CAMBODIA: OPPORTUNITIES

POTENTIAL & CHALLENGES

Current Economic Status of Cambodia 2 Doing Business in Cambodia 3 Natural Resources in Cambodia 5 Energy Generation 9 Steel Industries 12 Related Issues 12

October 2010

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Current Economic Status of Cambodia 1. Cambodia’s GDP grew around 10% every year between 2004-2007 due to expansion of

garment industry (hiring one-third of the workforce and contribute 70% of the export), construction, agriculture and tourism.

2. GDP dropped below 7% from 2008 onwards due to global economic slowdown 3. In 2005, exploitable oil deposits were found beneath Cambodia's territorial waters,

representing a new revenue stream for the government when commercial extraction begins in 2011.

4. Mining also is attracting significant investor interest, particularly in the northern parts of the country. Opportunities exist for mining bauxite, gold, iron and gems

5. Cambodia’s economy was driven significantly by “informal economy” that is small or mid-sized businesses that are household-based and not registered with the government - so government was unable to tax them. The proponent of these system (the business owners) said “complicated licensing procedures and the high cost of registration lead most micro, small and medium enterprises to the conclusion that participating in the formal economy is unaffordable … Tax evasion and a lack of trust in the transparency of the government’s tax management are powerful arguments for informality”. Informal economy in Cambodia accounts for 52.2% of GDP and employs 85% of the workforce in 2006.

6. There was a marked deterioration in the fiscal position in 2009 as spending exceeded expectations because of large increases in wages for civil servants and defence spending. The IMF estimated the budget deficit was 6.75% of GDP. Thus was well above the 4.25% original estimate. The IMF has urged the government to take measures to reduce the budget deficit which based on current spending and revenue projections will rise to 7.5% of GDP in 2010. In discussions with the IMF, the government has indicated it is considering additional measures to raise revenue including lifting excise taxes on truck sales, imposing a VAT on electricity imports and further strengthening tax administration. The IMF urged the government to contain wage costs by limiting wage increases, freezing new hirings and enacting comprehensive civil service reforms.

7. The major economic challenge for Cambodia over the next decade will be fashioning an economic environment in which the private sector can create enough jobs to handle Cambodia's demographic imbalance. More than 50% of the population is less than 21 years old. The population lacks education and productive skills, particularly in the poverty-ridden countryside, which suffers from an almost total lack of basic infrastructure.

Economic indicators Previous data latest data

GDP (purchasing power parity) USD28.34b (2008) USD27.92b (2009)

GDP (official exchange rate) n.a. USD10.9b (2009)

GDP (real growth rate) -1% (2009) 3% (2010)

GDP (per capita) USD693 (2009) USD735 (2010)

population below poverty line 35% (2004) 27.4% (2009)

live less than USD2 per day 78% (2007)

life expectancy 58 years (2008)

literacy 76.3% (2008)

labour force 8.6m (2008)

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unemployment rate 3.5% (2007) < 3% (2010)

investment (gross fixed) 21.2% of GDP (2009)

inflation (customer prices) -1% (2009) 5.3% (2010)

industrial production growth rate -6.5% (2009) 1.5% (2010)

current account balance USD-218.1m (2003) USD-1.024b (2010)

external debt USD2.4b (2002) USD4.157b (2010)

exchange rates (against USD1) KHR4135.39 (2009) KHR4245.00 (2010)

Imports USD5.374b (2009)

Exports USD3.582b (2009) From various sources, projected and official numbers

Doing Business in Cambodia 1. In 2010, Cambodia was ranked 131 out of 159 countries on corruption (third worst in

ASEAN behind Indonesia and Myanmar) by Transparency International 2. In 2010, Cambodia was ranked 145 out of 183 economies on ease of doing business

according to the World Bank/International Finance Corporation (down from 139 in 2009 survey).

3. There are 9 procedures needed before starting the business. It takes 85 days to complete and it costs about 138.4% of the income per capita and require minimum capital about 36.6% of income per capita. This may due to inefficient and unsynchronized authorities and lack of basic infrastructures.

