cost Page 2 Doing Business 2020 Cambodia About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation. These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. To learn more about Doing Business please visit doingbusiness.org Page 3 Doing Business 2020 Cambodia Ease of Doing Business in DB RANK DB SCORE Region East Asia & Pacific Cambodia Income Category Lower middle income Population 16,249,798 144 53.8 City Covered Phnom Penh Rankings on Doing Business topics - Cambodia 25 82 118 129 128 138 146 178 182 187 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Topic Scores 52.4 44.6 57.5 55.2 80.0 40.0 61.3 67.3 31.7 48.5 Starting a Business (rank) 187 Getting Credit (rank) 25 Trading across Borders (rank) 118 Score of starting a business (0-100) 52.4 Score of getting credit (0-100) 80.0 Score of trading across borders (0-100) 67.3 Procedures (number) 9 Strength of legal rights index (0-12) 10 Time to export Time (days) 99 Depth of credit information index (0-8) 6 Documentary compliance (hours) 132 Cost (number) 53.4 Credit registry coverage (% of adults) 0.0 Border compliance (hours) 48 Paid-in min. capital (% of income per capita) 70.2 Credit bureau coverage (% of adults) 52.2 Cost to export Documentary compliance (USD) 100 Dealing with Construction Permits (rank) 178 Protecting Minority Investors (rank) 128 Border compliance (USD) 375 Score of dealing with construction permits (0-100) 44.6 Score of protecting minority investors (0-100) 40.0 Time to export Procedures (number) 20 Extent of disclosure index (0-10) 6.0 Documentary compliance (hours) 132 Time (days) 652 Extent of director liability index (0-10) 10.0 Border compliance (hours) 8 Cost (% of warehouse value) 3.0 Ease of shareholder suits index (0-10) 4.0 Cost to export Building quality control index (0-15) 8.0 Extent of shareholder rights index (0-6) 0.0 Documentary compliance (USD) 120 Extent of ownership and control index (0-7) 0.0 Border compliance (USD) 240 Getting Electricity (rank) 146 Extent of corporate transparency index (0-7) 0.0 Score of getting electricity (0-100) 57.5 Enforcing Contracts (rank) 182 Procedures (number) 4 Paying Taxes (rank) 138 Score of enforcing contracts (0-100) 31.7 Time (days) 179 Score of paying taxes (0-100) 61.3 Time (days) 483 Cost (% of income per capita) 1,701.9 Payments (number per year) 40 Cost (% of claim value) 103.4 Reliability of supply and transparency of tariff index (0-8) 3 Time (hours per year) 173 Quality of judicial processes index (0-18) 4.5 Total tax and contribution rate (% of profit) 23.1 Registering Property (rank) 129 Postfiling index (0-100) 26.0 Resolving Insolvency (rank) 82 Score of registering property (0-100) 55.2 Score of resolving insolvency (0-100) 48.5 Procedures (number) 7 Recovery rate (cents on the dollar) 14.6 Time (days) 55 Time (years) 6.0 Cost (% of property value) 4.3 Cost (% of estate) 18.0 Quality of the land administration index (0-30) 7.5 Outcome (0 as piecemeal sale and 1 as going 0 concern) Strength of insolvency framework index (0-16) 13.0 Page 4 Doing Business 2020 Cambodia Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the (number) procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited • Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office. • Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for the home to register the company the second largest business city. • Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily Time required to complete each procedure (calendar days) polluting production processes. • Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits. -Is 100% domestically owned. • Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the start on the same day) company shares, two owners have 20% of shares each, and two owners have 15% of shares • Procedures fully completed online are recorded as ½ day each. -Is managed by one local director. • Procedure is considered completed once final document is -Has between 10 and 50 employees one month after the commencement of operations, all of them received domestic nationals. • No prior contact with officials -Has start-up capital of 10 times income per capita. -Has an estimated turnover of at least 100 times income per capita. Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate. capita) -Has an annual lease for the office space equivalent to one income per capita. • Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet). -Has a company deed that is 10 pages long. • No professional fees unless services required by law or commonly used in practice The owners: Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there • Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old. or up to 3 months after incorporation -Are in good health and have no criminal record. -Are married, the marriage is monogamous and registered with the authorities. -Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. Page 5 Doing Business 2020 Cambodia Starting a Business - Cambodia Standardized Company Legal form Private Limited Liability Company Paid-in minimum capital requirement KHR 4,000,000 City Covered Phnom Penh Indicator Cambodia East Asia & OECD high Best Regulatory Pacific income Performance Procedure – Men (number) 9 6.5 4.9 1 (2 Economies) Time – Men (days) 99 25.6 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 53.4 17.4 3.0 0.0 (2 Economies) Procedure – Women (number) 9 6.6 4.9 1 (2 Economies) Time – Women (days) 99 25.7 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 53.4 17.4 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 70.2 3.5 7.6 0.0 (120 Economies) Figure – Starting a Business in Cambodia – Score 52.9 1.0 73.3 82.5 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in Cambodia and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 92.4: Thailand (Rank: 47) 85.1: Vietnam (Rank: 115) 83.9: Regional Average (East Asia & Pacific) 83.3: Malaysia (Rank: 126) 62.7: Lao PDR (Rank: 181) 52.4: Cambodia (Rank: 187) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2020 Cambodia Figure – Starting a Business in Cambodia – Procedure, Time and Cost Time (days) Cost (% of income per capita) 35 30 Cost (% of income per capita) 80 25 Time (days) 60 20 15 40 10 20 5 0 0 1 2 3 4 5 6 *7 *8 *9 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2020 Cambodia Details – Starting a Business in Cambodia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Conduct an initial check for uniqueness of the company name and Obtain company name 1 week KHR 40,000 approval at the Business Registration Department Agency : Business Registration Department, Ministry of Commerce The Ministry of Commerce issued a Prakas No. 299 on 29 December 2015 to implement a new procedure for registration of company through the online system. Website: www.businessregistration.moc.gov.kh The company is required to set up an account on business registration website of Ministry of Commerce, so they can perform the name search availability and reserve the name online by uploading the ID Cards or Passports of Owners. The payment of government fee shall be done online via ACLEDA Bank and offline via Foreign Trade Bank, Canadia Bank and Acleda Bank. Currently, e-payment to the Ministry of Commerce via Foreign Trade Bank does not work yet. 2 Incorporate the company with the Business Registration Department in Ministry of 1 month KHR 1,680,000 Commerce Agency : Business Registration Department, Ministry of Commerce Every businessman and trade company based in the Kingdom of Cambodia is obligated to register their business through the Ministry of Commerce’s automated business registration system from anywhere via this Website: www.businessregistration.moc.gov.kh The following documents must be provided online to the Ministry’s Registrar in the specified quantity: 1. Documents containing address, which can be a lease agreement, electricity bill, water bill, house or building rent agreement, bank statement, etc. 2. Agreement establishing the company 3. Photos 4x6 4. Identity card or passport of the company’s owners and administrator 5. Honest declaration by the administrator to have no previous conviction in any commercial, civic or criminal case, and that he/she is currently not a civil servant bound by the Statutes of Civil Servants of the Kingdom of Cambodia 6. In the case where the company’s owners are legal persons: - a certified copy of the original legal documents proving the company’s registration - the original copy of letter appointing the legal person as the representative issued by the owners of the company 7. The company must provide two (02) copies of the original version of its statute, accompanied by a statement of bank deposit, to the Department of Business Registration within 30 days starting from the date a business registration certificate is issued. During this period, if the Department of Business Registration does not receive the original copy of the statute from the applicant, Ministry of Commerce reserves its right to reject the company’s registration and delete it altogether from its database. Documents listed under items (1)-(6) are submitted online at http://www.businessregistration.moc.gov.kh. Documents listed under item (7) are submitted in person in original hard copy. 3 Make a company seal 1 day USD 15 Agency : Sealmaker The Ministry of Commerce registers and acknowledges the seal of the company. The company itself must produce a seal in accordance with formats provided in the MOC. 4 Open a bank account 1 day no charge Agency : Bank The company must open a bank account in its name. The evidence of a bank account must be submitted to the MOC within one month after the company has obtained the certificate of incorporation. At the same time of opening a