WORLD TRADE  
ORGANIZATION  RESTRICTED 
WT/TPR/G/253 
27 September 2011  
 
(11-4504) 
Trade Policy Review Body Original: English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
CAMBODIA 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Cambodia is attached. 
 
 
Note: This report is subject to restricted ci rculation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on Cambodia. Cambodia WT/TPR/G/253 
 Page 3 
 
 
  CONTENTS 
 
    Page 
I.  INTRODUCTION 5 
II.  MACROECONOMIC PERFORMANCE 5  
III.  INSTITUTIONAL DEVELOPMENTS SINCE ACCESSION 7  
IV.  TRADE RELATIONS 9  
A.  Cambodia and the WTO 9  
B.  Trade Development:  General Policy Orientation 11  
C.  Regional Integration an d Preferential Trade 12  
D.  Sub-Regional Integration 14  
E.  The Import Regime and Trade Facilitation 15  
F.  Protecting Intellectual Property 16  
G.  Trade Development:  Managing Aid for Trade 17  
V.  SECTORAL ISSUES 19  
A.  Manufacturing 19  
B.  Agriculture 23 
C.  Services  24 
VI.  CONCLUSION  26 
 
  Cambodia WT/TPR/G/253 
 Page 5 
 
 
  I. INTRODUCTION  
1. Cambodia has been classified by the United Nati ons as a least developed country. It is a small 
country of 181,035 square kilometers and a popul ation of roughly 14 million. Its per capita GDP in 
2010 was about US$790. Eighty per cent of the population is rural and 28%  is living below the 
poverty level. Large parts of the countryside suffer from a lack of basic infrastructure.  
2. Cambodia is an open economy. Imports and exports  combined are equivalent to about 65% of 
its GDP. Exports account for a high proportion of formal employment, and a very high proportion of the growth of employment. Cambodians working in export sectors are typically recruited from among the rural poor. Trade, employment and poverty re duction are thus tightly linked in Cambodia, and 
trade policy is an integral and central element in the Royal Government's efforts to promote 
development and improve living sta ndards. Reflecting this, the Royal Government has identified trade 
as a priority area. 
II. MACROECONOMIC PERFORMANCE  
3. Cambodia experienced rapid growth in the y ears immediately following its accession to WTO 
in 2004. GDP expanded at an average annual rate  of 10.3% during the period 2004-2008, reaching a 
peak of 13.3% in 2005. GDP per capita, in turn, rose from US$417 to US$773 over the same period.  
4. All broad sectors contributed to this rapid gr owth. Industrial output expanded at an average 
annual rate of 12% during 2004-2008, while service s and agricultural output grew by average annual 
rates of 11% and 6.2%, respectively. Within these  broad sectors, specific activities are of special 
importance. Thus, paddy rice production accounts for ro ughly 55% of the value of all crops grown in 
Cambodia, and the value of paddy output in 2007 stood 87% above the level recorded in 2004. 
Likewise, garments and footwear make up roughly 70% of Cambodia's output of manufactures, and the value of their output in 2007 stood 49% above the level reached in 2004. The activity level in 
2007 of construction, which accounts for about 25% of  industrial output, stood 80% above the value 
of output in 2004. In the services sector, tourism w as a particularly dynamic element, with estimated 
tourist expenditures in 2007 standing 250% above their level in 2004.  
5. This period of rapid growth was accompanied by relative stability in prices. Consumer prices 
in Phnom Penh rose at an annual average of 6% dur ing 2004-2007 and the exchange rate of the riel 
remained virtually unchanged.  
6. Price stability was the result of prudent fiscal and monetary policies and a relatively stable 
external environment. The overall public sector budget deficit varied during this period between 2.5% 
and 2.8% of GDP, and was financed by external gr ants and concessionary lending. The deficit thus 
did not require domestic bank financing, and the cen tral bank's net credit to government throughout 
this period was negative, allowing the National Bank of Cambodia to exercise firm control over 
monetary expansion. At the same time, the co llection of budget revenues improved considerably, 
growing from about 10% of GDP in 2004 to over 13% of GDP in 2008. This allowed the Government 
to expand rapidly essential social services. In 2008 expenditure by the Ministry of Health stood 120% 
above the level of 2004, and the comparable figure for the Ministry of Education was 86%. 
7. This period of robust growth in the context of stability allowed Cambodia to continue its 
significant progress in improving social welfare. The poverty rate is estimated to have fallen from 35% to 30% between 2004 and 2008;  and to 28% in  2010. Over the same period the literacy rate 
advanced from 69.7% to 75% and the infant morta lity rate is estimated to have fallen from 71 to 
51 per 1,000 live births.  WT/TPR/G/253 Trade Policy Review 
Page 6 
  
  8. A series of shocks in the world economy th at began in 2007 and continued during 2008 and 
2009 threatened to interrupt these positive tr ends, and presented the Cambodian economy and 
Cambodian policy makers with severe challenges. 
9. As a small and open economy that is highly dollarized, Cambodia was immediately affected 
by the dramatic increase in the price of crude oil that  began in early 2007 and culminated in the record 
level of US$147 per barrel in July 2008. At the same time the price of rice in  international markets 
doubled between the first quarter of 2007 and the beginning of 2008, and then doubled again in the first four months of 2008. This was immediately followed by a widespread international financial 
crisis and a sharp recession in a number of industrial countries. 
10. These events in the international economy ha d profound effects on the Cambodian economy. 
The world price increases for petroleum products and food triggered a sharp jump in Cambodian 
prices, with inflation reaching a peak of 25% in mid-2008. The recession in Cambodia's main export markets led to a sharp drop in exports:  Cambodia' s garment exports, which had grown by 24% in 
2006, advanced by only 3.6% in 2008, and then fell by 1.6% in 2009. Difficulties in obtaining trade financing also contributed to the outcome. Touris t arrivals, which had grown by about 20% in 2006 
and again in 2007, advanced by only 5.8% in 2008 and 1.7% in 2009. Construction, which had been 
booming, came to an abrupt halt as demand faltered and foreign developers encountered financing 
difficulties. Net foreign direct investment fell by 35% in 2009 as compared with 2008. Reflecting these developments, Cambodia's GDP growth rate slow ed to 6.7% in 2008 and a bare 0.1% in 2009.  
In the key sector of garments, a significant number of firms were forced to close or temporarily 
suspend operations, and employment in the sector is estimated to have fallen by between 15% and 
20%. These and other job losses resulted in lower remitta nces to rural areas and increased hardship for 
a large number of households.  
11. Responding to inflation and the international banking crisis, the monetary authorities took a 
series of measures. Although Cambodia's banking system was not directly affected by the international crisis, the National Bank of Camb odia took proactive measures to strengthen the 
prudential regulation of the banking system, improve d the credit rating system of the banking sector, 
and strengthened the credit information sharing sy stem. Inflationary pressures were met by placing a 
15% ceiling on credit to the real estate sector in  January 2008, and by increasing the reserve 
requirement rate from 8% to 16% on foreign curre ncy deposits in April of the same year.    
12. By early 2009 inflationary pressures had eased, and prices actually fell during most of 2009. 
Policy was consequently oriented toward supporti ng growth. In January 2009, the National Bank of 
Cambodia lifted the 15% ceiling on credit to the real estate sector and lowered reserve requirements from 16% to 12% for foreign currency deposits. Gove rnment expenditure and the fiscal stance were 
directed toward stimulating economic activity and mitigating the negative effects of the downturn in 
growth. The Government put in place targeted ta x cuts and incentives for key sectors, accelerated 
spending on infrastructure, and established a special fund for the re-training of garment workers who 
had lost their jobs, offering numerous short vo cational training courses designed to re-skill up to 
40,000 workers for re-employment. The result of th ese actions was a widening of the budget deficit, 
which increased from 2.9% of GDP in 2008 to 6.4% of GDP in 2009.  
13. The Government also took steps to begin expa nding its support for social protection, in 
particular through the development of a National Social Protection Strategy, prepared in close 
collaboration with development partners. Social protec tion, in particular the protection of vulnerable 
groups, including veterans and their families,  will help Cambodians deal with future shocks. It will Cambodia WT/TPR/G/253 
 Page 7 
 
