August 15, 2011

Doing business internationally: Cambodia


By Srikanth Radhakrishna

Cambodia (official name - Kingdom of Cambodia) is located in Southeast Asia. The kingdom is a constitutional monarchy. It is an underdeveloped nation with more than one fourth of its population living below poverty line, according to the United Nations. Phnom Penh is the capital of Cambodia. More than 67 percent of the population rely on agriculture for their livelihood. Tourism, garments and construction are other major sectors. Oil and natural gas deposits were found in 2005. This has opened up business opportunities. Buddhism is the main religion in Cambodia. Government offices in Cambodia are open from Monday to Saturday from 7:30 am to 4:30 pm. The color white is considered unlucky in Cambodia. Green and red colors are acceptable.

Cambodia was ranked 147th among 183 economies in the "Ease of doing business" category (Doing Business 2011). Entrepreneurs intending to start a business in Cambodia should deposit an initial capital of 4 million KHR in any authorized bank in Cambodia and should obtain evidence. It is a legal requirement. The procedure will usually take one day. Then the uniqueness of the company name should be checked. The uniqueness of the company name is researched at the Legal Affairs Department of the Ministry of Commerce. This usually takes around five days and costs around $10 (US dollar).

After the company's name is approved, an abstract of the new company's documents has to be published in a state recognized public newspaper. The abstract should include information regarding company name, company form, summary of business objectives, company term, total capital and location of the company. It should also include full name, occupation, nationality and address of the director. This may cost around $15 and may take around a week.

Then the company has to be incorporated with the Commercial Register. The memorandum and articles of association should be prepared as per standards set by the Ministry of Commerce. The Commercial Register is maintained at the Office of the Clerk of the Commercial Court. This procedure takes around 25 days and costs around $105.

After registration, a company seal has to be created. The Ministry of Commerce issues the seal and the registration certificate. This should take one day and should cost fifteen dollars. Later registration documents should be stamped and approved by Phnom Penh Tax Department. This will take around 3 days and will cost around forty nine dollars. Then the company has to be registered for VAT and patent at the Real Regime Tax Office. This takes around 15 days and costs $390.

After registering for VAT, Ministry of Labor should be notified of start of operations and hiring of employees. A labor inspector usually conducts an inspection.

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