4. Application for construction permits has about 23 procedures and it took up to 2 years to process. It also costs up to 53.6% of income per capita.

5. Property registration could take up to 2 months to be verified by local authorities. 6. Getting credits from local banks in Cambodia is rather difficult and complicated.

However, rights of the customers were protected fairly well. 7. Laws of Cambodia protecting investor to the extent that is better than Laos and

Philippines but far worst than Thailand and Malaysia. 8. Tax policies in Cambodia were good. While number of tax payments is much greater

than countries in East Asia and Pacific, it requires lesser hours (per year) to process (by the companies and the government) and the rate was also substantially lower. Tax policies in Cambodia are better than Thailand, Indonesia, Philippines and Laos.

9. Import-exports activities require more documents in Cambodia than any other countries in Asia Pacific. However cost of imports and exports (per container) is about 30% cheaper than average East Asia and Pacific (cheaper than Laos and Philippines but more expensive than Malaysia, Indonesia and Thailand). Time of imports and exports has been cut almost half in the last two years, thanks to opening of new ports and upgrades of existing facilities.

10. Resolving commercial disputes through the courts in Cambodia is far below the international standards. The process required about 44 steps/procedures in 13 months and costs as much as and slightly higher than the claims.

11. There is no information regarding bankruptcy protection laws in Cambodia. It is assumed that business owners may got nothing when the business was closed (compared to average East Asia-Pacific of 30 cents per dollar recovery rate, 42.4 cents in Thailand and 38.6 cents in Malaysia)

12. Several human rights group reported when resource-rich areas are ready for excavation, Cambodia’s government is suspected of dispatching soldiers and police to

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forcibly remove residents. Government “militants” have torched homes and pushed out hundreds of families. Once excavation begins, soldiers are believed to stand watch over the sites as international firms do their work. Human rights group also speculate the involvement of international firms (e.g. bribery) in these oppressive actions. Member of Royal Cambodian Armed Forces (RCAF) are also reported to be the beneficial owners of companies involved in mining activities.

13. Ninety-seven percent of all registered companies in the Cambodian industrial sector are microenterprises, defined as one that employs less than 10 individuals, and has capital sum of less than USD50 000. The majority of these face problems of access to working capital and markets, and many are not competitive, handicapped by a lack of technology.

14. Cambodia has 21 Special Economic Zones, only 6 have commenced the operation. Nineteen of SEZs located along the border of Thailand and Vietnam, another two located at Phnom Penh. Each of these SEZs has their own power plant, making possible for cheaper electricity. Each SEZs also has one-stop centre for investors to gather information, apply or pay for many services (e.g. tax) and others. How this one-stop centre operate or does it live up to the hype (against reports from World Bank/IFC) are unknown.

15. Openness to foreign investments:

corporate income tax in Cambodia is 20% (except for oil, gas and mining which is 30%)

projects eligible for incentives will get tax holiday up to 9 years and exemptions for import duties for construction material, production equipment and input materials for exports

there no legal distinctions between foreign and domestic investors

nationalization and expropriation can only occur for reasons of “public interest” (no specific definition of public interest was disclosed). Investors whose property has been taken must receive fair and just compensation. There have been no recent cases of nationalization of a foreign investment

no local partner needed. Foreign companies can own 100% of their business (certain exclusions applied) and there are also no repatriation of funds, capital, royalties, management fees, dividend, interest payments and no price controls

when no local talents available, expatriate workers can be easily hired

due to its status among 50 least-developing countries (by United Nations), exporter entitled for tariff-free privileges to USA, Canada, Japan, Euro and many other international markets.

Cambodia is one of the most open economies in the world. The Index of Economic Freedom 2003, compiled by Heritage Foundation USA ranked Cambodia 35th from 170 economies, which is on par with Japan, slightly ahead than Thailand (40th) and much better than Indonesia, Laos and Vietnam. The same report do mentioned about lack of transparency, excessive bureaucracy and insufficient basic infrastructures, however “at least where government policy is concerned, it can claim to offer a liberal welcome to investors”.