 
  also help reduce chronic poverty, promote human capital, improve productivity and promote 
sustainable economic growth.  
14. In 2010, the revival of Cambodia's export markets set the stage for a recovery of growth. 
Exports rose by about 25% over 2009, led by a reviva l of garment shipments to traditional markets, 
and their diversification into new markets. Touris t arrivals advanced by 16% over a year earlier. 
These positive external changes were reinforced by domes tic policies:  the fiscal deficit rose to 7.9% 
of GDP, and monetary policy rema ined expansionary. These developm ents, together with continued 
robust growth of agriculture, produced a GDP growth rate of 5.9% and employ ment recovered. Price 
inflation was about 3.5%.  
15. The outlook for 2011 is for continued vigorous growth, with GDP expected to rise by more 
than 6%. As in 2010, growth will be led by a r obust expansion of expor ts, as traditional markets 
recover and the share of exports to regional market s, and the share of agri cultural products in total 
exports, both grow. Tourism is expected to expa nd further, and agricultural output will remain 
vigorous. The budget deficit is expected to dec line to 6.3% of GDP. There are, however, some 
potential dangers to this positive scenario arising in  the international economy, in particular with 
regard to the prices of energy and foodstuffs.  
16. Cambodia has successfully met the challeng es presented by the 2008-2009 world economic 
crises. However, events since 2008 clearly show the extent of Cambodia's exposure to external 
shocks. Indeed, this exposure appears to have in creased in recent years. The Economic Vulnerability 
Index constructed by the Committee for Developm ent Policy of the United Nations indicates that 
Cambodia's economic vulnerability increased by 6% between 2006 and 2009. In the period ahead, the 
Royal Government will be striving to deepen and broaden Cambodia's integration into the world and 
regional trading systems. At the same time, th e economy's exposure to negative shocks transmitted 
through this system must be reduced. The diversif ication of export products and export markets is the 
key to accomplishing this goal. 
III. INSTITUTIONAL DEVELOPMENTS SINCE ACCESSION  
17. During the period since accession, some significan t initiatives have been under way affecting 
the interaction between Government and civil so ciety and the way Cambodia mobilizes financial 
resources for investment. These initiatives are ongoing. They will have important consequences for the way trade and development proceeds in Cambodia. 
Good governance 
18. The Royal Government views good governance as an essential pre-requisite to sustainable 
socio-economic development and social justice.  Corruption is a major impediment to good 
governance, and prevents the public sector from rea lizing its full potential to advance development 
goals and foster growth with equity. The Royal Government has been comb ating corruption through 
an Anti-Corruption Unit, the National Audit Author ity, internal audit units in line ministries and 
agencies, and the Ministry of National Assembly-S enate relations and Inspection. It has recently 
expanded significantly its campaign against corrupti on and the mechanisms at its disposal to wage 
that campaign. The new Anti-Corruption Law, adopt ed in 2010, creates an Anti-corruption Council to 
oversee investigations of corruption, and a new An ti-Corruption Unit that undertakes investigations 
and brings charges. In December 2010, the first arrests were made under the provisions of the new 
law, and in April 2011 the first case went to trial.  WT/TPR/G/253 Trade Policy Review 
Page 8 
  
  19. Other aspects of good governance have also been addressed:  The Council on Legal and 
Judicial Reform has been executing an extensive work program designed to accelerate reform in a 
number of ways, for example by fostering better access to legal and judicial information and by helping legal and judicial sector institutions stre ngthen their management, planning and monitoring 
mechanisms and capacity. At the same time, the Council for Admi nistrative Reform has overseen 
reforms of the legal and regulatory framework governing the Civil Service, of the management and control systems for managing the Civil Service wi thin that framework, and of the compensation 
regime to make it more reflective of performance.   
Interaction with the private sector 
20. The Government-Private Sector Forum was estab lished in 1999 at the initiative of the Prime 
Minister of the Royal Government in order to pr ovide a reliable consultation mechanism between the 
Government and the private business sector on all matters of mutual interest. The Forum holds a 
plenary session twice a year, under the chairmanship of the Prime Minister and with the presence of 
the full cabinet. These sessions allow the business commun ity to raise issues of concern at the highest 
level of government. 
21. During the period since accession, the Royal Gove rnment and the private sector decided to 
deepen and broaden their dialogue.  Eight Working Gr oups have been established to deal with specific 
areas of private sector interest. These are:  agricultu re and agro-industry;  t ourism;  manufacturing and 
small and medium enterprises;  law, tax and gove rnance;  banking and financial services;  export 
processing and trade facilitation;  energy, transport a nd infrastructure;  and industrial relations. Each 
Working Group is co-chaired by a government mi nister and a representative of the private sector, 
either one of which can request a meeting and pr opose items for discussion. Issues that cannot be 
resolved at the Working Group level may be referred to a plenary session of the forum. 
22. Dialogue between the Government and the privat e also takes place in  the Steering Committee 
on Private Sector Development. This Steering Co mmittee has four sub-steering committees, dealing 
with the investment climate and private participati on in infrastructure;  trade facilitation;  small and 
medium enterprises;  and corporate governance.  The Government welcomes and encourages 
public-private partnerships, which have developed in a number of areas, such as electricity, health 
care and the provision of drinking water.  
De-centralization and de-concentration 
23. De-centralization and de-concentration are pa rt of the Royal Government's reforms to 
promote democracy, improve deve lopment opportunities, reduce poverty and ensure sustainable 
development. The centerpiece of the reform is the creation of Councils at sub-national administrative 
levels, consisting of elected officials with legi slative and executive authority. The Councils assume 
primary responsibility for local economic and social de velopment. They have the authority to collect 
direct revenue from taxes and fees, and are entitled to a share of national revenue. They play an 
important role in managing the local deliver y of essential services provided by the central 
government, for example health and education, and identify and execute local development projects. 
They are the means through which citizens may particip ate in shaping the future of their communities, 
and in securing better and more responsive public services delivery. These changes are taking place in 
the context of a national program on sub-national de mocratic development that envisages the creation 
and progressive strengthening of the institutions  of sub-national governance over the period 
2010-2019. Cambodia WT/TPR/G/253 
 Page 9 
 
 
  24. An important result of these reform efforts was the creation at the local level of the 
One-Window Service Office (OWSO). This office organizes under one roof officials of the line ministries who deliver administrative services co mmonly required at the local level by citizens and 
small businesses. 
25. This important shift in authority and responsibility to the local level does not affect 
Cambodia's WTO obligations, which remain the so le responsibility of the central government.  
Mobilizing savings  
26. In the context of its "Financial Sector Develo pment Strategy 2006-2015" Cambodia is in the 
process of establishing a securities market. The basic laws and regulations are in place, a Securities 
and Exchange Commission has been established, and three state-owned enterprises are preparing to be 
among the first firms to be listed. When it begi ns operation, the securities market will provide 
additional channels through whic h firms operating in Cambodia can secure financing for investment, 
as well as additional outlets for domestic savings. Th e establishment of a securities market will also 
promote transparency, accountability, good corporate governance and efficiency in the allocation of 
financial resources.  
IV. TRADE RELATIONS  
A. Cambodia and the WTO  
27. Cambodia views its integration into the worl d economy as an essential ingredient in its 
strategy for growth and poverty alleviation. This  strategy has been elaborated in a number of 
Governmental undertakings, most notably the  Cambodia Millennium Development Goals,  the 
Socio-Economic Development Plan 2001-2005 and the Cambodia National Poverty Reduction 
Strategy 2003-2005.  The key elements in these undert akings were synthesized in the Rectangular 
Strategy for Growth, Employme nt, Equity and Efficiency, recently updated as the Rectangular 
Strategy Phase II, covering the period 2008-2013. The Rectangular Strategy, in turn, was the basis for 
the development of Cambodia's National Strategic Development Plan, also recently updated to cover 
the period 2008-2013. 
28. International trade  and investment are the foundation on which Cambodia's Strategic 
Development Plan is based. Cambodia is a small eco nomy, most of its citizens are impoverished, and 
60% of its population is under the age of 24. The labor force will grow rapidly in the years ahead. 
Poverty reduction will require an even more rapi d expansion of employment opportunities. This can 
only be accomplished by accessing markets outside Ca mbodia, and by mobilizing financial resources 
and skills not presently available in Cambodia, in particular through private direct investment. 
29. Joining WTO was a key element in Cambodia's tr ade- and investment-centered approach to 
development and poverty alleviation. WTO membersh ip ensures that in all WTO member countries 
Cambodian exports will be subject to an internati onally-agreed set of rules, including MFN treatment. 
At the same time, the need to align Cambodia's tr ade regime with WTO requi rements has accelerated 
the process of reform of trade-related law. This  is creating a more transparent and predictable 
environment for business, and is helping to improve  Cambodia's attractiveness as an international 
investment destination.   
30. The WTO system is thus the framework within which Cambodia seeks to harness 
international trade and investment to achieve  its growth and poverty reduction objectives. 
Consequently, Cambodia attaches the highest importan ce to the preservation and enhancement of that WT/TPR/G/253 Trade Policy Review 
Page 10 
  
