Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

CAMBODIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of December 31, 2004)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: January 1, 2002.
Exchange Arrangement
CurrencyThe currency of Cambodia is the Cambodian riel.
Other legal tenderThe dollar circulates freely and is used for payments.
Exchange rate structure
DualThe exchange rate system comprises two rates: the official rate and the market rate. Adjustments to the official exchange rate are made daily by the National Bank of Cambodia (NBC) to limit the spread between the official and parallel market rates to less than 1%. The official exchange rate applies mainly to external transactions conducted by the government and state-owned enterprises, and is used by banks for recording all transactions in foreign currency.
Classification
Managed floating with no predetermined path for the exchange rateThe NBC quotes daily official rates, while commercial banks are free to buy and sell foreign exchange at their own rates. Exchange transactions take place at the market rate. Foreign exchange dealers are permitted to buy and sell banknotes and traveler’s checks at the market rate.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangementsNo.
Administration of controlThe responsibility for the management of foreign exchange rests with the NBC. The NBC is authorized to license commercial banks and other agents to engage in foreign exchange transactions and to regulate current and capital transactions.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Banks have been instructed to freeze any transfers of capital and assets of certain individuals and to freeze funds and other financial assets of terrorists and terrorist organizations pursuant to UN Security Council Resolutions Nos. 1267 and 1373, respectively.
In accordance with UN sanctionsYes.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeThe import or export of raw gold and other precious metals is subject to prior declaration to the NBC if the value of each transaction equals or exceeds $10,000 or its equivalent.
Controls on exports and imports of banknotes
On exportsThe export of means of payment exceeding $10,000 in foreign exchange or its equivalent in domestic currency by a traveler must be declared to customs officers at border crossings of Cambodia.
Domestic currencyYes.
Foreign currencyExports of cash by banks are subject to prior notification to the NBC.
On importsThe regulations pertaining to exports of banknotes apply.
Domestic currencyYes.
Foreign currencyNo limits apply, but imports exceeding $10,000 or its equivalent must be declared on entry.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyThe balances of these accounts are not subject to limits, and the funds may also be used to settle domestic obligations. All transactions may be settled in foreign currency.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedRegulations applied to residents also apply to nonresidents.
Domestic currency accountsNo laws prohibit these accounts.
Convertible into foreign currencyNo.
Blocked accountsAccounts belonging to persons and/or organizations known to be associated with terrorist activities are blocked.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsLoans and borrowing, including trade credits, may be freely contracted between residents and nonresidents, provided that the loan disbursements and the repayments thereof are made through authorized intermediaries.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementsAuthorized intermediaries may be required by the NBC to submit proof of payment of imports by banker’s order in support of their applications to purchase foreign exchange, and later may also be required to provide various documentary evidence confirming the entry of goods into the country. When collection is made, the proceeds from exports of goods or services must be credited to the exporter’s account with the domiciled bank, in accordance with the existing law.
Preshipment inspectionPreshipment inspection is aimed at establishing the accuracy of the import transaction in terms of volume, quality, and price.
Import licenses and other nontariff measures
Negative listImports of certain products are subject to control or are prohibited for reasons of national security, health, environmental well-being, or public morality.
Import taxes and/or tariffsImport duties and excise taxes are levied on selected imports. Imported goods are also subject to a VAT.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsExport proceeds must be transacted through authorized domiciled banks.
Financing requirementsLoans and borrowing, including trade credits, may be freely contracted between residents and nonresidents, provided that the loan disbursements and the repayments thereof are made through authorized intermediaries.
Documentation requirements
DomiciliationExport proceeds must be credited to the exporter’s account with a domiciled bank in accordance with the existing law.
Export licenses
Without quotasExports of a limited list of goods by either state-owned or private sector entities must be licensed by the Ministry of Commerce. Export licenses are required for sawed timber and some categories of logs. Exports of antiques and several categories of logs are prohibited. Exports of uncut precious stones are subject to the Law on Foreign Exchange.
With quotasWith the expiration of the WTO Agreement on Textiles and Clothing by December 31, 2004, exports of garments to the United States are no longer subject to quotas.
Export taxesAn export tax of 10% of the estimated market value applies to exports of timber and other selected exports.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsThe proceeds from exports of services must be credited to the exporter’s account with a domiciled bank, in accordance with existing laws.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instrumentsNo securities markets exist in Cambodia, and there are no specific laws on capital market securities.
Controls on derivatives and other instrumentsThere are no specific regulations regarding derivatives.
Controls on credit operationsLoans and borrowing, including trade credits, may be freely contracted between residents and nonresidents, provided that the loan disbursements and the repayments thereof are made through authorized banks.
Controls on direct investment
Outward direct investmentThere are no specific laws requiring approval, and capital transfers relating to investment abroad are not restricted. However, transactions involving the equivalent of $100,000 or more require prior declaration to the NBC.
Inward direct investmentForeign investors are required to obtain approval from the Council for Development of Cambodia, but there are no foreign exchange controls.
Controls on liquidation of direct investmentProceeds from the liquidation of foreign direct investment taking place in accordance with the provisions of the investment law of Cambodia may be transferred freely. However, such transfers have to be made through authorized intermediaries, which must report to the NBC all amounts equal to or exceeding $100,000 or its equivalent.
Controls on real estate transactions
Purchase locally by nonresidentsNonresidents may not own land in Cambodia.
Sale locally by nonresidentsNonresidents may not sell land in Cambodia.
Controls on personal capital transactions
LoansLoans and borrowing, including trade credits, may be freely contracted between residents and nonresidents, provided that the loan disbursements and the repayments thereof are made through authorized intermediaries.
Transfer of assetsThese transactions must be effected through authorized banks.
Provisions specific to commercial banks and other credit institutionsAuthorized banks must provide the NBC with periodic statements of transfers or settlements and of outflows and inflows of capital carried out between Cambodia and other countries. Any export of foreign currency banknotes by authorized intermediaries is subject to prior declaration to the NBC. Loans and borrowing, including trade credits, may be freely contracted between residents and nonresidents, provided that the loan disbursements and repayments thereof are made through authorized intermediaries. However, in the event of a foreign exchange crisis, the NBC may issue regulations to be implemented for a maximum period of three months, imposing certain temporary restrictions on the activity of authorized intermediaries, particularly on certain transactions specified in the law, their foreign exchange position, or any loans in domestic currency extended to nonresidents.
Lending to nonresidents (financial or commercial credits)Banks are not allowed to grant loans outside Cambodia from deposits of customers and banks collected inside Cambodia.
Differential treatment of deposit accounts in foreign exchange
Credit controlsBanks are required to maintain at all times a maximum ratio of 20% between their overall exposure resulting from their operations with each individual beneficiary and their net worth.
Differential treatment of deposit accounts held by nonresidents
Investment regulations
Abroad by banksYes.
In banks by nonresidentsYes.
Open foreign exchange position limitsBanks are not allowed to exceed their short or long position in any single foreign currency by more than 5% and in all foreign currencies by more than 15% of their net worth. Residents and nonresidents are treated the same.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investorsThere are no institutional investors in Cambodia.
Other controls imposed by securities lawsThere are no securities laws.
Changes During 2004
Export and export proceedsDecember 31. With the expiration of the WTO Agreement on Textiles and Clothing, exports of garments to the United States ceased to be subject to quotas.

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