16. All investors requesting incentives must submit an application to the Cambodian Investment Board. Investors in retail, wholesale, and duty-free stores, entertainment (including restaurants, bars, nightclubs, massage parlours, and casinos), tourist services, currency and financial services, press and media related activities,

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professional services; and production and processing of tobacco and wood products and investments of less than USD500 000 in the food and beverages, textiles, garments and footwear, plastic, rubber and paper products sectors are not entitled to investment incentives.

17. Most sectors of the economy are open to foreign investment. Some sectors though such as the manufacturing of cigarettes, movie production, rice milling, gemstone mining, publishing and printing, radio and television, manufacturing wood and stone carvings, and silk weaving require local equity participation or prior authorization from the relevant government ministries.

18. Tax system in Cambodia:

corporate losses can be carried forward for 5 years

the first KHR500 000 (USD118) of income is tax free. After that the rates range from 5% to 20% for income over KHR12 500 001 (USD2965)

non-residents pay a flat 20% income tax

VAT is 10%. VAT does not apply to public postal services, hospital and medical services, public transportation owned by state companies, insurance and financial services, non profit activities and electricity

capital gains are taxed as ordinary income. There are no social security, gift, real estate, wealth, estate, inheritance and unemployment taxes

there is a 10% withholding tax on rental income and 15% for interest, services and royalties

there is a 2% accommodation tax on hotel rooms, a 3% tax on local and international telecommunications services, 10% for motorcycles, local and international air tickets sold in Cambodia, entertainment including spas and wine, and a 30% tax on beer

19. Foreigners cannot own land but allowed to lease it up to 99 years and own the building build on the land.

20. Cambodia has adopted legislation regarding patents, copyrights and industrial design; however it was not effectively enforced. There are no anti-monopoly and anti-trust laws.

21. In first half of 2010, new foreign business registration in Cambodia surged 42% compared to 1H09, led by investors from China, Vietnam and South Korea. China currently the biggest investor in Cambodia with total FDIs about USD8b.

22. As on June 2009, there are about 26 financial institutions in Cambodia. The banking system has been undermined by the collapse of US subprime crisis. Non performing loans are also on rise. Stock exchange was planned to be opened this year – 49% owned by South Korea Exchange and only trading three to five companies.

Natural Resources in Cambodia 1. While Cambodia’s mineral resources remain largely unexplored, several important

minerals have been discovered, which include bauxite, copper, zinc, gold, iron ore, nickel, granite, gemstones and tungsten. Minerals currently extracted include gemstones and gold - mostly mined by small-scale operators - marble, granite, sand, limestone and salt.

2. Cambodia allowed 100% foreign ownership of mining companies (certain exclusions applied)

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3. Mining industry contributed only 0.39% to Cambodia’s GDP in 2005 and employing about 19 000 people (0.2% of total employment)

4. Council for the Development of Cambodia, government entity responsible for FDI approving USD403m investment in mining industry in 2006. About 21 new mining licences were approved in 2008. Each mining licence costs USD50 000 but the “undocumented payments” could reach up to USD7m.

5. Extractive industries since then were grown tremendously until mid 2009 when commodity prices plummet and the global financial crisis puts the squeeze on capital. Small and medium-sized mining start-ups, which forms the core of Cambodia’s mining sector selling mining licences “when companies find out they don't have enough cash to go ahead”. Large players appeared to be unaffected by the crisis, as none of the pledged investors withdrawn their investments. Local analyst however said that the progress of the projects were slower due to lower cash reserves and troubles at home (e.g. Kenertec has been hit by crisis and scandals at South Korea)

6. Mining industries have shown some recovery since early 2010. 7. The Cambodian government has made the decision to prioritise mining over

environmental needs and protection, causing international outcry. 8. On current trends, previously unexplored areas in the Cardamoms, Prey Long Forest

and Phnom Krasop Wildlife Sanctuary will be permanently damaged or destroyed. At least six out of Cambodia’s 23 protected areas now have some form of mining activity within their boundaries