  system, and to making it more supportive of developm ent. In this regard, the early completion of the 
Doha Development Agenda is critical. Cambodia has actively participated in the Doha Round 
negotiations, and will continue to do so. 
31. The present stalemate in the DDA negotiations is of great concern, and Cambodia urges 
Members to strengthen their resolve and exercise maximum flexibility so as to bring the Doha Round 
to a successful conclusion in 2012. Cambodia att aches particular importance to early and full 
implementation of duty-free and quota-free market a ccess for LDCs and to the full implementation of 
the aid for trade commitments taken at the Hong K ong Ministerial Conference. It calls for the NAMA 
outcome to ensure that modalities for Special and Differential Treatment provide LDCs with more 
preferential treatment than non-LDCs.  Cambodia also calls for special and differential treatment for 
LDCs in all other areas of the negotiations, wh ich should go beyond a transition period. Cambodia 
notes with high appreciation the decision to put th e LDC's priority issues for deliverables on the 
agenda of the discussions that will prepare the eighth Ministerial Conference. Cambodia calls on all Members to provide full support for the adoption of the LDC deliverables at the eighth Conference.   
32. Cambodia's accession to WTO was governed, am ong other things, by the 10 December 2002 
Decision of the General Council on the Accession of  Least Developed Countries. Cambodia's trade 
regime was thus not required to be fully comp liant with WTO rules upon accession. Through its 
protocol of accession, Cambodia undertook commitments to bring its regime into compliance shortly after accession, in particular through the executi on of agreed Action Plans in four areas – customs 
valuation, TRIPS, TBT and SPS. The Royal Go vernment established a coordinating body, the 
Inter-ministerial Coordinating Committee on Cambodia's WTO Commitments, to oversee the 
fulfillment of its obligations.  To date, 19 laws and regulations responding to these commitments have 
been adopted and implemented.
1 The Action Plan on customs valua tion has been fully implemented, 
the final steps toward full compliance with GATT Artic le VII having been taken in January 2011.  In 
other areas, however, difficulties in securing timely assistance have meant that not all of the laws and 
regulations required to meet commitments have been put in place.  Cambodia presently has under 
preparation 12 laws and regulations that meet re maining compliance requirements. Two of these laws 
– on the Commercial Court and the organization of the judicial system – deal with general dispute settlement and law enforcement. Four other laws and regulations are in the area of intellectual 
property protection. Five other legal texts ar e being prepared to execute fully Cambodia's 
commitments in its services schedule.  
33. Cambodia is also working on legal texts that are not required by its WTO commitments, but 
which are subject to WTO disciplines. It expects to  put in place trade remedies legislation sometime 
in 2012, and is working on legal texts to make it easier to benefit fully from the Doha Decision on 
TRIPS and Public Health. 
                                                      
1 These are: Law on Amending the Law on Drug Management;  Regulation 1031 of the Ministry of 
Health amending Regulation 82 on drug import-export procedures;  Regulation No. 589 of the Ministry of 
Agriculture, Forestry and Fisheries on elimination of quantitative restrictions on the importation of pesticides and fertilizer;  Law on Customs;  Regulation 387 of the Ministry of Economy and Finance on the Customs 
valuation of imported goods;  Law on the Amendment of the Law on Investment;  Sub-Decree No 111 on the 
implementation of the Amendment to the Law on Investment;  Law on Standards of Cambodia;  Sub-Decree No. 62 on Industrial Standards;  Civil Code;  Sub-Decree on Food Hygiene;  Civil Procedures Code;  Criminal 
Code;  Sub-Decree No. 64 implementing the Law on Marks;  Regulation of the Ministry of Industry, Mines and 
Energy on the procedure for granting patent and utility model certificates;  Law on Seed Management and Plant Breeders Rights;  Regulation of the Ministry of Culture and Fine Arts on the urgent control and suppression of 
activities violating copyrights and related rights;  Regu lation of the Ministry of Culture and Fine Arts on 
procedures for granting rights to manage literature, artistic and music rights without heirs. Cambodia WT/TPR/G/253 
 Page 11 
 
 
  34. Cambodia has experienced difficulty in fulfillin g its notifications obligations in a timely 
manner, and has only recently been able to meet some of those requirements in the areas of state 
support for agriculture, customs valuation, pre-sh ipment inspection, TBT, import licensing, TRIPS 
and trade remedies. Cambodia is striving to meet all its notification requirements as soon as possible.  
B. Trade Development:  General Policy Orientation 
35. Cambodia's capacity to benefit from its integr ation into the WTO trade system depends 
critically on its ability to expand exports. Policie s to increase the supply and competitiveness of 
exports and potential exports are at the center of Cambodia's trade and development objectives.  These 
policies fall under three broad and sometimes overlappi ng headings:  policies to ensure the continued 
vitality of existing exports in the face of competiti on from other countries;  policies to develop export 
potential and widen the range of Cambodia's export products and export market s;  and policies to 
facilitate and encourage investment for export. In all of these areas, diversification of export products 
and of export markets is of the highest importance. 
36. Textiles and garments are the mainstay of Cambodia's exports, and account for roughly 85% 
of total exports of goods and 15% of GDP.  Much of this trade is directed toward markets in North 
America, with those markets accounting for about  65% of Cambodia's exports.  During the period 
since accession, the garment industry has accounted for a very high proportion of total job creation, and the wages that garment workers send to thei r families in the provinces have a decided positive 
influence on village incomes and ru ral development. Ensuring the c ontinued expansion of Cambodia's 
garment exports in the face of in ternational competition is a high priority of the Royal Government 
(see section V(A), below). 
37. Tourism has expanded rapidly in the period since accession and now accounts for about 13% 
of GDP. This sector has great further potential as regards both increasing tourism receipts, and forging backward linkages that would allow a greater part of tourist spending to be retained in Cambodia. 
Promoting tourism is a high priority of the Royal Government (see section V(C), below). 
38. As mentioned above, developing additional expo rt products is an urgent requirement if 
Cambodia is to be better protected against extern al shocks. Cambodia's "National Export Strategy:  
2006-2008" was a first attempt to identify such produc ts. The Strategy lays out steps that could be 
taken to reinforce the competitiveness of garments  and tourism, but it also identifies fruits and 
vegetables, fresh water fish, organic rice and silk  and silk products as having export potential. The 
report makes a series of proposals regarding the steps that might be taken to assist these sectors in 
achieving export competitiveness. 
39. Cambodia's Diagnostic Trade Integration Study, 2007, developed this analysis further, 
examining in depth the export potential of a wider ra nge of products. It identified 15 products having 
export potential, and 4 services. It also looked at  the human development potential of the various 
products and services.  
40. The Royal Government has been progressively  putting in place support mechanisms to help 
producers of products with export potential to enter markets abroad, and to move up the value chain. 
At present, these activities are focused mainly on ag ricultural products, where success leads directly 
to increases in rural incomes. Exports of these produc ts have increased, and are expected to rise 
rapidly in the near future. Recently, particular atte ntion has been directed to expanding the export of 
milled rice (see section V(B), below). WT/TPR/G/253 Trade Policy Review 
Page 12 
  
  41. Complementing these efforts, the new Export Market Access Fund provides both financial 
and technical assistance to Cambodian firm s seeking to enter foreign markets. 
42. A rapid expansion of exports will require an  equally rapid expansion of investment. 
Cambodia is well aware of the role that foreign i nvestment can play in developing skills and in 
providing access to technology and to markets ab road, as well as in providing capital to expand 
production for export. Cambodia's investment regime  observes the principle of national treatment 
throughout, and provides attractive tax and other in centives to investors. Cambodia has entered into 
bilateral investment agreements with a number of co untries, and expects to add to that number in the 
period ahead. Special Economic Zones are located n ear transportation centers  and provide additional 
advantages to investors. The zones are an im portant instrument for attracting non-garment 
manufacturing investment, and their success will advan ce the process of diversification of Cambodia's 
production base and exports (see section V(A), below).  
43. Cambodia is working to improve the overall invest ment climate, and in particular the climate 
facing exporters. Through the Government-Private  Sector Forum, and the Steering Committee on 
Private Sector Development (and its sub-Steering Committees), described above, the Government is 
in regular dialogue with the private sector, and seeks to address their concerns. It has, for example, 
undertaken a series of concrete measures in the area of trade facilitation identified by the private sector (see section E, below). 
44. The legal regime relevant to private businesses is an important component of the investment 
climate. In addition to those laws formally required by its accession to WTO, mentioned in 
section IV(A), above, Cambodia has adopted laws covering topics such as commercial enterprises, 
insolvency, secured transactions, commercial arbitra tion, transportation, civi l aviation, and others. 
Cambodia has an ongoing work program to continue to improve its commercial law regime, and, in 
addition to the laws under preparation that are re quired by its WTO accession, referred to above, is 
presently preparing laws on contracts and competition. 
C. Regional Integration and Preferential Trade 
45. While supply-side policies are the essential i ngredient for diversifying Cambodia's export 
basket, regional trade integration and trade prefer ences are important instruments for diversifying 
export markets.  
46. As an ASEAN Member state, Cambodia undert ook specific tariff reduction commitments in 
respect of the Common Effective Preferential Tari ff (CEPT) Scheme of the ASEAN Free Trade Area 
(AFTA). On 17 May 2010, the ASEAN Trade in Goods Agreement (ATIGA) came into force 
following its ratification by all ten ASEAN Member  states. The ATIGA consolidates all previous 
CEPT/AFTA commitments related to trade in goods. It also provides for the simp lification of rules of 
origin and other measures to f acilitate its implementation. The general principle of ATIGA provides 
for duty-free preferential access for trade among A SEAN Member states. For Cambodia (and also 
Laos, Myanmar and Viet Nam), the agreement specifi es that duty-free access to its market will occur 
by 2015, with flexibility to 2018. It also allows  for temporary suspension or adjustment of tariff 
reduction and exemption commitments. 
47. Cambodia follows the established schedule for lib eralization of ASEAN trade in services. As 
of the seventh package of commitments under the ASEAN framework Agreement on Services, 
Cambodia's ASEAN commitments with regard to ma rket access and national treatment of services 
sectors have gone beyond its WTO commitments in a li mited number of sectors, for example leasing Cambodia WT/TPR/G/253 
 Page 13 
 