bank account, the company can also deposit the initial capital. Page 8 Doing Business 2020 Cambodia 5 Have registration documents stamped and approved, register for TIN, Patent tax and VAT 1 month USD 100 tax Agency : General Department of Taxation The documents need to be stamped are the Memorandum and Articles of Association and the Certificate of Incorporation. This is obtained at one of the Department of Administration and General Affairs, and other 33 Tax Branches. In-person visit to Tax Registration Office is required in order to take picture and fingerprint. To register, it is required to complete the application form issued by the Tax Administration and attach the following documents: - Approval letter or certificate issued by the Royal Government of Cambodia (RGC) or relevant RGC ministries; - Articles of Association or Memorandum of Understanding (AoA or MoU) with competent ministries-institutions (if any); - Valid ID card or passport; - Two current photos (not older than 3 months), size 4x6, white background, no glasses and showing both ears, and must be signed by Chairman on the back of the photo; - Ownership certificate or valid lease agreement; - Immovable property tax receipt or documents (if any); - Bank account information of the enterprise (i.e. bank confirmation letter or bank statement or bank book) issued by a bank; - Licences issued by competent institution (if any) (e.g. tourist license issued by Ministry of Tourist etc.). The e-registration website is not functioning at the moment. 6 Notify the Ministry of Labor of enterprise opening, hiring of employees and establishing 1 month KHR 850,000 (for 8-100 internal regulations employees) - see Agency : Phnom Penh Capital Hall procedure details All businesses must submit a written declaration to Ministry of Labor before starting their operations. In addition, each enterprise with at least eight employees must have established internal regulations that adapt such general provisions of the labor code as conditions of hiring and calculation and payment of wages and perquisites, including in-kind benefits, work hours, health and safety measures, and personal leave, including holidays. The internal regulations must be filed within 3 months of firm opening. All establishments must maintain a payroll ledger, a declaration of personnel, a book of establishment, and labor regulations (in Khmer version). As required by law, local employees shall be provided with a “labor book” upon completing a physical examination at the Labor Health Center. The procedure cost covers five processes: - Registration for opening of enterprise (KHR 30,000) - Registration of enterprise/establishment ledger (KHR 60,000) - Registration of payroll (KHR 80,000) - Having internal regulation certified (KHR 600,000) - Issuance of letter recognizing the election of shop steward for enterprise/establishment employing (KHR 80,000) 7 Submit company original statutes and evidence of a bank account at the Business Registry 1 day (simultaneous with no charge Agency : Business Registration Department in Ministry of Commerce previous procedure) The company must provide two copies of the original version of its statute, accompanied by a statement of bank account to the Department of Business Registration within 30 days starting from the date a business registration certificate is issued. During this period, if the Department of Business Registration does not receive the original copy of the statute from the applicant, Ministry of Commerce reserves its right to reject the company’s registration and delete it altogether from its database. 8 Receive inspection from Labor Inspector 1 day (simultaneous with included in procedure 6 Agency : Ministry of Labor and Vocational Training previous procedure) After the registration, labor inspection is done randomly and jointly by the labor official, immigration police, and NSSF official. Page 9 Doing Business 2020 Cambodia 9 Register at the National Social Security Fund 2 weeks (simultaneous no charge Agency : National Social Security Fund with previous procedure) According to Prakas No. 448 of the Ministry of Labor on on the Registration of Enterprises/Establishments and Workers/Employees that fall under the Provisions of the Labor Law with the NSSF, any employer employing at least one employee is required to register with the NSSF. At the beginning an employer needs to fill out form 1.01 (Registration of an Enterprise) and 2.01 (Registration of Employees) and file them with NSSF along with supporting documents listed on form 1.01. The two forms can be obtained from any of NSSF offices. Form 1.01 lists four supporting documents: (1) Certificate of incorporation of the Company; (2) Patent tax certificate of the Company; (3) List of employees (form 2.01); (4) Identification card or passport of Company's representative. In practice, additional documents might be required, e.g. application form, photo of Company's representative, and location plan of the Company. Upon review and approval, NSSF will issue the Enterprise Registration Certificate. After registration, the employer must calculate, complete and file the monthly NSSF contribution form with the NSSF. The information required to complete the NSSF contribution form must be completed and filed by the required deadline of the 15th of each month. Takes place simultaneously with previous procedure. Page 10 Doing Business 2020 Cambodia Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates The construction company (BuildCo): • Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest inspections business city. For 11 economies the data are also collected for the second largest business city. • Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects • Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed Time required to complete each procedure (calendar days) experts, such as geological or topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse upon its • Does not include time spent gathering information completion. • Each procedure starts on a separate day—though procedures The warehouse: that can be fully completed online are an exception to this rule - Will be used for general storage activities, such as storage of books or stationery. • Procedure is considered completed once final document is received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be • No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of income per - Will have complete architectural and technical plans prepared by a licensed architect. If capita) preparation of the plans requires such steps as obtaining further documentation or getting prior • Official costs only, no bribes approvals from external agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory Building quality control index (0-15) requirements). • Quality of building regulations (0-2) The water and sewerage connections: • Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water • Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control after construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow • Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and • Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 11 Doing Business 2020 Cambodia Dealing with Construction Permits - Cambodia Standardized Warehouse Estimated value of warehouse KHR 284,929,167.90 City Covered Phnom Penh Indicator Cambodia East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 20 14.8 12.7 None in 2018/19 Time (days) 652 132.3 152.3 None in 2018/19 Cost (% of warehouse value) 3.0 3.2 1.5 None in 2018/19 Building quality control index (0-15) 8.0 9.4 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in Cambodia – Score 40.0 0.0 84.9 53.3 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in Cambodia and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 89.9: Malaysia (Rank: 2) 79.3: Vietnam (Rank: 25) 77.3: Thailand (Rank: 34) 70.0: Regional Average (East Asia & Pacific) 68.3: Lao PDR (Rank: 99) 44.6: Cambodia (Rank: 178) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 12 Doing Business 2020 Cambodia Figure – Dealing with Construction Permits in Cambodia – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 3 600 2.5 Cost (% of warehouse value) 500 2 Time (days) 400 1.5 300 1 200 100 0.5 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 13 Doing Business 2020 Cambodia Figure – Dealing with Construction Permits in Cambodia and comparator economies – Measure of Quality 14 13.0 12.0 12 11.0 Index score 10 9.4 8.0 8 6.5 6 4 2 0 Cambodia Lao Malaysia Thailand Vietnam East PDR Asia & Pacific Details – Dealing with Construction Permits in Cambodia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain application form 1 day KHR 4,500 Agency : Municipal Department of Land Management, Construction and Urban Planning The application form and list of supporting documents must be picked up from the Municipal Department of Land Management, Construction and Urban Planning. 