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Companies with Mining Licences, by Province

BATTAMBANG Oxiana Cambodia Limited and Shin Ha Mining Company Ltd

Cambodia Mining Development Co. Ltd. Southern Gold Ltd

Jireh International Cambodia Construction & Import-Export Co. Ltd. Summer Gold Investment PVT Ltd

Ultra Marine Kiri (Cambodia) Co. Ltd Zhong-Xin Industry Investment Cambodia Co

Kampong Chhnang ODDORMEAN CHEY

Meas Sopheap Co. Ltd. Angkor Wat Cement Ltd.

KAMPOT Cambodia Mineral Development Co. Ltd.

Cement Cambodia Chakrey Ting Co. Ltd. Neoneer

Kampot Cement Co. Ltd. Ratanak Stone Cambodia Development Co. Ltd.

Khaou Chuly Development Co. Ltd. & Tong Yang Cement Corporation PAILIN

Pheapimex Group - Phnom Kampong trach Sonuba Cham IndustriesCo. Ltd.

Thai Boon Roong Cement Co. Ltd. PREAH VIHEAR

Unite International (Cambodia) Foreign Investment Group Co. Ltd. Chhong Kor Chhean Pean Co. Ltd

KOH KONG Delcom Cambodia PTE. LTD

Samnang Rea Thbong Thmor Co. Ltd Ratanak Stone Cambodia Development Co. Ltd

KOMPONG CHAM Titan Mineral Group Co., Ltd

Sun Trading Co. Ltd. PURSAT

Kompong Speu Southern Mining Co. Ltd.

Future Environment RATANAKIRI

T.S.S.M Group Co., Ltd Cambo Cana Kiri Development Ltd

KOMPONG THOM Cambodia International Mining Group (CIMG - China)

NGOV PET Indochine Resources Ltd

Vannvymex Co. Ltd. Liberty Mining International PTY Ltd

KRATIE Rattanak Chhorpoan (Cambodia) Ltd

Cambodia International Mining Group Seoul Digem Cambodia Co Ltd

Chhong Kor Chhean Pean Co. Ltd Southern Gold (Cambodia) Ltd, Greystroke Ltd

Leang Samean Quarry Summer Gold Investment Pty Ltd

TTY Rithy Mexco Co. Ltd Transol Mining And Exploration Company Pty Ltd

Zhong Xin Industrial Co. Ltd. Ultra Marine Kiri (Cambodia) Ltd

MONDULKIRI SIEM REAP

Anging Cambodia Investment Company Co, Ltd Chea Ravy Quarry

Antrong EL Meas Narithy Quarry

Bhp Billiton World Exploration Inc and Mitsubishi Corporation Teng Mab Quarry

CAMBO CANAKIRI Development Ltd SIHANOUK VILLE

Cambodia Hai Lan Mineral Company Limited TKS International Co. Ltd.

Chin Siv Nginh CSN Cambodia Import Export Va Ly Heng

China Forwin International Investment Phnom Penh Mining Co, Ltd STUNG TRENG

D&Z Investment Co, Ltd Mong Good Luck Mining Co. Ltd.

Gold Metal Group Co, Ltd Ta Yi Co. Ltd.

Moeung Sok Try Pheap Co. Ltd.

Oksan Cambodia Inc Titan Mineral Group Co., Ltd

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Energy Generation 1. Cambodia’s power supply facilities were heavily damaged by war 2. Some sources indicated there are currently 24 fragmented and isolated, non-

nationwide grid-connected electric power plants in Cambodia. Thirteen of them using fossil fuels – oil and gas (provide 95% of the total electric generated). Cambodia also imported electric from Thailand and Vietnam.

3. Data from 2009 showed only 16.41% of Cambodia’s population have access to electricity. Electricity consumption is as follows: private sectors 0.5%, service sectors 40%, industrial 14%. There are frequent power shortages and outages.