 
  of construction machinery (CPC 83107), translati on and interpretation services (CPC 87905), paging 
services (CPC 75291) and dental services (CPC 93123). Cambodia is in ongoing discussions with its 
ASEAN Member on the further steps to be taken under the framework agreement.  
48. In January 2007, the ASEAN Summit establishe d an accelerated time line for completing the 
preparations for establishing the ASEAN Economic  Community. The Economic Community, which is 
to come into effect in 2015, will transform A SEAN into a region with free movement of goods, 
services, investment and skilled labor, and a freer flow of capital. Cambodia is actively working to meet its commitments in these and other area s covered by the ASEAN Economic Community 
blueprint.   
49. ASEAN has established a number of program s designed to harmonize the trade and 
trade-related procedures of its Members. ASEAN' s harmonization policies cover a wide range of 
topics. There is a Common Manual for post-clearance customs audit and customs valuation. ASEAN is working toward a single window for cargo clearance. Work is under way to harmonize intellectual property procedures and cooperate on enforcement of  IP rights. The harmonization of standards has 
begun and the mutual recognition of conformity assess ment procedures is in progress. In the area of 
services, mutual recognition arrangements have been  agreed for services in engineering, nursing, 
architecture, surveying, accounting, medical practitioners and dental practitioners. 
50. Cambodia's goods exports to ASEAN members have risen rapidly in recent years. These 
exports mainly fall outside the category of tex tiles and clothing, and therefore help diversify 
Cambodia's export basket. At the same time, increased linkages to Cambodia's dynamic ASEAN 
partners help diversify export markets and protect against disruptions in major export markets. In 
2009, a year of recession in North America, Cam bodia's exports to ASEAN grew, thereby offsetting 
somewhat the drop in exports to North America.  Although these trends are positive and encouraging, 
the actual magnitudes involved are still small:  in  2009 exports to ASEAN accounted for a little more 
than 9% of total exports. 
51. Within the context of ASEAN framework agre ements with its dialogue partners, Cambodia 
has negotiated free-trade agreements with Austra lia/New Zealand, China, India, Japan, and the 
Republic of Korea. In most cases, the agreements are broad in scope, covering trade in goods and 
services, as well as investment, and the agreement with Australia/New Zealand also contains provisions in other areas such as intellectual prope rty, SPS and TBT, and competition. All agreements 
contain dispute settlement mechanisms, and create cooperation fora.  
52. The agreements with dialogue partners are rela tively recent, and have not yet had their full 
impact on trade flows. However, available data sugg est that a response by traders has begun. Since the 
implementation of Cambodia's agreement with the Re public of Korea exports to that country have 
grown three fold, albeit from a very small base.  In 2006 the share of the five ASEAN dialogue 
partners in Cambodia's total exports was 2%;  in 2010 their share was 7.5%. 
53. Cambodia is eligible to benefit from the G SP schemes of a number of WTO Members. The 
extent to which Cambodia is actually able to r ealize these potential benefits varies from country to 
country, depending on the product coverage and rules of origin attached to the schemes.  
54. In January 2011, the EU put in place new and more favorable rules of origin for its 
Everything But Arms program for least developed c ountries. This is a significant development which 
will be of considerable benefit to Cambodia' s current exporters, and will open up new export 
opportunities. The Ministry of Commerce is working with present and prospective exporters to ensure WT/TPR/G/253 Trade Policy Review 
Page 14 
  
  that they are aware of the new possibilities that this change has created. Data available for 2011 
indicate that there has already been a supply resp onse from established exporters of garments and 
bicycles.   
55. Cambodia encourages other countries providing GSP schemes to follow the EU example. 
D. Sub-Regional Integration 
56. Cambodia has entered into a number of s ub-regional arrangements with neighbouring 
countries designed to foster mutual trade. These arrangements do not involve independent tariff commitments:  tariffs on trade within the sub-re gional arrangements are governed by ASEAN tariff 
commitments, and in the case of the Greater Mekong Sub-Region, also by ASEAN Members' 
free-trade agreements with China. Rather, coopera tion is designed to expand trade by joint activities 
such as improving trade and transportation infrast ructure, facilitating cross-border movements of 
goods and people, developing joint approaches to tourism, etc. The underlying purpose of all the 
cooperation arrangements is to narrow the developm ent gap between the participating countries and 
other ASEAN members. The arrangements involving ASEAN members only have been incorporated into the Master Plan on ASEAN Connectivity. 
The Greater Mekong Sub-region 
57. The members of this arrangement, which came into effect in 1992, are Cambodia, China, 
Lao PDR, Myanmar, Thailand and Viet Nam. Th e program of economic cooperation focuses on nine 
priority areas:  agriculture, energy, environm ent, human resource development, investment, 
telecommunications, tourism, transport infrastructure,  and transport and trade facilitation. In order to 
focus resources in a meaningful way, three "econo mic corridors" have been identified, along which a 
coordinated package of measures in th e above areas will be implemented.   
Cambodia-Laos-Myanmar-Vietnam Cooperation  
58. The political and economic leaders of these five countries meet periodically to discuss ways 
in which they can help promote mutual trade. R ecent discussions have focused on trade facilitation, 
enhancing trade promotion activities, and boosting in vestment, in particular in SEZs. The grouping 
has also attracted external support for specific proj ects, for example the promotion of information and 
communications technology aimed at narrowing the dig ital divide. At its recent summit meeting, the 
group identified 16 priority projects in eight sectors that the four countries will undertake.  
Ayeyawady-Chao Phraya-Mekon g Economic Cooperation 
59. The members of this group are Cambodia, Lao PDR, Myanmar, Thailand and Viet Nam. The 
following priority areas have been identified:  ag ricultural and industrial cooperation;  transport 
linkages;  tourism cooperation;  human resour ce development and environment. A significant 
accomplishment has been the elaboration of a rice cooperation initiative. 
Cambodia-Laos-Vietnam Development Triangle Area   
60. This cooperative initiative focuses on promoti ng exchanges among the 13 provinces of the 
3 countries in the area of their common border. In the case of Cambodia, the provinces in question are 
among the very poorest in the country. Cross bor der exchanges will be promoted by special 
preferential policies in:  procedures for border crossings and residency of business people and investors;  border crossings of goods and of means of transportation;  transit;  import-export duty and Cambodia WT/TPR/G/253 
 Page 15 
 
 
  tax policy;  fees and charges;  banking and paymen ts mechanisms;  border inspection;  investment 
policy;  tourism development;  communication, energy and transportation infrastructure and 
environmental cooperation. These e fforts are being supported by a re gional development partner, who 
is financing a number of projects in the areas of transportation and education infrastructure. 
E. The Import Regime and Trade Facilitation 
61. Since accession, Cambodia has succeeded in broadening the revenue base of the Royal 
Government. The share of customs duties in total tax revenue declined from 21.9% in 2004 to 16.9% 
in 2010. However, import duties continue to be an important component of government revenue, and 
tariff policy is conducted giving due wei ght to its effects on budget revenue. 
62. As part of its WTO accession commitments, Cambodia bound 100% of its customs tariff lines 
at an (unweighted) average rate of 19%. The aver age bound rate for agricultural products was 28%;  
the average for non-agricultural products was 17.7%.  At the time of accession the average applied 
MFN tariff rate was 15.8%. In a relatively few specific tariff lines applied rates were higher than bound rates. The alignment of these applied rates with bound rates did not occur immediately after accession. At present, no applied rates are above their respective bound rates. 
63. Cambodia has adopted the ASEAN Harmonized Tariff Nomenclature (AHTN), which is 
based on the WCO's Harmonized System. 
64. At the time of accession, Cambodia's investment regime provided tax and tariff concessions 
to qualified investment projects. The objective of th e tariff concessions was to ensure that Cambodian 
producers and especially exporters had access to im ported capital goods and intermediate inputs at 
world market prices. Following accession, this regime was modified to bring it into conformity with 
WTO rules. Small and medium sized enterprises a nd small agricultural producers do not usually make 
use of the investment regime. In order to ensure that they, too, could secure essential imported inputs 
at the lowest possible prices, the Royal Government  undertook to lower applied tariff rates on a select 
number of products of particular interest to these producers.   As a result of these and other changes, 
the average MFN applied tariff rate declined from 15.8% in 2004 to 11.7% in 2011.  Moreover, taking 
into account the preferential rates on goods origina ting in other ASEAN members and the impact of 
the tariff relief under the investment regime, the av erage tariff burden effectively facing importers is 
much lower than the average MFN applied tariff. 
65. All firms, foreign and domestic, that are properl y registered may engage in import and export 
activities. This includes wholly foreign-owned firm s established for the sole purpose of engaging in 
international trade.  
66. The administration of the import regime has underg one, and continues to undergo, significant 
change. Pre-shipment inspection, which was being u sed at the time of accession, was terminated in 
2009. A number of trade facilitation measures have  been taken. The most important are: 
 The establishment in 2006 of the Single Ad ministrative Document (SAD);  the 
45 documents previously required at the borde r were either eliminated or replaced by 
the SAD; 
 The computerization of customs clea rance through ASYCUDA, which became 
operational at five border checkpoints in 2009. It will be introduced at the remaining 
17 international border check points in 2011 and early 2012. At checkpoints serviced WT/TPR/G/253 Trade Policy Review 
Page 16 
  