2 Submit documents to the Sangkat Office for review 14 days no charge Agency : Sangkat Office According to Subdecree No. 86 (dated December 19, 1997), relating to the construction permit, the documents attached to the official letter application must contain at least the following (10 copies on 21 x 29.7 cm paper): • Certificate to the estate or title certificate to the estate or the temporary occupation permit to the land • Sheet of plot (the basic plan of dimension of the land): this plan shall be made by a private land surveyor or by the land office’s private agent • Plan of warehouse location on the plot. This plan specifies the location of construction in the plot and the object of the application, by stating the following: the distance between one or more buildings and boundaries of the plot and the distance of the neighboring existing buildings; all arrangements of other sectors of the vacant land, with clarification on the type of land and existing crops and planned car parks and fences; drainage pipes outside the building (substance, diameter, slope, height level, checking hole) up to the connection point of public network for draining sewage and for clean water, latrine, sink, and well; and stable point of the height of plot after the arrangement • Plan of all warehouse floors (scale 1:100) • Plan of the underground parts and latrine sinks (scale 1:100) • Plan of front warehouse (scale 1:100) • Plan of divided parts (scale 1:100). This plan shows the same as the front face plan, with one part showing the hygienic latrine sink • Table of the surface area for each floor • Technical specifications for calculating the ground level surface. Upon receiving the construction permit, BuildCo must prepare a detailed plan of the construction integration. The Ministry of Public Works and Transportation will review this plan before the construction site is opened. There is no official fee; however, an informal fee must be paid to facilitate the application. 3 Request and obtain certification from the Khan or District Governor 182 days no charge Agency : Khan/ District Governor According to the Decision No. 05 SSR dated February 6, 2006 from the Ministry of Land Management, Urban Planning and Construction, this procedure must follow Procedure 2. The time frame should be 5 working days by law. The certification fee is not provided for by law. If informal fees are not paid, it generally takes between 4 months to 1 year to obtain the certification. Page 14 Doing Business 2020 Cambodia 4 Submit documents to the Khan Land Management, Urban Planning, and Construction 14 days no charge Office for review and obtain approval Agency : Khan Land Management, Urban Planning, and Construction Office The following documents must be submitted within 6 days after Procedure 2 has been completed: • Plot plan • Structural and engineering plans • Plan of the location of the warehouse on the plot • Plan of all warehouse floors. This plan specifies the purpose of using the rooms and the area, sanitation installation, and areas for pipes placing • Plan of the underground parts and the latrine sinks (scale, 1:100) • Plan of front building (scale 1:100): This plan specifies the front face plan, showing the height level of the following: each floor; land at the bottom of the building, by specifying the height level of natural land, filled land, or removal land; the roof and limit of roof or height of existing terrace and the wall barriers; existing flower's pole and substance for front face • Plan of divided parts (scale, 1:100): This plan shows the same as the front face plan with one part showing the hygienic latrine sink • Table of surface area for each floor • Technical specifications for calculating the ground level surface • Additional documents: the applicant may be requested to provide additional documents for reasons of hydrology, prevention against all types of annoyance, public order, and protection of patrimony or landscape • Title certificate • Application for construction permit (10 copies) There is no official fee; however, an informal fee must be paid. 5 Request and obtain the approval (building permit) of the Municipal Department of Land 365 days KHR 6,720,000 Management, Construction and Urban Planning Agency : Municipal Department of Land Management, Construction and Urban Planning BuildCo must file the documents with the Sangkat Office/Commune first, then to Khan/District), then with (a) the Municipality/Province for plots under 3,000 sq. m. or (b) the Ministry of Land Management, Urban Planning and Construction for plots above 3,000 sq. m. However, BuildCo does not need to visit each government office if the builder hires an agent who handles the construction permit application to completion. Fee schedule for construction permit according to the Joint Prakas 995 on provision of the Public Services Delivered by the Ministry of Land Management, Urban Plannign, and Construction : Surface of the construction on the land (SCL) less than or equal to • 100 sq. m.: KHR 1,000,000 • Less than or equal to 200.00 sq. m.: KHR 2,000,000 • Less than or equal to 300.00 sq. M.: KHR 3,000,000 • Less than or equal to 400.00 sq. m.: KHR 4,000,000 • Less than or equal to 500.00 sq. m.: KHR 5,000,000 • Less than or equal to 1,000.00 sq. m.: KHR 8,000,000 • Less than or equal to 2,000.00 sq. m.: KHR 10,000,000 • Less than or equal to 3,000.00 sq. m.: KHR 12,000,000 Based on the Decision No. 5 SSR from the Ministry of Land Management Urban Planning and Construction, after the examination by the Khan Land Office, the documents will be forwarded to the Phnom Penh Municipal Department of Land Management, Urban Planning and Construction and Cadastre (the "PP LO"). At the PP LO, the documents will be examined by the relevant offices such as the Cadastral Office, Technical and Geography Office, Construction Office, and Land Management Office. After the approval of the PP LO, the documents will be forwarded to the Phnom Penh Municipality (the "PPM") who will have 5 days for a final examination and issuance of the construction permit. The construction permit is valid for one year from the date of its issuance by the PPM and can be extended once for another year. Article 9.10 of the Sub Decree No. 86 on Construction Permit stipulates that after obtaining the Construction Permit, there shall be an iron structure plan which will be examined by the Ministry of Public Works and Transport. However, this is not enforced in practice, but maybe arbitrarily used by some officials. 6 Notify the Sangkat Office once the building permit is obtained 1 day no charge Agency : Sangkat Office Under Cambodian regulation, after receiving the building permit from the provincial or municipal authority, the company must notify other relevant authorities. Construction work must commence within a year from the date of issuance of the construction permit. 7 Notify the Khan Office once the building permit has been obtained 1 day no charge Agency : Khan Office/ District Page 15 Doing Business 2020 Cambodia 8 Request "construction site opening" from the Phnom Penh Municipal Department of Land 1 day KHR 672,000 Management, Urban Planning, and Construction and Cadastre (the "PP LO") Agency : Phnom Penh Municipal Department of Land Management Urban Planning and Construction and Cadastre (the "PP LO") BuildCo must inform the authorities about the start of the construction within 7 days. Then the authority will issue a declaration of "construction site opening." In order to start construction and as required by Sub Decree No. 86 on Construction Permit and Decision No. 05, the construction owner shall apply to the PP LO (not the Khan Land Office or the Sala Khan) for an approval to open the construction site. The PP LO will respond to the request within 6 days. According to the Prakas 995, this costs 10% of the building permit fee. 9 Receive an inspection from technical official 1 day no charge Agency : Technical Department The Technical Department sends an expert to inspect the construction site before construction starts. 10 Inform the building authority of the poles setup and receive inspection 1 day no charge Agency : Technical Department The inspector may visit the site without notifying BuildCo. The inspection takes a few hours, depending on the construction size and complexity. After receiving notification from BuildCo, an inspector will visit the site within 2 or 3 days. It is not necessary to stop the construction work. 11 Inform the building authority after foundation work and receive inspection 1 day no charge Agency : Technical Department 12 Inform the building authority when columns are built and receive inspection 1 day no charge Agency : Technical Department 13 Inform the building authority when walls are erected and receive inspection 1 day no charge Agency : Technical Department 14 Inform the building authority when floors are built and receive inspection 1 day no charge Agency : Technical Department 15 Inform the building authority upon completion of construction 1 day no charge Agency : Technical Department 16 Request connection to water and sewage services 1 day KHR 550,000 Agency : Phnom Penh Water Supply Authority (PPWSA) BuildCo must fill out some application forms for the water and sewage connection. BuildCo is not required to prepay government and service fees before, or at the time of, the connection. Instead, it must pay the following only after approval: the government fee (as listed below), the plumbing service fee [between KHR 200,000.00 (USD 50.00) and KHR 300,000.00 (USD 75.00) plus KHR 457,750.00 (USD 114.44)], and the water meter network length connection fee [KHR 92,800.00 (USD 23.20): water subscription cost)] = KHR 800,550.00. The water subscription fee for networks varies by water connection type (Point A and Point B) and is based on network length and water-meter size: Point A: Water subscription for new network is calculated as follows (for a network length of 15 mm): • 0 to 10 mm: KHR 457,750.00 (USD 114.44) • 11 mm to 20 mm: KHR 460,400.00 (USD 115.10) • 21 mm to 30 mm: KHR 665,200.00 (USD 166.30) • 31mm to 40 mm: KHR 772,250.00 (USD 193.06) • 41 mm up to 50 mm: KHR 878,500.00 (USD 219.62) Point B: Water subscription for available network with meter is calculated as follows (SN meter size water subscription fee): • 15 mm: KHR 92,800.00 (USD 23.20) • 20 mm: KHR 98,900.00 (USD 24.73) • 25 mm: KHR 106,900.00 (USD 26.73) • 30 mm: KHR 225,000.00 (USD 56.25) • 40 mm: KHR 271,000.00 (USD 67.75) 17 Receive inspection by water authorities and obtain water and sewage connection 42 days no charge Agency : Phnom Penh Water Supply Authority (PPWSA) According to Article 18 of Sub-Decree N0 89 the technical committee conducts inspection "during the connections of sewers, water and electricity systems.” In general, water and power supply companies must conduct on-site inspections to determine how to connect the construction to the network and to estimate the cost of this connection. In addition to providing water services, the utilities must ensure the connection is made according to the approved plan. 18 Inform the building authority once connection to utilities is complete 1 day no charge Agency : Khan Office/ District Page 16 Doing Business 2020 Cambodia 19 Receive final inspection by the relevant authorities 1 day KHR 672,000 Agency : Khan Office/District, Urbanization and Construction Office, Municipality/ Provincial Authority At the end of construction, the District or Khan Office and the Urbanization and Construction Office may check simultaneously that the erected building complies with the construction permit specifications. 