4. According to data from 2000, the average tariff of electricity is about USD0.146/kWh (14.6 US cents) in urban areas (such as Phnom Penh) and between USD0.25 to USD0.50 in remote areas. Tariff for imported electricity (concentrated mostly at SEZs) is much cheaper than one generated locally, possibly due to better distribution system and greater number of customers.

5. In an effort to solidify its electricity security, Cambodia has diversify it electricity sources to include hydroelectric, coal and solar while at the same time keeps importing electric from neighbouring countries.

6. As on 2009, a total of fourteen hydropower projects are planned, five of which are already under construction. However, hydropower can only be used at full capacity for the duration of Cambodia’s rainy season; the rest of the year capacity is reduced to only one-third. For this reason Cambodia is also developing coal-fired power plants. Coal was currently imported from Indonesia and Australia.

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7. As on October 2010, only two hydroelectric power plan (out of five that under construction since mid 2008) already operated and generates electricity, namely Kirirom III Hydro and Kamchay Hydro, both located at southwest of the country, within forest reserves zone.

Steel Industries 1. Four Chinese steelmakers in 2005 have established a joint venture to explore and

develop iron ore mines in Cambodia. Wuhan Steel, China’s fifth biggest steel mill, is leading the project with a 50% stake, with Shanghai-based Baosteel Group taking 20%; Anshan Iron Steel Group and Beijing’s Shougang Iron Steel Group each hold 15% in the venture. The project is to explore and develop mines (called Rattanak Stone mines, beneficially owned by General Pol Saroeun, Commander-in-Chief of RCAF) in Cambodia’s Preah Vihear province following exploration of the area by Cambodian companies and China’s National Machinery and Equipment Group that found the region may have 2.5 billion tons of iron ore reserves.

2. In 2008, Kenertec Co. Ltd. of South Korea said that they have concluded a contract to take over 85% of the Rovieng iron mine (located near Rattanak Stone mines) with a joint venture with Rattanak Stone. Kenertec has planned a 2 million tons production plan and expects its annual sales to be at USD140m and profits to be over USD35m each year.

3. It is reported that Kenertec’s mine lot is estimated to have about 200 million tons of iron ore, more than 65% of which is high quality hematite and magnetite, and there is regarded to be little risk in securing the reserves. The iron ore is distributed from the surface to 150m deep underground in this mine lot, with more than 65% of the high quality hematite being exposed to the surface, which makes mining easier, and the ore is found to be commercially available without ore dressing.

4. Kenertec also planned to use surface/road transportation from the mine to the Mekong River, 80km east of the mine, then a 2 000 ton barge will be used to the coast along the Mekong River.

5. It is speculated that said mines was managed and operated by Chinese, from the front-line to the top management.

6. Almost all iron ore mined in Cambodia were exported, primarily to China, South Korea and Australia.

7. In December 2008, Ho Chi Minh City-based Thep Viet steel manufacturer is planning to invest USD70m to build in a steel plant in Cambodia. The steel mill will begin operation in 2012.

Related Issues 1. United Nations’ Human Development Index in 2009 ranked Cambodia at 137 out of

182 countries. 2. US’s Freedom House in 2009 has designated Cambodia as “not free” and has assigned

it a rating of 6 out of 7 for political rights and 5 out of 7 for civil rights (the lower the rating the higher the degree of political and civil liberties). Cambodia is ranked 100 of 128 nations in the 2009 Bertelsmann Transformation Index, indicating that Cambodia’s government too slow in reforming the country post-war. It is ranked 49 of 177 in the Fund for Peace Failed State Index 2009 (the lower the ranking the higher the degree of

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economic and political dysfunction) and is ranked at the 34.4 Percentile in the World Bank’s Political Stability Governance Indicator 2009.