  by ASYCUDA, more that 90% of import and export clearances now occur within 
24 hours of the presentation of the customs declaration. Previously several days had been required. New modules, covering transit trade and allowing brokers to enter data 
directly on line, are being developed. 
 Risk management has been introduced at th e same five check points in conjunction 
with the introduction of ASYCUDA. Physical inspections at those border points have been reduced to less than 20% of impor t containers, and a bout 13% of export 
containers. 
67. Plans for the immediate future include the development of a Single Window and 
implementing the WCO SAFE Framework of Standards and acceding to the revised Kyoto 
Convention.  
68. The rapid expansion of the range and volume of  imports has also required changes in the way 
imports that could endanger human, animal or plant health, or pose dangers to the environment, are 
monitored and managed. As compared with the situ ation at the time of accession, the list of products 
subject to import bans has been reduced, while the range of products that co me under import licensing 
has been expanded. At the time of accession, for ex ample, all imports of narcotics and psychotropic 
substances and their precursors were banned. Some  are now under a regime of non-automatic 
licensing. Pharmaceuticals, pesticid es and fertilizer continue to be subject to import licensing, and 
dangerous chemicals, live animals, and forestry an d fishery products now also  require import permits. 
F. Protecting Intellectual Property  
69. Cambodia has put in place four main laws dealing with the protection of intellectual property:  
the Law on Copyright and Related Rights;  the Law Concerning Marks, Trade Names and Acts of 
Unfair Competition;  the Law on Patents, Utility Mode ls and Industrial Designs;  and the Law in Seed 
Management and Plant Breeders Rights. In add ition, Cambodia has adopted five legal texts 
implementing the first three of the above laws. The laws and the implementing texts have been 
notified to WTO. 
70. Draft laws on Geographical Indications, Trade Secrets and Undisclosed Information, and 
Layout Designs of Integrated Circuits are unde r preparation. Pending the adoption of the law on 
Geographical Indications, a regulation has been adopted protecting two Cambodian geographical 
indications. A legal text clarifying and simplifyi ng procedures allowing Cambodia to benefit from the 
Doha Decision on TRIPs and Public Health is al so being prepared, as are regulations on border 
measures; on the import, export and manufacture of laser-readable discs and other means for storing 
information; and on the implementation of the La w on Seed Management and Plant Breeders Rights. 
A regulation on layout designs of  integrated circuits has recently b een issued;  it will provide a basis 
for protection pending the adoption of the Law on Layout Designs of  Integrated Circuits.    
71. During 2010, more than 3,000 marks were registered, bringing the total registry of marks to 
more than 36,000. More than 32,000 of the registered marks are foreign owned.  
72. Several avenues exist for resolving infringement of marks. Since the principles of intellectual 
property protection are not well understood in Cambodia,  some infringement is inadvertent:  a simple 
letter from the mark owner to the infringer ofte n resolves the matter. A mark owner may also 
approach the Ministry of Commerce's Department of Intellectual Property Rights, which will then 
convene both parties and seek a mutually agreed r esolution. A mark owner, like all rights holders, Cambodia WT/TPR/G/253 
 Page 17 
 
 
  may also approach the Economic Police, and the courts. Information on Trade Mark infringement 
cases dealt with through all these ch annels is not available. During 2010, 35 complaints were heard by 
the Department of Intellectual Property Rights, of which 32 were resolved. The Ministry of 
Commerce is planning to set up a formal Appeals Board to hear complaints. 
73. The registration of copyrights is voluntary and is not a pre-condition for protection. So far, 
about 50 works have been registered with the Ministry of Culture and Fine Arts, all by Cambodian nationals, and mainly textbooks written in the Ca mbodian language. Creators of books and music 
usually sell their rights to a publishing house or music company for a lump sum, and have no further financial interest in the work they have creat ed. In 2010, more than 255,000 infringing CDs and 
DVDs were seized in Cambodian markets and de stroyed. In raids on production facilities and 
warehouses, 22 large-scale pieces of production equi pment, 47,000 blank discs and 95,000 finished 
discs were confiscated and destroyed. 
74. At the end of 2010, about 100 applications for patent protection had been received. All 
applicants were non-Cambodian individuals or en tities. The process for granting a patent is under 
development, and is not yet fully in place. Sin ce 2010, assistance in undertaking patent searches has 
been provided by WIPO. The Department of Industr ial Property of the Ministry of Industry, Mines 
and Energy will shortly issue a regular publication containing applications a nd, where relevant, the 
results of the patent searches. There have not ye t been any detailed examinations (international 
preliminary examinations) of the applications. 
75. There have been no applications for the protection of utility models. 
76. At the end of 2010, about 13 0 applications had been recei ved for the protection of an 
industrial design, and 105 such designs had been  registered. Most applicants are non-Cambodian 
entities. The registered designs are pictured and descr ibed in the Official Gazette on Industrial Design, 
which is published by the Ministry of Industry,  Mines and Energy on behalf of the Royal 
Government. The Ministry will establish a technical boa rd that can be used by rights holders, if they 
so choose, to resolve disputes involving infringement.  
77. Experience with implementation and enforcement of copyright and trademarks has shown that 
there is need to strengthen and be tter coordinate the Government's e fforts. To this end, the Royal 
Government has established the National Committee fo r Intellectual Property Rights, which is chaired 
by the Minister of Commerce. This committee is  made up of representatives of 14 ministries and 
agencies, including all governmental entities with responsibility for the enforcement of intellectual 
property rights. The committee began its work in 2009. To better meet its objectives, two 
sub-committees will be created in 2012. A first sub-committee deals with enforcement. It will 
coordinate enforcement activities, ensure the ex change of information among enforcement entities 
and develop data bases, and provide guidelines fo r enforcers working on the ground and clarify their 
respective responsibilities. The second sub-committee d eals with education. It will develop detailed 
training and educational materials, will review and make recommendations on existing curricula, and 
will seek to expand the scope a nd frequency of courses dealing w ith intellectual property in 
Cambodia's education system.  
G. Trade Development:  Managing Aid for Trade 
78. Cambodia's efforts to develop trade as an inst rument of development and poverty alleviation 
have been supported by its devel opment partners, and that support has increased progressively during WT/TPR/G/253 Trade Policy Review 
Page 18 
  