20 Obtain certificate of compliance from building authority 21 days no charge Agency : Khan Office/ District After the final inspection, the municipal or provincial authority issues the certificate of compliance or could take legal action for noncompliance. Takes place simultaneously with previous procedure. Page 17 Doing Business 2020 Cambodia Details – Dealing with Construction Permits in Cambodia – Measure of Quality Answer Score Building quality control index (0-15) 8.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge. Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0 accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals; Available only on request. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed architect; 1.0 building regulations? (0-1) Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by in- 1.0 house engineer; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 2.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection does 0.0 not always occur in practice. Liability and insurance regimes index (0-2) 0.0 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use No party is held liable 0.0 (Latent Defect Liability or Decennial Liability)? (0-1) under the law. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance . Professional certifications index (0-4) 1.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans University degree in 1.0 or drawings are in compliance with existing building regulations? (0-2) architecture or engineering; Passing a certification exam. What are the qualification requirements for the professional who supervises the construction on the ground? (0- University degree in 0.0 2) engineering, construction or construction management. Page 18 Doing Business 2020 Cambodia Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining all necessary clearances and permits The warehouse: • Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods. inspections - Is located in the economy’s largest business city. For 11 economies the data are also collected for • Obtaining external installation works and possibly purchasing the second largest business city. material for these works - Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway. • Concluding any necessary supply contract and obtaining final - Is a new construction and is being connected to electricity for the first time. supply - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet). • Is at least 1 calendar day The electricity connection: • Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). • Does not include time spent gathering information - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution • Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other Cost required to complete each procedure (% of income per owners’ private property because the warehouse has access to a road. capita) - Does not require work to install the internal wiring of the warehouse. This has already been • Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours • Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours • Tools to monitor power outages (0–1) (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. - Tariffs effective in January of the current year are used for calculation of the price of electricity for • Regulatory monitoring of utilities’ performance (0–1) the warehouse. Although January has 31 days, for calculation purposes only 30 days are used. • Financial deterrents limiting outages (0–1) • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity. Page 19 Doing Business 2020 Cambodia Getting Electricity - Cambodia Standardized Connection Name of utility Electricité du Cambodge Price of electricity (US cents per kWh) 18.2 City Covered Phnom Penh Indicator Cambodia East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 4 4.2 4.4 3 (28 Economies) Time (days) 179 63.2 74.8 18 (3 Economies) Cost (% of income per capita) 1701.9 594.6 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 3 4.0 7.4 8 (26 Economies) Figure – Getting Electricity in Cambodia – Score 83.3 30.0 79.0 37.5 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in Cambodia and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 99.3: Malaysia (Rank: 4) 98.7: Thailand (Rank: 6) 88.2: Vietnam (Rank: 27) 75.1: Regional Average (East Asia & Pacific) 58.0: Lao PDR (Rank: 144) 57.5: Cambodia (Rank: 146) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in Cambodia – Procedure, Time and Cost Time (days) Cost (% of income per capita) 1800 160 1600 Cost (% of income per capita) 140 1400 120 1200 Time (days) 100 1000 80 800 60 600 40 400 20 200 0 0 1 *2 3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 20 Doing Business 2020 Cambodia reflected here, see the summary below. Figure – Getting Electricity in Cambodia and comparator economies – Measure of Quality 9 8 8 8 7 7 Index score 6 5 4.0 4 3 3 3 2 1 0 Cambodia Lao Malaysia Thailand Vietnam East PDR Asia & Pacific Page 21 Doing Business 2020 Cambodia Details – Getting Electricity in Cambodia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to Electricite Du Cambodge and await estimate 41 calendar days KHR 0 Agency : Electricite Du Cambodge (EDC) The application should be submitted in person to the Distribution Department of Electricite Du Cambodge. The application should include the following documents: a certificate of property title (a photocopy is sufficient and there is no need for notarization) and a certificate of company registration. The client has to fill a form specifying the power needed and the list of equipment in the warehouse. There are no official fees for the application. The time for this procedure includes an estimate for negotiation. 2 Receive site inspection by Electricite Du Cambodge 1 calendar day KHR 0 Agency : Electricite Du Cambodge (EDC) The Distribution Department of EDC sends an inspector to check the site and the area. After the inspection the EDC will do the assessment and quotation of the prices. 3 Await clearance from Electricite Du Cambodge and sign contract 75 calendar days KHR 0 Agency : Distribution Department Electricite Du Cambodge (EDC) The consumer should obtain a clearance from the Distribution Department which has to assess whether EDC has enough capacity. The clearance is issued by the Managing Director of the Distribution Department. Once the clearance is issued the applicant signs a contract and pays fees. 4 Await completion of external works, meter installation and final connection 63 calendar days KHR 96,984,022.59 Agency : Electricite Du Cambodge (EDC) and Electrical Contractor For an additional load of 140kVA installation of a transformer for 160 kVA will be required. The external connection works are carried out by EDC. The meter gets installed at the same time as when the connection is done. If there is a road crossing it takes EDC additional 2 weeks to obtain an excavation permit. The security deposit has to be paid and is returned upon the termination of the power consumption. There is no supervision / inspection of the internal wiring before the final connection. EDC is responsible only for the external connection. The customer's private electrical engineer is in charge of the internal wiring. There is no requirement that the electrician must be licensed, so they can practice without a license. However, EDC is de facto the licencor of electrical engineers because they provide training courses. Attendees of this training receive a certificate that EDC recognizes. There is no other agency that provides the courses. Takes place simultaneously with previous procedure. Page 22 Doing Business 2020 Cambodia Details – Getting Electricity in Cambodia – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 3 Total duration and frequency of outages per customer a year (0-3) 0 System average interruption duration index (SAIDI) 20.8 System average interruption frequency index (SAIFI) 15.4 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 1.0 Mechanisms for monitoring outages (0-1) 0 Does the distribution utility use automated tools to monitor outages? No Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? No Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online https://eac.gov.kh/uploads /tariff_decides/2018/302S R_20180720030341.pdf Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 23 Doing Business 2020 Cambodia Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the (number) transaction, the property and the procedures are used. • Preregistration procedures (for example, checking for liens, The parties (buyer and seller): notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). • Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits) • Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the municipality) second largest business city. - Are 100% domestically and privately owned. Time required to complete each procedure (calendar days) - Perform general commercial activities. • Does not include time spent gathering information The property (fully owned by the seller): • Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price. that can be fully completed online are an exception to this rule - Is fully owned by the seller. • Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years. received - Is registered in the land registry or cadastre, or both, and is free of title disputes. - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its • No prior contact with officials official limits), and no rezoning is required. Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, • Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be taxes). transferred in its entirety. • Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase. excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind. - Will not be used for special purposes, and no special permits, such as for residential use, Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required. - Has no occupants, and no other party holds a legal interest in it. • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 24 Doing Business 2020 Cambodia Registering Property - Cambodia Indicator Cambodia East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 7 5.5 4.7 1 (5 Economies) Time (days) 55 71.9 23.6 1 (2 Economies) Cost (% of property value) 4.3 4.5 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 7.5 16.2 23.2 None in 2018/19 Figure – Registering Property in Cambodia – Score 50.0 74.2 71.6 25.0 Procedures Time Cost Quality of the land administration index Figure – Registering Property in Cambodia and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 79.5: Malaysia (Rank: 33) 71.1: Vietnam (Rank: 64) 69.5: Thailand (Rank: 67) 64.9: Lao PDR (Rank: 88) 57.5: Regional Average (East Asia & Pacific) 55.2: Cambodia (Rank: 129) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 25 Doing Business 2020 Cambodia Figure – Registering Property in Cambodia – Procedure, Time and Cost Time (days) Cost (% of property value) 4.5 50 4 Cost (% of property value) 3.5 40 3 Time (days) 30 2.5 2 20 1.5 1 10 0.5 0 0 1 *2 *3 4 5 6 7 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 26 Doing Business 2020 Cambodia Figure – Registering Property in Cambodia and comparator economies – Measure of Quality 30 26.5 25 Index score 20 19.0 16.2 15 14.0 10.5 10 7.5 5 0 Cambodia Lao Malaysia Thailand Vietnam East PDR Asia & Pacific Details – Registering Property in Cambodia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain information on the property from the District and Commune Council Officials 10 days no charge Agency : District and Commune Office The land purchaser may contact the village chief or the district and commune council officials to obtain information on the land in addition to an official search at the municipal land office. Law does not require this procedure, but it is an additional step to verify that there are no liens or other encumbrances affecting the property object of the transaction. 2 Obtain the certificate of incorporation of the seller’s company at the Ministry of Commerce 10 days KHR 80,000 Agency : Ministry of Commerce If the landowner is a legal entity, the buyer should obtain a copy of the ID of the shareholder or person acting on behalf of the company, and a certified/notarized copy of the certificate of issued by the Ministry of Commerce. These documents are needed to verify the accuracy and identity of the company name appearing on the title certificate. A Power of Attorney is also required, as well as a resolution signed by the Board of Directors authorizing a named individual to represent the company at the land office accompanied by the Power of Attorney implementing that Resolution. The law doesn't require this procedure but it is carried out in practice to verify information of the seller. 3 The buyer verifies the title certificate with the Land Office, checking for potential liens or 4 days KHR 50,000 encumbrances Agency : Land Office (District Level, Office of the Ministry of Land Management, Urban Planning & Construction) The buyer should obtain a copy of the initial title certificate from the seller and verify proper ownership, ensuring that the seller is the rightful owner of the title certificate. The buyer checks the title certificate with the land office (it is also possible to start this procedure at the Land Department at the Provincial level) to ensure that there are no liens, mortgages or other encumbrances registered for that property. Official cost and time according to the Prakas 995 dated December 28th,2012 on public service at Ministry of Land Management, Urban Planning and Construction 4 Apply for registration at the District Land Office of the Ministry of Land Management, Urban 25 days KHR 600,000 Planning & Construction (MLMUPC) Agency : Land Office, (District Level, Office of the Ministry of Land Management, Urban Planning & Construction) When two persons/companies wish to buy/sell real property, together they should go to the district office of the Ministry of Land Management, Urban Planning & Construction (MLMUPC) and arrange to prepare and sign documents. The Land office reviews the document, checks the existing land book and sends it to the tax office to calculate the amount to be paid for the Transfer Tax. Before that, the tax office will send their staff to the field to evaluate the property. They have to inspect the property and assess its value. After the inspection, the tax office will ask the buyer to pay the transfer tax. In order to complete this procedure, a cadastral transfer fee of KHR 600,000 is paid to MLMUPC. The documentation shall include the company's statute, its Certificate of Incorporation, and Power of Attorney (obtained in Procedure 3). At the time, the original Title Certificate held by the seller must be presented to the Khan (District Level) at the time of signing the deed to have the name of the new owner inserted on the document. 5 Pay transfer tax at the Tax Collection Office 1 day KHR 11,397,166.71; (4% Agency : Relevant Tax Department of property value (transfer The seller pays a transfer tax of 4% of the value of the property to the Ministry of Economy and fee)) Finance at the Tax Collection Office of the location of the transferred property. A Tax Receipt is issued to prove that the tax has been paid. The 4% transfer tax is set out in Article 40 of the Law on Finance for the year 1995. In Phnom Penh, this tax is not assessed based on the true transacted value of the property but based on a schedule of the price of property determined by the Phnom Penh Municipality. The assessed value is usually based on the total number of square meters, the land's location, use etc. For the land of more than 1200m², the surplus is subject to unused land tax. For the land less than 1200m², the unused land tax is not applicable. The time for the tax office to complete the calculation of transfer tax will depend on the location of the land and its size. Page 27 Doing Business 2020 Cambodia 6 Return to Cadastral office to complete the registration process 5 days Cadastral service paid in Agency : Land Department (Province Level of the Ministry of Land Management, Urban Planning Procedure 4 & Construction) After taxes are paid the parties return to the cadastral office at the MLMUPC and sign/thumbprint a MLMUPC form for buying/selling real property that was filled in by MLMUPC official. The signing/thumb printing will be witnessed by a local authority such as commune chief who will also thumbprint. These Procedures are based on Land Law Arts. 244 and 245. Land Law Art. 69 bars transfer unless all necessary taxes are paid. The documentation shall include: (1) Payment receipts of transfer tax (obtained in Procedure 5) 7 Obtain the certificate of title from the Municipal Land Office 13 days Already paid in Procedure Agency : Land Department (Province Level of the Ministry of Land Management, Urban Planning 5 & Construction) The Khan/District land office forwards all the "transfer documents" to the Municipal Land Office where it issues the Certificate of Title in the new owner's name and has it registered. The last procedural step in practice can take several weeks, depending on the diligence of the land officials and interested parties. Land Department (Khan level) receives the Certificate of Title. Takes place simultaneously with previous procedure. Page 28 Doing Business 2020 Cambodia Details – Registering Property in Cambodia – Measure of Quality Answer Score Quality of the land administration index (0-30) 7.5 Reliability of infrastructure index (0-8) 2.0 Type of land registration system in the economy: Title Registration System What is the institution in charge of immovable property registration? Phnom Penh Municipal Department of Land Management, Urban Planning and Construction In what format are past and newly issued land records kept at the immovable property registry of the largest Paper 0.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, No 0.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Khan Office of Land Management, Urban Planning, Construction and Cadastral (District Level) In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Paper 0.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information No 0.