Cambodia investment update for May 2016 

Published: May, 2016

  • INDUSTRIAL RELATIONS
  • PROMULGATION OF THE LAW ON TRADE UNIONS, Royal Kram № NS/RKM/1516/007, dated 17 May 2016


    The Law on Trade Unions is intended to: (a) provide rights and freedom for enterprises, establishments and persons governed by the provisions of the 1997 Labour Law and persons serving in air and maritime transportation and (b) sets out the organization and functioning of professional organizations of employees and employers. This law includes provisions related to, among other things, the establishment, operation, dissolution, rights and obligations and dispute resolution concerning professional organizations of employees and employers. This law also addresses provisions related to staff representatives, employee union with the most representative status, termination procedures of specially protected employees and negotiation of collective bargaining agreements.


    This law introduces significant changes relating to eligibility of staff representatives when compared with the 1997 Labour Law. Under this law, an employee who is 18 years old, has employment seniority of three (3) months and is able to read and write Khmer language (additional qualification), is eligible to seek a position as staff representative. Staff representatives may be elected from among candidates nominated by a local union or from among employees who, while not members of a local union, volunteer to be candidates. Effectively, this requires that any enterprise employing eight (8) or more employees must now arrange for an election of staff representatives after the enterprise has operated for three (3) months.


    The mechanism and procedures for special protection against termination under the 1997 Labour Law and relevant regulations are incorporated into this law, such that staff representative candidates, elected staff representatives, union leader candidates and the elected union leaders are entitled to protection against termination of employment. It is important to note that local unions are now required to, in addition to submitting a list of individuals entitled to special protection to the employer, file the same list with the Ministry of Labour and Vocational Training.


    Of important note to enterprises is that this law requires representatives of local unions to seek and obtain approval from the employer before entering the enterprise to perform their union duties. The employer must not withhold approval unless such approval may hinder the normal operation of the enterprise. It is unclear under this law how a local union’s representative is defined and whether union leaders are subject to this requirement as well. Further, union management and administrators duly dismissed continue to have the right to enter the enterprise temporarily, limited to 60 days from the date of dismissal. This post-dismissal right to enter does not apply where dismissal is for serious misconduct.


    Finally, employers are prohibited from retaliating against whistleblowers who report or provide testimony about an enterprise’s compliance with labour regulations. A breach of this restriction may result in a monetary fine of up to KHR 5,000,000 (approximately USD 1,250).


    • MINING LICENSING

    MANAGEMENT OF MINERAL RESOURCE EXPLORATION LICENSE AND INDUSTRIAL MINING LICENSE,Sub-Decree No. 72, dated 5 May 2016


    Subject to the 2001 Law on Mineral Resources Management and Exploitation, this sub-decree addresses: (a) management of mineral resource operations under exploration licenses and industrial mining licenses; (b) management and use of land in mineral resource operations under exploration licenses and industrial mining licenses; (c) procedures, processes and conditions related to the issuance of exploration licenses and industrial mining licenses; and (d) rights and obligations of licensees.


    The most critical matter for existing licenses is the requirement for license holders under existing mining investment agreements to file an application with the Ministry of Mines and Energy to re-apply for their license and/or to have the mining investment agreement revised within 180 days from the date this sub-decree came into effect (being 5 May 2016). If a licensee fails to comply with this requirement, the licensee must continue the mining operation pursuant to the terms and conditions of the license and/or the mining investment agreement until such license and/or agreement expires or is revoked.


    Under this sub-decree, an exploration license is valid for three (3) years and may be renewed for another two (2) terms provided that each such term does not exceed two (2) years. Similarly, the validity of an industrial mining license cannot exceed 21 years and may be renewed for another two (2) terms provided that each such term does not exceed 10 years. In exceptional circumstances, an industrial mining license may be renewed more than the terms specified above, although the sub-decree is silent as to what constitutes exceptional circumstances that permit such renewal.


    Licensees are required to comply with reporting obligations. A licensee holding an exploration license must report to the Ministry of Mines and Energy on an annual basis about the results and the associated expenses related to mineral resources exploration for each year before the end of the first month of the next calendar year or within 30 days following the date at which the exploration license expires. Likewise, a licensee holding an industrial mining license must file a monthly production and sale report to the Ministry of Mines and Energy in a form as determined by the Ministry within fifteen (15) days of the following calendar month. Failure to comply with reporting obligations may result in the license being revoked.