  the years since accession. Much of the progress describ ed in other parts of this Report is the direct 
result of that support, which the Royal Government acknowledges with deep appreciation. 
79. The Integrated Framework has played an importa nt role in stimulating this support. Cambodia 
was the first country to complete an IF Diagnostic Trade Integration Study, in 2002. The program and 
procedures that followed the adoption of the DTIS were instrumental in moving forward the trade 
development agenda in the following years. They also revealed human and institutional weaknesses 
within the Government that were holding back progress. 
80. The DAC Paris Declaration on Aid Effectiv eness (March 2005) and the Aid for Trade 
initiative at the Hong Kong WTO Ministerial Meeting (December 2005) made it clear that important 
changes were taking place in the way the donor community was addressing aid for trade, and that 
such assistance could expand rapidly. This, together  with lessons learned from the DTIS experience, 
caused the Royal Government to undertake a major revision of its institutions and procedures for 
dealing with trade-related assistance. 
81. In 2007 the Government adopted a revised and updated DTIS, launched a Sector-Wide 
Approach to trade (trade SWAp), and re-organized  the Ministry of Commerce so as to allow it to 
better manage trade-related assistance. 
82. As mentioned above, The DTIS 2007 laid out a new agenda for trade development. It 
identified 19 products and services with export pot ential;  examined the human development and 
poverty reduction potential of the 19 sectors;  identif ied markets abroad that could be attractive to 
Cambodian exporters of the 19 products and servi ces;  and expanded and updated the agenda for 
legislative reform. 
83. The trade SWAp established the mechanisms for coordinating actions by the Royal 
Government and its development partners in executing the DTIS agenda. It established the 
Sub-Steering Committee on Trade Development and Trade-related Investment, whose members are representatives of all ministries dealing with trad e and trade-related issues, and all development 
partners providing aid for trade. Representatives of the private sector also participate in the 
Sub-Steering Committee's work, when the topics under discussion are relevant to them.   
84. The Sub-Steering Committee has three working gr oups, or "pillars" charged with developing 
the DTIS agenda into specific projects suitable fo r support by development partners. The first pillar 
deals with legislative reform, and works to formul ate projects for funding by development partners in 
this area;  the second deals with the 19 products  and services, and works to develop projects for 
funding with regard to those products and services;  and the third develops proposals with regard to 
capacity development. This process is producing a st eady stream of viable projects, many of which 
have found support among development partners. The pillars have de veloped road maps, setting out 
goals, strategic objectives, and outcomes in the area for which they are responsible. Taken together, 
these "road maps" cover a large part of Cambodia's aid for trade strategy.  
85. The Ministry of Commerce's new Department for International Cooperation serves as a focal 
point for coordination of the execution, monito ring and assessment of trade-related assistance.  
86. This new institutional setting provides the Roya l Government with an important additional 
mechanism for ensuring that trade, developmen t and poverty alleviati on actions are properly 
integrated as regards policy formulation and execu tion, and with respect to relations between the 
Royal Government and its development partners (" mainstreaming"). The Royal Government believes 
that these changes have increased, and are continui ng to increase, Cambodia's capacity to successfully Cambodia WT/TPR/G/253 
 Page 19 
 
 
  utilize higher levels of aid for trade, and to ensu re that trade realizes its full potential to reduce 
poverty and contribute to social development.   
87. In support of these efforts, some development partners have come together to establish a 
multi-donor trust fund, whose resources are availabl e to support directly project proposals identified 
through the SWAp process. Other development pa rtners use their own delivery mechanisms to 
achieve the same results, under the coordi nation of the Sub-Steering Committee on Trade 
Development and Trade-Related Investment. 
88. Activities under the trade SWAp are being backstopped by assistance from EIF Tier 1. 
Funding from Tier 1 will allow Cambodia to enhance its national capacity to formulate, implement, 
manage and monitor trade policy and trade-relate d assistance, with particular emphasis on poverty 
reduction. These resources will also help Cambodia sh are its experiences with aid for trade with other 
Least Developed Countries.  
89. Further backstopping is being provided within As ia and the Pacific by the Regional Technical 
Group on Aid for Trade, which is co-chaired by Cambodia and Japan. The Group provides a forum 
for reviewing the flows of aid for trade to Asia-P acific countries, and for exchanging information and 
experiences, particularly as regards the policy responses of individual countries in the area of aid for 
trade.  
V. SECTORAL ISSUES  
A. Manufacturing Overview 
90. Manufacturing accounts for a little more than 20% of Cambodia's GDP and employs more 
than half a million Cambodians. The most impor tant manufacturing activity is the production of 
wearing apparel and footwear, which, together, account for more than 15% of GDP and around 80% 
of employment in the manufacturing sector. Wearing apparel and footwear are mostly produced by large manufacturing enterprises. The second most impor tant manufacturing activity is food, beverages 
and tobacco, which accounts for somewhat more th an 2% of GDP. Small and medium sized firms 
predominate in this activity, as they do in most other sectors.  
91. The Royal Government's strategy for dive rsifying manufactured export products has 
four main pillars. The first is to continue to s upport and promote garment expor ts to existing markets, 
while diversifying the range of articles of clothi ng exported, and increasing value added. The second 
is to seize existing opportunities to diversify the markets for Cambodia's garments, in particular by 
developing exports to Asian markets. The third is to enlarge the range of manufactured exports by 
upgrading existing industries with growth and export  potential. Such potential exists as regards 
furniture, handicrafts, paper/recycled paper, cons truction materials, household appliances and simple 
electronic equipment. Many of the firms operating in these sectors are small and medium enterprises. The fourth is to seek to develop manufactured expor t products not presently produced in Cambodia, in 
particular by attracting investment by transnationa l corporations. In addition, the Royal Government's 
trade policy encourages import substitution, in particular by developing competitive small and 
medium enterprises in the food processing sector. Ca mbodia's manufacturing base is very narrow;  
broadening it is a prime objective of industrial policy. WT/TPR/G/253 Trade Policy Review 
Page 20 
  
  Garment industry 
92. Cambodia began exporting garments in the mid 1990 s. Growth was rapid, and by the time of 
accession in 2004, garment exports were a little l ess than US$2 billion. There were 219 firms 
exporting from Cambodia, and employing some 270,000 workers. At present (mid 2011) there are 
about 270 firms exporting from Cambodia employing around 310,000 workers. Exports in 2010 were 
US$2.9 billion. In addition to those directly employ ed by garment factories, it is estimated that the 
garment industry is responsible for the creation, in directly, of a further 250,000 jobs in supporting 
services. Ninety per cent of the workers in the ga rment industry are women, most of them coming 
from rural areas. 
93. There was concern that Cambodia's garment e xports might suffer from the expiration of the 
WTO Agreement on Textiles and Clothing. This was not the case, however. Exports grew by 10% in 
2005, by 21% in 2006, and by 8% in 2007.  
94. In 2008-2009, the economic crisis affecting Ca mbodia's main export markets reversed these 
trends. Exports grew by 3.6% in 2008, and then dr opped by 1.8% in 2009. Export values fell not only 
because of a sharp reduction in orders, but also because of downward pressure on prices. The number 
of operating firms, which had reached 292 at the end of 2007, was reduced to 243 by the end of 2009. 
About 75,000 jobs were lost, and the earnings of th ose who continued to be employed were reduced 
because work was increasingly part tim e, and overtime was not required. 
95. In 2010, there was a sharp recovery, with e xports expanding by 25%. The early months of 
2011 showed a continuation of export growth. Ther e are signs that exports to Asian markets are 
beginning to accelerate.  
96. Throughout this period the garment industry has received strong support from the Royal 
Government through both appropriate investment  incentives and the streamlining of import/export 
procedures.  
97. A key feature of this support is the Better F actories program. This program, undertaken with 
participation of the ILO, establishes a system fo r the regular monitoring of work conditions in 
individual factories, through unannounced visits , and worker and manage ment interviews. The 
monitoring is designed to ensure the full complianc e of garment factories with Cambodia's labor law, 
which fully reflects the ILO's core labor standard s with regard to freedom of association and 
collective bargaining; elimination of all forms of forced labor and child labor;  and freedom from 
discrimination at work. The results of the monitori ng are made available to the factories, including 
recommendations for improvement in work conditi ons. These electronic reports are subsequently 
posted on a web site, where they may be examined by  buyers. This allows buyers to form their own 
judgment as to whether the work conditions in a pa rticular factory meet the buyer's requirements. 
98. The Ministry of Commerce enforces this program  by requiring all factories seeking an export 
certificate of Cambodian origin to participate in th e program. Only factories that are registered with 
the Ministry of Commerce may export, and the condi tion for registry is membership in the Garment 
Manufacturers Association of Cambodia and in the Better Factories Program. 
99. While the main objective of this program is to  ensure that Cambodian workers enjoy working 
conditions that meet internati onal standards, the program also provides a competitive edge for 
Cambodian producers in markets that are sensitive to the issu e of "sweatshop" labor.   Cambodia WT/TPR/G/253 
 Page 21 
 
 
  100. Diversification of markets is a key objective for the future. Diversification is needed within 
existing markets:  it is estimated that that the top 15 buyers in the United States account for more than 
50% of garment exports. In Europe, most exports ha ve been concentrated on France, Germany, Spain 
and the United Kingdom:  other EU markets will be exploited. Increasing exports to markets such as 
China, Japan, Mexico and Russia is also an important objective. 
101. Diversification of products is an equally im portant objective, and is necessary for successful 
diversification of markets. Cambodia's exports ar e concentrated on a small number of high volume 
low value added products. In 2008, the top 5 pro ducts accounted for 54% and 67% of total garment 
exports to the United States and the European Uni on, respectively. Efforts to upgrade to higher value 
products will require improvements in the skill leve ls of Cambodian workers. Higher skill levels 
would also allow Cambodian producers to go beyond the simple cut-make-trim operations which 
predominate today. 
102. The Garment Manufacturers Association of Cambodia manages the Cambodian Garment 
Training Center, which provides training across a broad range of topics connected with garment 
manufacture. The Garment Industry Productivity Cent er also works to improve skills. Through its 
activities, Cambodian pattern-makers have recently b een trained and certified. It is estimated that 
production of garment patterns in Cambodia would allo w Cambodia to retain an additional 25-30% of 
the value of a finished garment. 
Trade, Investment and Special Economic Zones (SEZs) 
 