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Different databases 1.0 kept in a single database, in different but linked databases or in separate databases? but linked Do the immovable property registration agency and cadastral or mapping agency use the same identification Yes 1.0 number for properties? Transparency of information index (0–6) 0.5 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Only intermediaries 0.0 in the largest business city? and interested parties Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, in person 0.0 and if so, how? Link for online access: Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable Yes, online 0.5 property registration in the largest business city made publicly available–and if so, how? Link for online access: http://www.mlmupc.g ov.kh/? page=document&me nu1=374&menu2=42 6&ref_id=36&ctype=a rticle&id=426&lg=k / http://www.jica.go.jp/c ambodia/office/inform ation/investment/ku57 pq00001vq7zz- att/administrative_pro cedure_08.pdf Does the agency in charge of immovable property registration agency formally commit to deliver a legally No 0.0 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0 in charge of immovable property registration? Contact information: Page 29 Doing Business 2020 Cambodia Are there publicly available official statistics tracking the number of transactions at the immovable property No 0.0 registration agency? Number of property transfers in the largest business city in 2018: Who is able to consult maps of land plots in the largest business city? Only intermediaries 0.0 and interested parties Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? No 0.0 Link for online access: Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and No 0.0 if so, how does it communicate the service standard? Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 0.0 Are all privately held land plots in the largest business city formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? No 0.0 Are all privately held land plots in the largest business city mapped? No 0.0 Are all privately held land plots in the economy mapped? No 0.0 Land dispute resolution index (0–8) 5.0 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: Article 135 of the Civil Code (requisite of transfer of title by agreement pertaining to an immovable). Transfer of title by agreement pertaining to an immovable property shall come into effect only when the transfer of right is registered following the provisions of the laws and ordinances regarding registration Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Type of guarantee: State guarantee Page 30 Doing Business 2020 Cambodia Legal basis: Article 226 of the Land Law: Ownership of immovable property shall be guaranteed by the State. For that purpose, the Cadastral Administration under the supervision of the Ministry of Land Management, Urban Planning and Construction shall have the competence to identify properties, establish cadastral index maps, issue ownership titles, register lands and inform all persons as to the status of a parcel of land in relation with its nature, size, owner and any relevant encumbrances over such parcel. Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Is there a national database to verify the accuracy of government issued identity documents? No 0.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local Phnom Penh businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located Municipality Court of in the largest business city? First Instance How long does it take on average to obtain a decision from the first-instance court for such a case (without Between 1 and 2 2.0 appeal)? years Are there publicly available statistics on the number of land disputes at the economy level in the first instance No 0.0 court? Number of land disputes in the economy in 2018: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 31 Doing Business 2020 Cambodia Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral. Credit registry coverage (% of adults) • Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 32 Doing Business 2020 Cambodia Getting Credit - Cambodia Indicator Cambodia East Asia & OECD high Best Regulatory Pacific income Performance Strength of legal rights index (0-12) 10 7.1 6.1 12 (5 Economies) Depth of credit information index (0-8) 6 4.5 6.8 8 (53 Economies) Credit registry coverage (% of adults) 0.0 16.6 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 52.2 23.8 66.7 100.0 (14 Economies) Figure – Getting Credit in Cambodia – Score 80.0 Score - Getting Credit Figure – Getting Credit in Cambodia and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 80.0: Cambodia (Rank: 25) 80.0: Vietnam (Rank: 25) 75.0: Malaysia (Rank: 37) 70.0: Thailand (Rank: 48) 60.0: Lao PDR (Rank: 80) 58.0: Regional Average (East Asia & Pacific) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 33 Doing Business 2020 Cambodia Figure – Legal Rights in Cambodia and comparator economies 12 10 10 Index Score 8 8 7 7 7.1 6 6 4 2 0 Cambodia Lao Malaysia Thailand Vietnam East PDR Asia & Pacific Page 34 Doing Business 2020 Cambodia Details – Legal Rights in Cambodia Strength of legal rights index (0-12) 10 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents Yes to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description Yes of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the Yes original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; Yes and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an Yes electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? Yes Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third Yes party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? Yes Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Cambodia and comparator economies 9 8 8 8 7 7 Index Score 6 6 6 5 4.5 4 3 2 1 0 Cambodia Lao Malaysia Thailand Vietnam East PDR Asia & Pacific Page 35 Doing Business 2020 Cambodia Details – Credit Information in Cambodia Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? No No 0 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes No 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or Yes No 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes No 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 5,450,043 0 Number of firms 0 0 Total 5,450,043 0 Percentage of adult population 52.2 0.0 Page 36 Doing Business 2020 Cambodia Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James appointed 60% of the shareholder-elected members. • Ease of shareholder suits index (0–10): Access to internal - Has not adopted bylaws or articles of association that go beyond the minimum requirements. corporate documents; Evidence obtainable during trial and allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0–20): Sum of the - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and extent of shareholders rights, extent of ownership and control directors that approved the transaction. and extent of corporate transparency indices • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices Page 37 Doing Business 2020 Cambodia Protecting Minority Investors - Cambodia Stock exchange information Stock exchange Cambodia Securities Exchange Stock exchange URL http://www.csx.com.kh Listed firms with equity securities 3 City Covered Phnom Penh Indicator Cambodia East Asia & OECD high Best Regulatory Pacific income Performance Extent of disclosure index (0-10) 6.0 5.9 6.5 10 (13 Economies) Extent of director liability index (0-10) 10.0 5.2 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 4.0 6.7 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 0.0 2.0 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 0.0 2.4 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 0.0 2.6 5.7 7 (13 Economies) Figure – Protecting Minority in Cambodia – Score 40.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Cambodia and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 88.0: Malaysia (Rank: 2) 86.0: Thailand (Rank: 3) 54.0: Vietnam (Rank: 97) 49.7: Regional Average (East Asia & Pacific) 40.0: Cambodia (Rank: 128) 20.0: Lao PDR (Rank: 179) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 38 Doing Business 2020 Cambodia Figure – Protecting Minority Investors in Cambodia and comparator economies – Measure of Quality Cambodia 0 10 6 0 4 Lao PDR 01 6 0 3 Malaysia 6 9 10 6 5 8 Thailand 6 7 10 6 5 9 Vietnam 5 4 7 5 4 2 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 East Asia & Pacific 3.1 5.1 6.4 2.9 2.4 6.3 0 5 10 15 20 25 30 35 40 45 50 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 39 Doing Business 2020 Cambodia Details – Protecting Minority Investors in Cambodia – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 6.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Board of directors 2.0 excluding interested members Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) No disclosure 0.0 obligation Extent of director liability index (0-10) 10.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Liable if unfair or 2.0 prejudicial Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Liable if unfair or 2.0 prejudicial Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) Yes 1.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) Yes 1.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) Yes 1.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Voidable if unfair or 2.0 prejudicial Ease of shareholder suits index (0-10) 4.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? Yes 1.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) No 0.0 Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 0.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? No 0.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? No 0.