Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

CAMBODIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of December 31, 2006)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: January 1, 2002.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
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 relevant UN Security Council resolutions.
Other security restrictionsYes.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Cambodia is the Cambodian riel.
Other legal tenderThe dollar circulates freely and is used for payments.
Exchange rate structure
UnitaryThe exchange rate system comprises two rates: the official rate and the market rate. 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. It is set to ensure that the spread between the official and market rates is less than 1%.
Effective January 1, 2006, the exchange rate structure was reclassified to unitary from dual due to technical correction in the classification.
Classification
Managed floating with no predetermined path for the exchange rateThe National Bank of Cambodia (NBC) quotes daily official rates; 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.
References to legal instruments and hyperlinksn.a.
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. In the event of a foreign exchange crisis, the NBC may issue regulations, to be implemented for a maximum period of three months, that impose certain temporary restrictions on the activity of authorized intermediaries, particularly on certain transactions specified in the law, foreign exchange positions, or any loans in domestic currency extended to nonresidents.
Payments arrears
OfficialArrears exist on payments to the United States and the Russian Federation.
Controls on trade in gold (coins and/or bullion)
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.
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.
References to legal instruments and hyperlinksn.a.
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.
Held abroadn.r.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyNo.
References to legal instruments and hyperlinksn.a.
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.
References to legal instruments and hyperlinksn.a.
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 the loan disbursements and the repayments thereof are made through authorized intermediaries.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementAuthorized 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.
Preshipment inspectionPreshipment inspection is aimed at establishing the accuracy of the import transaction in terms of volume, quality, and price.
Othern.a.
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.
References to legal instruments and hyperlinksn.a.
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 the loan disbursements and the repayments thereof are made through authorized intermediaries.
Documentation requirements
Letters of creditn.a.
Guaranteesn.a.
DomiciliationExport proceeds must be credited to the exporter’s account with a domiciled bank, in accordance with the existing law.
Othern.a.
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.
Export taxesAn export tax of 10% of the estimated market value applies to exports of timber and other selected exports.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
References to legal instruments and hyperlinksn.a.
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.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
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 the loan disbursements and the repayments thereof are made through authorized intermediaries.
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 the loan disbursements and the repayments thereof are made through authorized intermediaries.
Transfer of assetsThese transactions must be effected through authorized intermediaries.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
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 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 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 that impose certain temporary restrictions on the activity of authorized intermediaries, particularly on certain transactions specified in the law, foreign exchange positions, 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.
Purchase of locally issued securities denominated in foreign exchangen.r.
Differential treatment of deposit accounts in foreign exchange
Liquid asset requirementsn.a.
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.
Investment regulations
Abroad by banksYes.
In banks by nonresidentsYes.
Open foreign exchange position limitsEffective July 31, 2006, the open position limits were eliminated. Previously, banks were 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 were treated the same.
Provisions specific to institutional investorsThere are no institutional investors in Cambodia.
References to legal instruments and hyperlinksn.a.
Changes during 2006
Exchange arrangementJanuary 1. The exchange rate structure was reclassified to unitary from dual due to technical correction in the classification.
Provisions specific to the financial sector
Provisions specific to commercial banks and other credit institutionsJuly 31. The open position limits were eliminated.

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