103. The development of new manufactured products fo r export will require sizable investment, in 
particular by transnational corporations. The invest ment climate is thus critical to export expansion. 
As mentioned elsewhere, the Royal Government is  firmly committed to improving the investment 
climate by putting in place a transparent and predictable legal framework for business;  engaging in trade facilitation;  improving infrastructure;  maintaining efficient and competitive investment incentives, and entering into bila teral investment agreements.  
104. Special economic zones can provide  additional attractions for investors, and the promotion of 
SEZs is a government priority. 
105. The Royal Government adopted the Sub-Decree on the Establishment and Management of 
Special Economic Zones in December 2005. Since then , 22 SEZs have been authorized. All zones are 
being developed by private investors/operators . Some zones are located near borders with 
neighbouring countries, allowing manufacturers in the zone ready access to those countries' 
transportation infrastructures when moving goods to market. Others are located near Sihanoukville port, and near Phnom Penh. 
106. Investment incentives, and the criteria for gr anting incentives, are th e same for investors 
inside and outside the zones. The principal advant ages of locating in a zone are the availability of 
superior infrastructure, and the st reamlining of government procedures. 
107. The infrastructure and provision of non-governmental services inside a zone are the sole 
responsibility of the private investor/operator. A ll Governmental agencies have simplified and 
streamlined the application of regulations and proce dures in the zones, and have stationed officials in 
the zones who operate a "One Stop Shop" to ensu re rapid completion of all paper work.    WT/TPR/G/253 Trade Policy Review 
Page 22 
  
  108. Cambodia's Labor Law applies fully to workers in an SEZ, and workers in a zone enjoy the 
same rights and privileges as workers elsewhere in Cambodia. Goods that move from an SEZ into the 
rest of Cambodia are treated as imports into Cambodi a and are subject to all applicable duties, taxes 
and import procedures.   
109. The development of the zones has so far been uneven. Five are currently in operation;  the 
remainders are in various stages of development.  The zones have provided around 7,000 jobs and 
export about US$100 million per year. Recent data suggest that the pace of investment in the zones is 
accelerating.   
Small and Medium Enterprises 
110. Small and medium enterprises are the incuba tors for the development of Cambodian 
entrepreneurship and business and technical skills. Mo st of these enterprises are located in the country 
side, and their success contributes di rectly to rural development. 
111. The SME Sub-Committee of the Private Sector Development Steering Committee promotes 
dialogue between the Royal Govern ment and small and medium ente rprises. This dialogue has 
allowed the identification of key impediments to the growth of small and medium enterprises. The 
Royal Government is addressing these impediments.  
112. A number of the difficulties faced by SMEs are common to all enterprises, but weigh 
especially heavily on small companies. These include the costs of registration procedures, and other 
costs of doing business; costs associated with import and export procedures;  and uncertainties resulting from an incomplete legal system. These are being addressed by the Royal Government, and 
considerable progress has been registered during th e period since accession, as mentioned earlier. The 
Royal Government continues to seek improvement in all these areas. 
113. Other impediments are more specific to small and medium enterprises, and require a response 
that is more focused on them. 
114. Access to bank finance is especially difficult for SMEs. In order to access bank finance an 
SME usually needs to show profitability thro ugh standard accounting methods, present a business 
plan, and provide collateral. Each of these is a challenge. 
115. Lack of relevant production sk ills and knowledge is another im pediment. Since most SMEs 
are in the food and beverage sector, knowledge of food technology and food safety is particularly 
important. To assist these SMEs, the Royal Gove rnment has established a Technology Incubator 
Center to help improve productivity and meet f ood safety requirements. The Center has recently 
organized training activities on water treatment tec hnology for firms producing bottled water and ice;  
on soy sauce technology, and on good manufact uring practices and good hygiene practices. 
116. Handicrafts are another area in which SMEs can develop competitiveness. The silk sector, for 
example, has registered rapid progress in improving efficiency in recent years, and is now able to 
begin exporting to markets offering preferential access.   
117. SMEs also lack adequate knowledge of form al export procedures, thereby limiting their 
ability to access foreign markets. The Royal Government  is establishing training and coaching service 
that will provide information on export proce dures, and assist SMEs in complying with those 
procedures.   Cambodia WT/TPR/G/253 
 Page 23 
 
 
  B. Agriculture 
118. Cambodia is competitive or potentially compe titive across a wide range of agricultural 
products. Increasing agricultural exports, widening th e range of products exported, and developing 
new export markets are key elements in Cambodia's export strategy. 
119. Export expansion necessarily takes place in the c ontext of the overall development of the 
agricultural sector. The Royal Government has estab lished strategic goals for the development of 
agriculture in the areas of food security, produc tivity and diversification;  market access for 
agricultural products;  improvement of institutional capacity and of the legislative framework;  and 
fisheries and forestry reform.  
120. Since its adoption, the law on Economic Land C oncessions has been an important instrument 
for accelerating the production of a number of ag ricultural export products. Concessions have been 
granted to producers of rubber, sugarcane, pa lm oil, cashew nuts, cassava, acacia, teak, and 
eucalyptus, and for some of these crops exports have grown rapidly in recent years, albeit from a small base. Exports of crude palm oil, for exam ple, rose from US$700,000 in 2005 to US$6.7 million 
in 2009 and US$9.4 million in 2010. Exports of na tural rubber rose from US$34.7 million in 2005 to 
US$82.6 million in 2010, most of the increase having occurred in the past two years.  
121. Experience to date in encouraging agricultura l exports indicates that there are a number of 
impediments which hold back Cambodian export s. Foremost among these is the high cost of 
transportation:  these costs are more than twi ce as high per tonne/kilometre in Cambodia when 
compared to neighbouring countries. The Royal Government is actively pursuing an ambitious 
program of road improvement and bridge buildi ng. Energy costs are high in Cambodia, and are 
particularly high in rural areas. The National Polic y on Rural Electrification addresses this issue. For 
many crops, up to date technolog y and production skills are lacking. The Cambodia Agricultural 
Research and Development Institu te, the Agricultural Experimentation Station, the Agricultural 
Development Center and the Center of Seed Produc tion, Research and Technical Training and various 
extension services all seek to address this. There is insufficient investment in land improvement by 
small farmers. In part, this is the result of insecu rity produced by incomplete land titling – only about 
24% of farmers have land titles. Land titling in rural areas is being speeded up so as to provide the 
necessary security. Titles will also allow land to be u sed as collateral when seeking loans. Finally, for 
food crops, insufficient knowledge of SPS requireme nts in importing countries, and insufficient 
capacity to meet those requirements are important impediments.  
122. Until the very recent past, almost all of Cam bodia's agricultural exports have been processed 
outside Cambodia, usually in neighbouring countries.  This limits the gains to the economy as a whole, 
since significant value added resulting from processing is foregone.  Promoting increased processing within Cambodia is an important policy objective.  
123. The European Union has recently included milled rice in its "Everything But Arms" system of 
preferences for Least Developed Countries. This provides Cambodian producers with significant tariff 
advantages in the EU market.  
124. In 2009, Cambodia produced 7.59 million metric tonnes of paddy rice, and was the world's 
14
th largest producer. Domestic consumption, and seed and post-harvest loss, were 4.09 million metric 
tonnes. Official statistics show that 13,000 to nnes of milled rice was exported. Thus, roughly 
3.5 million tonnes of paddy rice appears to have le ft Cambodia for processing elsewhere. Much of this WT/TPR/G/253 Trade Policy Review 
Page 24 
  