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? No 0.0 Do shareholders elect and dismiss the external auditor? No 0.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0 Extent of ownership and control index (0-7) 0.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? No 0.0 Page 40 Doing Business 2020 Cambodia Must the board of directors include independent and nonexecutive board members? Yes 1.0 Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? Yes 1.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? No 0.0 Must Buyer pay declared dividends within a maximum period set by law? No 0.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Extent of corporate transparency index (0-7) 0.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? No 0.0 Must Buyer disclose information about board members’ primary employment and directorships in other Yes 1.0 companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? Yes 1.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 41 Doing Business 2020 Cambodia Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the second year of operation (calendar year 2018). Taxes and mandatory contributions are measured • Collecting information, computing tax payable at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times • Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output • Social contributions, labor taxes paid by employer VAT in June 2018. • Property and property transfer taxes The corporate income tax audit process: • Dividend, capital gains, financial transactions taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 42 Doing Business 2020 Cambodia Paying Taxes - Cambodia Indicator Cambodia East Asia & OECD high Best Regulatory Pacific income Performance Payments (number per year) 40 20.6 10.3 3 (2 Economies) Time (hours per year) 173 173.0 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 23.1 33.6 39.9 26.1 (33 Economies) Postfiling index (0-100) 26.0 56.4 86.7 None in 2018/19 Figure – Paying Taxes in Cambodia – Score 38.3 80.8 100.0 26.0 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Cambodia and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 77.7: Thailand (Rank: 68) 76.0: Malaysia (Rank: 80) 73.6: Regional Average (East Asia & Pacific) 69.0: Vietnam (Rank: 109) 61.3: Cambodia (Rank: 138) 54.2: Lao PDR (Rank: 157) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 43 Doing Business 2020 Cambodia Figure – Paying Taxes in Cambodia and comparator economies – Measure of Quality 80 73.4 70 56.4 Index score 60 51.0 49.1 50 40 30 26.0 18.6 20 10 0 Cambodia Lao Malaysia Thailand Vietnam East PDR Asia & Pacific Page 44 Doing Business 2020 Cambodia Details – Paying Taxes in Cambodia Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Corporate 12.0 23.0 20% on profits or taxable profit 19.00 income tax 1% on turnover (whichever is higher) Social security 12.0 84.0 3.4% gross salaries 2.33 contributions Patent tax 1.0 KHR 3,000,000 fixed fee 1.39 Transport tax 1.0 KHR 774,206 fixed fee 0.36 depending on type of vehicle Tax on interest 0.0 4% interest income 0.10 not included Tax on 1.0 0.1% (the value of 0.07 Immovable immovable Property property*80%) – KHR 100,000,000 Fuel tax 1.0 included in the 0.00 small amount fuel price Value added tax 12.0 66.0 10% value added 0.00 not included (VAT) Totals 40 173 23.1 Page 45 Doing Business 2020 Cambodia Details – Paying Taxes in Cambodia – Tax by Type Taxes by type Answer Profit tax (% of profit) 19.0 Labor tax and contributions (% of profit) 2.3 Other taxes (% of profit) 1.8 Page 46 Doing Business 2020 Cambodia Details – Paying Taxes in Cambodia – Measure of Quality Answer Score Postfiling index (0-100) 26.0 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process none Percentage of cases exposed to a VAT audit (%) 75% - 100% Is there a mandatory carry forward period? Yes Time to comply with VAT refund (hours) 21.0 58.0 Time to obtain VAT refund (weeks) 64.0 0.0 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 75% - 100% Time to comply with a corporate income tax correction (hours) 31.0 45.9 Time to complete a corporate income tax correction (weeks) 39.4 0.0 Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 47 Doing Business 2020 Cambodia Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 48 Doing Business 2020 Cambodia Trading across Borders - Cambodia Indicator Cambodia East Asia & OECD high Best Regulatory Pacific income Performance Time to export: Border compliance (hours) 48 57.5 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 375 381.1 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 132 55.6 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 100 109.4 33.4 0 (20 Economies) Time to import: Border compliance (hours) 8 68.4 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 240 422.8 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 132 53.7 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 120 108.4 23.5 0 (30 Economies) Figure – Trading across Borders in Cambodia – Score 70.4 64.6 22.5 75.0 97.7 80.0 45.2 82.9 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Cambodia and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 88.5: Malaysia (Rank: 49) 84.6: Thailand (Rank: 62) 78.1: Lao PDR (Rank: 78) 71.6: Regional Average (East Asia & Pacific) 70.8: Vietnam (Rank: 104) 67.3: Cambodia (Rank: 118) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 49 Doing Business 2020 Cambodia Figure – Trading across Borders in Cambodia – Time and Cost Time (hours) Cost (USD) 140 375 132 132 400 120 350 Time (hours) 100 300 Cost (USD) 240 250 80 200 60 48 120 150 40 100 100 20 8 50 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 50 Doing Business 2020 Cambodia Details – Trading across Borders in Cambodia Characteristics Export Import Product HS 61 : Articles of apparel and clothing accessories, HS 8708: Parts and accessories of motor vehicles knitted or crocheted Trade partner United States Thailand Border Sihanoukville port Poipet border crossing Distance (km) 224 412 Domestic transport time (hours) 6 11 Domestic transport cost (USD) 200 1125 Details – Trading across Borders in Cambodia – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 28.3 275.0 customs authorities Export: Clearance and inspections required by 0.0 0.0 agencies other than customs Export: Port or border handling 24.0 100.0 Import: Clearance and inspections required by 4.3 240.0 customs authorities Import: Clearance and inspections required by 0.0 0.0 agencies other than customs Import: Port or border handling 7.5 0.0 Page 51 Doing Business 2020 Cambodia Details – Trading across Borders in Cambodia – Trade Documents Export Import Customs Export Declaration Customs Import Declaration Commercial Invoice Commercial Invoice Packing List Packing List Bill of Lading Road Transport Document Terminal Handling Receipts Import Permit Insurance Certificate Insurance Certificate Export Permit Tax Certificate Certificate of Origin Certificate of Origin SOLAS certificate Company Registration Page 52 Doing Business 2020 Cambodia Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. • Court costs - The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. - The Seller enforces the judgment through a public sale of the Buyer’s movable assets. • Alternative dispute resolution (0-3) Page 53 Doing Business 2020 Cambodia Enforcing Contracts - Cambodia Standardized Case Claim value KHR 21,352,431 Court name Phnom Penh Municipal Court of First Instance City Covered Phnom Penh Indicator Cambodia East Asia & OECD high Best Regulatory Pacific income Performance Time (days) 483 581.1 589.6 120 (Singapore) Cost (% of claim value) 103.4 47.2 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 4.5 8.1 11.7 None in 2018/19 Figure – Enforcing Contracts in Cambodia – Score 70.2 0.0 25.0 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Cambodia and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 68.2: Malaysia (Rank: 35) 67.9: Thailand (Rank: 37) 62.1: Vietnam (Rank: 68) 53.0: Regional Average (East Asia & Pacific) 42.0: Lao PDR (Rank: 161) 31.7: Cambodia (Rank: 182) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 54 Doing Business 2020 Cambodia Figure – Enforcing Contracts in Cambodia – Time and Cost Time (days) Cost (% of claim value) 900 828 120 Cost (% of claim value) 800 103.4 100 700 Time (days) 581.1 589.6 600 80 483 500 425 420 400 60 400 47.2 37.9 300 31.6 29.0 40 200 21.5 16.9 20 100 0 0 Cambodia East Lao Malaysia OECD Thailand Vietnam Asia PDR high & income Pacific Page 55 Doing Business 2020 Cambodia Figure – Enforcing Contracts in Cambodia and comparator economies – Measure of Quality Cambodia 2.5 1 0 1 Lao PDR 2.5 0 1 Malaysia 2.5 4 2.5 4 Thailand 2.5 2 1 3 Vietnam 2.5 1 1 3 OECD high income 2.5 3.2 2.4 3.6 East Asia & Pacific 2.2 2.2 1.3 3 0 2 4 6 8 10 12 14 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Cambodia Indicator Time (days) 483 Filing and service 63 Trial and judgment 250 Enforcement of judgment 170 Cost (% of claim value) 103.4 Attorney fees 95.8 Court fees 1 Enforcement fees 6.6 Quality of judicial processes index (0-18) 4.5 Court structure and proceedings (-1-5) 1.0 Case management (0-6) 1.0 Court automation (0-4) 0.0 Alternative dispute resolution (0-3) 2.5 Page 56 Doing Business 2020 Cambodia Details – Enforcing Contracts in Cambodia – Measure of Quality Answer Score Quality of judicial processes index (0-18) 4.5 Court structure and proceedings (-1-5) 1.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 0.0 2.a. Is there a small claims court or a fast-track procedure for small claims? No 2.b. If yes, is self-representation allowed? n.a. 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? No 0.