3. Freedom of speech and the press are not fully respected:

according to the constitution, free speech should not adversely affect public security. The constitution also declares that the king is inviolable

there are about 20 Khmer language newspapers, the largest three were controlled by the ruling party, same as all television stations and most of radio stations. Newspapers are allowed to criticize the government but not in TV – oppositions was not given equal broadcast time, especially during election.

there are no restriction, reports of snooping or censorship of internet by the government, primarily due to inability of much of the population to own personal computer and low electrification rate.

4. Freedom of religion and academic freedom were respected but there is discrimination against minority Muslim population. Freedom of assembly is restricted by the requirement that organizers of a march or demonstration must obtain a permit. The government routinely does not issue permits to critics of the government. The judiciary is not independent and is marred by inefficiency, lack of resources, poorly trained personnel, low salaries and a shortage of lawyers. Illegal detention and torture are common as is long trail delays.

5. With the exception of civil servants (including teachers and judges) and military personnel, workers can form and join trade unions. Trade unions have to file a charter and a list of their officials with the Ministry of Labour and Vocational Training (MOLVT). Union leaders must be at least 25, be able to read and write, and have no criminal record. Workers have the right to strike but that right is restricted. Labour disputes for example are subjected to a conciliation discussion process that can last as long as 30 days. It is conducted by an inspector of the MOLVT. If the MOLVT inspector cannot resolve the dispute, a strike can be called only if a union obtains a majority vote in a secret ballot and gives 7 days notice to the employer and the MOLVT. A minimum of 15 days notification must be given for strikes in essential services (no related information found on definition of essential services). Collective bargaining is allowed.

6. According to the International Confederation of Free Trade Unions 2009 Report for Cambodia: “in many factories, trade unionists continue to face repression of all kinds, including beatings, death threats, blacklisting, false accusations, wage deductions and exclusion from promotions. The government very rarely prosecutes or takes measures against an employer for anti-union practices …. Labour inspectors are poorly trained and, given their low pay, open to bribery. In cases where the MOLVT does rule in favour of the workers, it rarely uses its legal authority to penalize employers who fail to follow its orders"

7. Less than 3% of the labour force in 2007 was unionized. Unions were concentrated in the garment and footwear industries, where 70% to 75% of the workers are union members.

8. The law requires the MOLVT to establish a minimum wage in the garment industry. There are no minimum wages set for any other industry. The minimum wage for garment workers in 2008 was about USD50 per month, plus a minimum USD6 living allowance. Teachers in primary school earn about USD35-40 a month while secondary school teachers earn around USD60 a month. They usually paid irregularly. The legal

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workweek is 48 hours. There are labour laws regarding nightshift pay, overtime, holiday work and health and safety standards but they are not effectively enforced.

9. The law sets 15 as the minimum age for employment and 18 as the minimum age for hazardous work. Children between 12 and 15 can engage in light work that is not hazardous to their health and does not affect school attendance. Despite these laws, child labour is widespread, particularly in agriculture, brick making, fishing, commercial sex industry, domestic service, and on tobacco and rubber plantations.

10. There are 38 093km of roads of which only 7.8% are paved. The US State Department Travel Advisory for Cambodia 2009 noted that: “driving at night is strongly discouraged. Road maintenance is sporadic in both urban and rural areas. Roads between major areas are adequate; however, roads leading to areas that are more rural are poor. During the rainy season, both urban and rural road conditions deteriorate considerably. Roadside assistance is non-existent"

11. There are 17 airports of which 6 are paved. Phnom Penh International Airport is the largest international airport. It is located 7km west of the capital. There is also an international airport at Siem Reap, which is near the Angkor Wat temples.

12. There are 602km of railway. The rail system is in dilapidated condition. The line connection to Thailand is no longer operational. The US Department of State Travel Advisory 2009 strongly warns against using the railway because of “low safety standards and the high risk of banditry”. Almost all planned route expansion and upgrades will be operational in 2013.

13. Sihanoukville is the main deep-water sea port. It became operational in 1960. The port has warehouse and storage facilities, fork lifts, cranes that can lift as much as 64 tons and an oil tanker terminal. A new container terminal has recently been constructed. In 2008, the port handled 2 057 967 tons of goods. This was 49% above the level of 2005.