  movement went un-recorded. Estimates for 2010 in dicate that more than 8 million tonnes of paddy 
rice were produced, expanding considerably the surplus available for export. 
125. On 25 June 2010, the Royal Government adopted  a Policy Paper on The Promotion of Paddy 
Production and Rice Export. The objectives laid out in the Policy Paper are to increase paddy 
production, in particular by raising output per hectar e;  to increase the milling of rice to international 
standards;  and to seek out markets abroad for Ca mbodian milled rice. The specific targets are to 
attain, by 2015, an annual paddy ri ce surplus of more than 4 million tonnes, and milled rice exports of 
one million tonnes. 
126. To achieve these goals, the Royal Government is intensifying its efforts to reduce the general 
impediments to agriculture exports , mentioned above. In addition, it is addressing issues specific to 
rice milling and export. The availability of working ca pital to rice producers, millers and exporters is 
a key issue. In early 2011 the Royal Government doubled its contribution to rice milling loans offered 
by the Rural Development Bank. It is also pr eparing a US$25 million fund to guarantee 50% of the 
credit offered to the rice industry by commercial ba nks, and is taking other steps to facilitate the 
access of rice millers to commercial credit. In a ll, between now and 2015, the Government will spend 
US$40 million supporting rice processing, trade facilitation and market research.  
127. The Government is also assisting exporters a nd potential exporters to identify import markets, 
and has led missions abroad and facilitated cont acts between Cambodian exporters and potential 
importers.   
128. These steps are already producing results:  Ca mbodia exported about 30,000 tonnes of milled 
rice in 2010, and about 80,000 tonnes of milled rice in January-June 2011. 
C. Services 
129. An efficient and competitive services sector is  crucial to Cambodia's economic and social 
development. Infrastructure services such as teleco mmunications and transport, business services such 
as accounting, auditing and bookk eeping, and basic financial services are important elements 
determining the investment climate. Higher education and health services are essential for the 
well-being of the population, and also affect the business and investment climate.  
130. Cambodia has historically had a liberal policy re garding the entry of foreign enterprises into 
the services sector. During accession, Cambodia form alized this policy by taking market access 
commitments in 94 services subsectors. It believed that such commitments would encourage foreign 
participation in the services sector, and accelerate the development of an efficient, world class 
services sector. 
131. No comprehensive data on services are available. In a few sectors, however, developments 
since accession can be followed:  they indicate that  Cambodia's strategy has met with considerable 
success.  
132. Cambodia took market access commitments with re gard to commercial banking. At the time 
of accession, there were 14 commercial banks in Cambodia of which 8 had foreign ownership as 
branches, subsidiaries or joint ventures. In 2010 there were 29 commercial banks in Cambodia, of 
which 23 were foreign-owned.  
133. Cambodia took market access commitments acr oss a wide range of Telecommunication 
Services sub-sectors, including mobile services where it granted full market access. At the time of Cambodia WT/TPR/G/253 
 Page 25 
 
 
  accession, Cambodia had three mobile operators. In 2010, there were eight mobile operators. The 
original investment in all eight operators included foreign participation. In the case of one operator, a 
Cambodian investor subsequently bought out the foreign investor.   
134. Cambodia also took a market ac cess commitment with regard to higher education, adult 
education, and other education services. At the time of accession, Cambodia had 17 private 
institutions of higher learning, all of them Cam bodian owned. Since accession, 26 additional private 
institutions of higher learning have been established, of which four are foreign owned. As regards the 
movement of natural persons, Cambodia places no rest rictions on any of its institutions of higher 
learning with respect to the hiring of foreign inst ructors. Cambodian universities have entered into 
more than 200 memoranda of un derstanding with foreign educa tional institutions establishing 
cooperation and exchange frameworks, thereby enhancing the openness of the higher education 
system. These developments have significantly ex panded the educational opportunities available to 
Cambodians. 
135. Similar stories can be told with regard to other sectors in which Cambodia took commitments, 
for example hospital services and insurance services. 
136. Cambodia also has one important services export:  tourism. 
137. At the time of Cambodia's accession to WTO,  tourism was already well established and 
growing rapidly. Visitor arrivals  in 2004 totalled more than one million, a 50% rise over 2003. During 
the period 2005-2007, tourist arriva ls and tourist receipts continued to experience double digit growth. 
In 2008-2009, however, this robust growth was in terrupted by the economic crises experienced by 
some important source countries. Arrivals from Eu rope and North America slowed noticeably, and 
arrivals from the Republic of Korea and from Japa n actually fell. These developments were partly 
offset by sharply higher arrivals from neighbouring c ountries:  overall, visitor arrivals grew by less 
than 6% in 2008 and by less than 2% in 2009.  
138. In 2010, visitor arrivals and tourist receipts returned to double-digit growth:  there were 
2.5 million arrivals and US$1.8 billion in tourism r eceipts. It is estimated that tourism generates, 
directly and indirectly, about 300,000 jobs. 
139. Despite these fluctuations, the main tourist generating markets have remained almost the 
same throughout the period. The Republic of Korea, Japan, the United States and, recently, Viet Nam, 
rank among the top four generating markets. The data  for 2010 also show strong growth in arrivals 
from China. 
140. From the very beginning, the primary tourist attraction in Cambodia has been the historic 
Khmer temples around Siem Reap, in particular the world famous Angkor Wat. The Royal Government's tourism policy has sought to manage  the growth of tourism in this area, while 
progressively developing complementary and alternative tourist destinations in the rest of the country. 
A number of such destinations have been identif ied and are under development. These include beach 
resorts in the coastal zone, (Cambodia has recently been admitted as a member of the World's Most 
Beautiful Bays Club);  ecotourism zones in the northeast and the southwest;  the Tonle Sap biodiversity zone;  and the upper Mekong river, with its fresh-water dolphins. For all these 
destinations, the main attractions are the natura l beauty of the Cambodian countryside and the 
uniqueness of Cambodian village life. Further to urist development will also be promoted in 
Phnom Penh and its surrounding area. Special atten tion is being given to the requirements of 
sustainable tourism development, which requires close attention to the interaction of tourism with the WT/TPR/G/253 Trade Policy Review 
Page 26 
  
  natural environment and with local communities. The potential of tourism as a direct means for 
poverty alleviation is recognized.    
141. The Royal Government is fostering tourism de velopment through a number of channels. It 
supports marketing, in particular through the "Cambodia-Kingdom of Wonder" and "Clean City, 
Clean Resort and Good Service" campaigns. Marketi ng is directed mainly at East Asia, where the 
attractiveness of Cambodia as a tourist destination has already been demonstrated. But recent rapid 
growth (albeit from a low base) of tourists from non-traditional markets, such as Russia and India, 
suggest that other countries could profitably be targeted.     
142. Cambodia is also seeking to facilitate tourist a rrivals through such measures as encouraging 
direct flights to Cambodia's international airpor ts, increasing the number of land border crossings, and 
working with ASEAN partners to eliminate visa re quirements – an objective that has already been 
partly met. Connectivity within Cambodia is also important, and the Government is encouraging the 
establishment of regular flights from Siem Reap to  Sihanoukville, so that tourists can more easily 
combine visits to Angkor Wat with relaxation on the beach.  
143. Attention will also be given to reinforcing me asures to ensure the safety and good health of 
tourists while in Cambodia, and to further elabora ting the legal and regulatory framework for tourism. 
This is in particular needed to or ganize properly community-based tourism. 
144. In addition to promoting increases in tourism, the Royal Government is concerned to enhance 
the development impact of tourism by increasing back ward linkages and local value added. Almost all 
of the food products used in upscale tourist hotels, for example, are imported. Many of these products 
could be, and should be, supplied by Cambodian producers. 
145. Foreign commercial presence (i.e. foreign invest ment) has been a major contributor to the 
rapid growth in tourism mentioned earlier. In its  WTO services schedule, Ca mbodia took on market 
access and national treatment commitments with respect  to hotels, restaurants, travel agencies and 
tour operator services and tourist guides services. With  respect to hotels, travel agencies and tour 
operators, the schedule contains some limitations wi th regard to foreign ownership. However, present 
policy allows 100% foreign owners hip in all three subsectors.  
146. Since accession there has been a significant expansion of foreign investment in luxury grade 
hotels.  
VI. CONCLUSION 
147. During the period since accession, Cambodia has made considerable progress in meeting its 
WTO obligations and in using the WTO trading sy stem to foster growth, development and poverty 
alleviation. Efforts in both areas will be intensif ied in the period ahead. Cambodia understands that 
the Trade Policy Review will produce detailed co mments by WTO Members on its trading regime. 
These comments are welcome, and will assist the G overnment in elaborating further its WTO work 
program. 
148. Recent and prospective increases in aid for trade will allow Cambodia to advance more 
rapidly to meet fully its WTO obligations, and  to accelerate legal reform and human resource 
development. The Royal Government is fully comm itted to putting in place a modern, transparent and 
predictable legal framework for business that fully reflects international norms and best practice.  Cambodia WT/TPR/G/253 
 Page 27 
 
 
  149. The inadequacy of physical infrastructure, in pa rticular transportation infrastructure, is at the 
heart of the difficulties faced by Cambodian produ cers in competing in world markets. With the 
support of development partners, Cambodia has be en making rapid progress in improving its roads, 
bridges, ports and railroad. These efforts will conti nue and intensify in the period ahead. A lowering 
of transport and electricity costs is central to any effort to improve the competitiveness of the 
Cambodian economy. 
150. These, and other specific policies of the Royal Government, are designed to foster and 
support a vigorous and competitive private sector, and to ensure that Cambodia becomes a highly 
attractive destination for international investment. 
151. Export development through the expansion of s upply-side capacity will remain the central 
element of trade policy. As described throughout this Report, policy seeks to increase the benefits 
Cambodia derives from the WTO system, while reduci ng its vulnerability to negative shocks. Specific 
policy objectives are to diversify the range of e xported products;  divers ify the range of export 
markets;  and for all export products and services, increase the value added in Cambodia.    
 
__________