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 1.0 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? Yes 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? No 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) No 0.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? Yes 1.0 5. Are there any electronic case management tools in place within the competent court for use by judges? No 0.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? No 0.0 Court automation (0-4) 0.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? No 0.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public No through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made No available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 57 Doing Business 2020 Cambodia 2. Mediation/Conciliation 1.0 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or No section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or Yes conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 58 Doing Business 2020 Cambodia Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have • Assessors’ and auctioneers’ fees been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 59 Doing Business 2020 Cambodia Resolving Insolvency - Cambodia Indicator Cambodia East Asia & OECD high Best Regulatory Pacific income Performance Recovery rate (cents on the dollar) 14.6 35.5 70.2 92.9 (Norway) Time (years) 6.0 2.6 1.7 0.4 (Ireland) Cost (% of estate) 18.0 20.6 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 0 .. .. .. Strength of insolvency framework index (0-16) 13.0 7.0 11.9 None in 2018/19 Figure – Resolving Insolvency in Cambodia – Score 15.8 81.3 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Cambodia and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 76.8: Thailand (Rank: 24) 67.0: Malaysia (Rank: 40) 48.5: Cambodia (Rank: 82) 40.9: Regional Average (East Asia & Pacific) 38.0: Vietnam (Rank: 122) 0.0: Lao PDR (Rank: 168) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 60 Doing Business 2020 Cambodia Figure – Resolving Insolvency in Cambodia – Time and Cost Time (years) Cost (% of estate) 7 25 6.0 20.6 Cost (% of estate) 6 18.0 18.0 5.0 20 Time (years) 5 14.5 4 15 3 2.6 10.0 9.3 10 2 1.7 1.5 1.0 5 1 0 0 Cambodia East No Malaysia OECD Thailand Vietnam Asia Practice high & Lao income Pacific PDR Page 61 Doing Business 2020 Cambodia Figure – Resolving Insolvency in Cambodia and comparator economies – Measure of Quality Cambodia 4 3 3 3 Lao PDR 2 2 0 0.5 Malaysia 2 3 2 0.5 Thailand 5 2.5 2 3 Vietnam 3 2.5 1 2 OECD high income 5.3 2.8 2.1 1.9 East Asia & Pacific 3.7 2.3 1.3 1 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Cambodia and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 90 81.0 80 70.1 70 60 50 40 35.5 30 21.3 20 14.6 10 0 No Practice Cambodia Lao PDR Malaysia Thailand Vietnam East Asia & Pacific Page 62 Doing Business 2020 Cambodia Details – Resolving Insolvency in Cambodia Indicator Answer Score Proceeding foreclosure BizBank would initiate foreclosing proceedings to avail itself of his security right by filing an application to the Court of First Instance. The Court invites the parties to negotiate, in the preparatory meeting. Because Mirage cannot repay, the court will rule in favor of BizBank. To enforce the judgment, a real estate company will assess the value of the property; then the sale will be announced. Other creditors, particularly the workers, may file claims. The sale will be organized and if no buyer is found, another auction will be needed. Outcome piecemeal sale The hotel will stop operating and Mirage assets will be sold piecemeal either through a public sale. Time (in years) 6.0 A foreclosure procedure will approximately take 6 years in total. This delay is largely due to judicial inefficiency. Cost (% of estate) 18.0 The costs associated with the case would amount to approximately 18% of the value of the debtor's estate. Cost incurred during the entire insolvency process mainly include attorneys' fees (10%), court fees (1%), and enforcement fees (7%), which include fees of auctioneers, publication costs, the real estate evaluation. Recovery rate 14.6 (cents on the dollar) Page 63 Doing Business 2020 Cambodia Details – Resolving Insolvency in Cambodia – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 13.0 Commencement of proceedings index (0-3) 3.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for 1.0 both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (a) Yes, a creditor 1.0 may file for both liquidation and reorganization What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (a) Debtor is 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value generally unable to of its assets pay its debts as they mature Management of debtor's assets index (0-6) 4.0 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the Yes 1.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of No 0.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 3.0 Which creditors vote on the proposed reorganization plan? (b) Only creditors 1.0 whose rights are affected by the proposed plan Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as Yes 1.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote Yes 1.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 3.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency No 0.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? Yes 1.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency Yes 1.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting Yes 1.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 64 Doing Business 2020 Cambodia Employing Workers Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected. Page 65 Doing Business 2020 Cambodia Employing Workers - Cambodia Details – Employing Workers in Cambodia Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) 24.0 Maximum length of fixed-term contracts, including renewals (months) 24.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 0.0 Ratio of minimum wage to value added per worker 0.0 Maximum length of probationary period (months) 1.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 30.0 Premium for work on weekly rest day (% of hourly pay) 0.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 18.0 Paid annual leave for a worker with 5 years of tenure (working days) 19.0 Paid annual leave for a worker with 10 years of tenure (working days) 21.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 19.3 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? Yes Priority rules for reemployment? Yes Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 2.1 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 8.7 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 13.0 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 7.9 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 2.1 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 10.7 Page 66 Doing Business 2020 Cambodia Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 21.4 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 11.4 Unemployment protection after one year of employment? No Page 67 Doing Business 2020 Cambodia Business Reforms in Cambodia From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2020 Starting a Business: Cambodia made starting a business more expensive by increasing the costs associated with business registration at the Ministry of Labor and Vocational Training. DB2019 Dealing with Construction Permits: Cambodia made dealing with construction permits less costly by reducing the fees of obtaining a building permit. DB2017 Starting a Business: Cambodia made starting a business more difficult by increasing the time required to register and by requiring companies to submit evidence of capital deposit after registration. Getting Credit: In Cambodia the credit bureau started to provide credit scores to banks and financial institutions, improving access to credit information. DB2016 Starting a Business: Cambodia made starting a business easier by simplifying company name checks, streamlining tax registration and eliminating the requirement to publish information on the new company’s incorporation in the official gazette. Getting Electricity: Cambodia reduced the average frequency and duration of power outages experienced by a customer over the course of a year in Phnom Penh by increasing power generation capacity. DB2014 Starting a Business: Cambodia made starting a business more difficult by introducing a requirement for a company name check at the Department of Intellectual Property and by increasing the costs both for getting registration documents approved and stamped by the Phnom Penh Tax Department and for completing incorporation with the commercial registrar. DB2013 Getting Credit: Cambodia improved access to credit information by establishing its first private credit bureau. Paying Taxes: Cambodia introduced a new tax on immovable property. DB2012 Getting Credit: Cambodia strengthened its credit information system through a new regulation allowing credit bureaus to collect and distribute positive as well as negative credit information. DB2011 Trading across Borders: Cambodia eliminated preshipment inspections, reducing the time and number of documents required for importing and exporting. DB2010 Paying Taxes: Cambodia made paying taxes more costly for companies by introducing a social security contribution based on employees’ average monthly wage. DB2009 Getting Credit: 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. Resolving Insolvency: Cambodia adopted its first law regulating the bankruptcy of private enterprises (the 2007 Bankruptcy Law), which introduced a reorganization procedure to restructure insolvent companies. Page 68 Doing Business 2020 Cambodia Page 69