Asia St: Cambodia’s New Law Spotlights Sectoral Areas to Watch for Businesses

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Cambodia’s New Law Spotlights Sectoral Areas to Watch for Business

October 18, 2021

Preah Sisowath Quay in Phnom Penh, Cambodia (Photo Credit: Bora Chhay).

The BGA Cambodia Team, led by Managing Director Bora Chhay and Advisor Sophea Ros, wrote an update for clients on the new law on public-private partnerships. The update addressed the background to the law, its significance and the implications for clients.

Context 

The Cambodian government on October 8 approved the draft Law on Public-Private Partnerships (PPP). The law is meant to replace the Law on Concessions passed in 2007, and was prepared based on a government policy paper dated June 2016 on the development of PPP mechanisms for the management of public investment.

The PPP law is part of a broader effort to boost project management, service delivery and economic reputation more generally. The law aims to enhance the management and implementation of public infrastructure projects and services by making them effective, efficient, sustainable and transparent.

Significance

The law is expected to promote private sector investment that will contribute toward Cambodia’s socioeconomic development while delivering broad-based benefits to the country’s population. BGA believes these inflows will boost trade volumes and help Cambodia develop competitive advantages over other markets in the region.

The law could have implications for key sectors of interest to businesses. Future PPPs are intended to modernize an array of sectors including public transport and logistics; telecommunications; energy; water and sewage; health care, education and tourism products; agro-industry; science, technology and innovation; and research and development.

Implications

If the draft law on PPP has its intended effects, it could be a boost for Cambodia’s economy. Of particular note will be whether the upgrades in turn could encourage a virtuous cycle by which Cambodia becomes exponentially more attractive as an investment destination over the medium term. Notably, the law will not apply to concession agreements or contracts similar to the PPP contracts that were signed before the law comes into force. It will also not apply to priority projects that have been approved by the government.

The draft Law on PPP will to go through the final motions before expected adoption.  After its expected review and passage by the National Assembly, it will be submitted to the Senate for review and then to the king for promulgation within the fourth quarter.

BGA will continue to keep you updated on developments in Cambodia. If you have any comments or questions, please contact BGA Cambodia Managing Director Bora Chhay at bchhay@bowergroupasia.com.