    TAX AND CUSTOMS


    IMPLEMENTATION OF VALUE ADDED TAX ON THE SUPPLY OF UNPROCESSED AGRICULTURAL PRODUCE,Prakas № 495 MEF, dated 6 April 2016


    This prakas aims to establish a mechanism for the implementation of VAT on the supply of unprocessed agricultural produce to support and promote government policies on the export of rice and also to mitigate the expense of people on the consumption of unprocessed agricultural produce including all kind of seeds and paddy/rice.


    This prakas provides that the supply of unprocessed agricultural produce is a non-taxable supply for VAT purposes.


    This prakas defines unprocessed agricultural produce to include root, tuber, trunk, skin, fruit, and flower of seeds harvested, and defines supply to include the sale, own use, making a gift or supply at below real price, and import of unprocessed agricultural produce by a real regime taxpayer in Cambodia.


    ADJUSTMENT OF EXPORT TAX ON RUBBER,Sub-Decree № 35 RNKr. BK, dated 4 March 2016


    The sub-decree adjusts the export tax on “unit base” on rubber as follows:


    • Exempt from export tax if the value of export tax base is below USD 1,000 per ton.
    • Export tax is USD 50 per ton if the value of export tax base is from USD 1,000 to USD 2,000 per ton.
    • Export tax is USD 150 per ton if the value of export tax base is from USD 2,000 to USD 3,000 per ton.
    • Export tax is USD 200 per ton if the value of export tax base is from USD 3,000 to USD 4,000 per ton.
    • Export tax is USD 300 per ton if the value of export tax base is above USD 4,000.

    The adjusted export tax is effective from 01 March 2016 onward.


    • REAL ESTATE AND CONSTRUCTION

    SPECIAL ANNOUNCEMENT OF THE MINISTRY OF ENVIRONMENT ON THE ESTABLISHMENT OF 18 PROTECTED NATURAL AREAS,dated 10 May 2016


    The Ministry of Environment issued a special announcement in regards to the establishment of 18 protected natural areas having a total land size of 2,674,503 hectares. The protected natural areas will be under the management of Ministry of Environment.


    To ensure protection, the Ministry of Environment will register the protected natural areas with the Ministry of Land Management, Urban Planning and Construction as well as make an assessment as to other methods that can be used to protect the natural areas and ecosystems.


    MINISTRY OF RURAL DEVELOPMENT ON THE WARRANTY OF CONSTRUCTION QUALITY AND PUBLIC SAFETY IN THE COURSE OF CONSTRUCTION, MAINTENANCE, REPARATION AND IMPROVEMENT OF RURAL INFRASTRUCTURE,Instruction No. 0054/16 dated 3 May 2016


    This instruction particularly targets entities under the governance of the Ministry of Rural Development and companies carrying out construction, maintenance and repairs to roads and bridges, as well as general improvements to rural roads and infrastructure.


    This instruction aims to ensure that entities undertaking these activities will implement them in such a way as to ensure that the work will not cause dust in the dry season or mud in the rainy season. Furthermore, to ensure the quality of road construction, maintenance and repairs pursuant to a construction contract involving entities under the governance of Ministry of Rural Development, the Ministry will send investigation officers to each construction site to ensure compliance with this instruction’s objectives.


    PHNOM PENH MUNICIPALITY DEPARTMENT OF LAND MANAGEMENT, URBAN PLANNING AND CONSTRUCTION TO ALL GOVERNORS OF DISTRICTS,Letter No. 537 dated 25 May 2016


    This letter provides certain instructions to the Governors of all 12 districts within the Municipality of Phnom Penh in relation to the transfer of possessory rights to foreigners (excluding the ground floor) with respect to co-ownership buildings. The letter provides that district governors will no longer have authority to sign a transfer letter of possessory rights to a foreigner if the co-ownership building has been built without a construction permit.


    DFDL contact:
    Alex Larkin
    Senior Consultant
    [email protected]


    *The information are provided for information purposes only, and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.


     

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