14. Phnom Penh has a river port along the Mekong River. It is operated by a government entity. The government is building a new port at the capital. The estimated cost is USD25m. It will be located south of the city. The new facility will have a capacity of 300 000 containers a day, which is six times larger than the current Phnom Penh port.

15. There are 2,400 km of navigable waterways, mostly along the Mekong River, that are an important means of transporting goods and passengers. The State Department Travel Advisory 2009 noted that “boat travel should be avoided because boats are often overcrowded and lack adequate safety equipment”

16. Quality of water supply was improved since 2004, thanks to funds from Asian Development Bank. In 2007, more than 85% of population of Phnom Penh has access to water. There is now 24-hour service. In rural areas, 55.4% had access to improved water.

17. According to a recent report by the World Bank Water and Sanitation Program, only 16% of the rural population has access to toilets. As a result, many people are forced to defecate in fields and forests, thus causing public health concerns. The government has set a target of increasing the ratio of the rural population with access to improved sanitation facilities to 50% by 2020.

18. Cambodia continues to become a heaven for pirates and drug trafficker from Golden Triangle – smuggling of beers from Thailand and Singapore costs about 3% of total budget revenue annually; cooking gas (from Thailand), gasoline, sugar, cigarette and cattle (from Vietnam) and ancient artefacts costs millions of dollar but not as much as

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narcotics and drugs trafficking (no official data available but NGOs estimated it values around USD1b every year)

19. Access to technology among Cambodian is very poor. In every thousand people, there are 3 fixed-line telephone lines, 291 cellular subscribers, 5 internet users, 4 personal computers, 430 (43% of households) have a television and 98 radios. In 2007, there were 154 389 motor vehicles of which 9% were cars, 4% were minibuses and vans that carried less than 20 people, 84% were motorized 2 and 3 wheelers and 2% were trucks.

20. Cambodia health care system was ranked 174 out of 190 countries by WHO in 2008. There are 90 nurses and midwives per 100 000 people, 20 physicians per 100 000 people and 10 hospital beds per 100 000 people. The US State Department Travel Advisory 2009 said "medical facilities and services do not meet international standards. Both Phnom Penh and Siem Reap have a limited number of internationally-run clinics and hospitals that can provide basic medical care and stabilization. Medical care outside these two cities is almost non-existent. Local pharmacies provide a limited supply of prescription and over-the-counter medications, but because the quality of locally obtained medications can vary greatly”

21. Education in Cambodia is not compulsory but it is free. Schools are overcrowded and there is a shortage of equipment and school materials such as books. Many schools are in poor condition and lack drinking water and toilets. Teachers’ salaries are low (lower than those who work in garment factories) and pay is often irregular. Primary education begins at age 6 and lasts for 6 years. Of the students who enrol in grade 1, 52% reach the last grade of primary school and 12% of students repeat a grade. The pupil/teacher ratio in primary school is 55:1. Secondary school begins at age 12 and lasts 6 years. The 2009 Bertelsmann Country report for Cambodia noted that “unemployment among university graduates is high … university education is of poor quality, many graduates lack the necessary skills and qualifications for the job market"

22. Credit ratings for Cambodia are as follows: Standard & Poor’s: B+/Stable/B; Moody’s: B2/Stable.

Important references Financial Standards Foundation; 2010; Country Brief – Cambodia; eStandards Forum, New

York, USA. Global Witness; 2009; Country for Sale – Welcome to Cambodia; Global Witness, San

Francisco, USA. United Nation, International Chamber of Commerce; 2003; An Investment Guide to

Cambodia – Opportunities and Condition (September 2003); United Nations, New York (USA), Geneva (Switzerland).

World Bank, International Finance Corporation; 2010; Doing Business 2010 – Cambodia; The

International Bank for Reconstruction and Development/The World Bank, Washington D.C., USA.