Cambodia Country Report

2014 COUNTRY REPORT

CAMBODIA Nicole Drain Professor Grace Canepa FASM 420- Global Sourcing April 28, 2014

EXECUTIVE SUMMARY

This report was commissioned to examine

textile and apparel industry of Cambodia is also

the political, social, and economic climate of

examined to determine its current situation and

country of the Royal Government of Cambodia

potential growth.

as a potential place of manufacturing for the Nix

swim wear line.

Cambodian culture is provided in order to add

Data on business etiquette of the

insight to potential buyers on what is expected

The research conducted focuses on key

when conducting business in the country. Key

elements of the country that are pertinent for

information in this section includes negotiation

a foreign investor to know when planning to

and communication styles which are important

conduct business in the county of Cambodia. In

elements when performing business in foreign

the country overview a socio-economic-political

countries.

situation is analyzed, with key findings showing an

overall improvement in those certain conditions.

Cambodia conducts trade with the United States

An analysis of the labor force is also included

is analyzed to provide a better understanding of

to provide buyers information on the potential

Cambodia’s potential as a country of interest for

workers of apparel manufacturing factories. The

the Californian swim wear company, Nix.

Most importantly, key information on how

TABLE OF CONTENTS INTRODUCTION

06

COUNTRY OVERVIEW Socio-Economic-Political Climate Labor & Labor Laws Textile & Apparel Industry Garment Manufacturers Association of Cambodia

07 10 13 18

BUSINESS ETIQUETTE Type of Culture Negotiation Styles Relationship Building Social Cultural Elements Dining Communication

20 23 23 24 28 29

TRADE AGREEMENTS & LAWS IMPORT CLASSIFICATION LOGISTICS & IMPORTATION IMPORT/EXPORT REQUIREMENTS MANUFACTURING & PRODUCTION

30 33 34 36 39

SOURCING

42

COSTING

46

RISKS & BENEFITS

49

SWOT ANALYSIS

51

CONCLUSION

52

APPENDIX Country Traits Culture Economy Geography Labor Importing/Exporting Documents Maps Tech Packs

53 61 65 74 77 80 88 90

REFERENCES

100

COUNTRY REPORT: CAMBODIA

INTRODUCTION

Cambodia is a country located on

the Indochinese mainland of Southeast Asia. The land is made up of plains and great rivers linking China to India and Southeast Asia. Many Asian cultures have significant influence in the country, including those of the United States and France, commonly seen in the capital, Phnom Penh. Many Cambodians identify themselves as Khmers, which are descendants of the Angkor Empire that spread across over much of Southeast Asia. After the decline of the empire, Cambodia became a colony of France in 1863. In 1953, following Japanese occupation during World War II, Cambodia attained full independence from France (Central Intelligence Agency).

However, the country still struggled with political instability when the communist Khmer Rouge forces

captured the capitol, resulting in the death of approximately 1.5 million Cambodians due to execution, forced hardships, or starvation. In 1993, the United Nations decided to intervene and sponsor elections in order to mend the appearance of normalcy under a coalition government. After a second round of national elections in 1998, another coalition formed and government stability was finally achieved. By late 2004, King Norodom Sihanouk renounced his title and his son, Prince Norodom Sihamoni took his place (Central Intelligence Agency).

As Cambodia focuses on efforts to end its dependence on foreign, it has captured the attention of

foreign investment from countries like China and Vietnam, interested in the country’s economic potential and natural resources. The garment industry is the largest industry of the country, employing about 500,000 people and makes up 80% of Cambodia’s exports. Following in second place, is tourism, which continues to expand as an industry. Although a troubled history and socio-political unrest sometimes plague the country, Cambodia’s economic growth and potential puts it in the running for a significant player in the apparel/ garment industry (BBC News). This report will discuss the socio-political-economic climate of Cambodia, along with it’s culture, importing and exporting guidelines, along with possible manufacturers for the swim 6

COUNTRY OVERVIEW

COUNTRY OVERVIEW SOCIO-ECONOMIC-POLITICAL CLIMATE

Social Climate

The social climate of Cambodia, is one that has become

more stable in recent years, with a growing population, and developing economy, and expanding education system contributing to its overall growth. The total population of Cambodia is 15.2 million, with an annual growth rate of about 1.63%. An estimated 1.55 million people reside in the capital, Phnom Penh (AVIC).

The largest single majority group is that of the Khmer

(also referred to as Cambodians), who are settled mainly along the Mekong River and the Tonle Sap. This group makes up a distinctive homogeneity uncommon in Southeast Asia that has stimulated a strong sense of national identity (AVIC).

After decades of turmoil devastated Cambodia’s main

industries of agriculture, forestry and fishing, inflation quickly ensued. However, while major cities such as Phnom Penh and Siem Reap exhibit many signs of new wealth, this has yet to trickle down to the rural areas, where economic activity continues to be very basic (AVIC).

7

COUNTRY REPORT: CAMBODIA

Today, Cambodia continues to be one of the world’s least developed countries with little resources

and heavy dependence on foreign aid. Economic growth also remains restricted by basic infrastructural problems such as inadequate roads, inefficient communications, deficiency of power, raw materials and most importantly the severe shortage of trained and skilled workers. The education system in Cambodia remains plagued by many difficulties including a severe shortage of qualified teaching staff, poor morale amongst teachers and limited suitable teaching materials. Attendance at school continues to be limited in rural areas as children are often expected to help out their families in the fields. The country also has a low participation rate in higher education, with a mere 1.2 % of the population enrolled, compared to ab average of 20.7% in all the ASEAN (Association of Southeast Asian Nations) countries (AVIC).

Economic Climate

Cambodia is one of the poorest South East Asian countries

with a Gross Domestic Product (GDP) per capita of about $2,600

GDP Composition

by Sector (2013)

as of 2013. The nation’s GDP has attained a real growth rate of 7% as of 2013. Income distribution is highly uneven and the poorest 20% account for only 6.9% of national income and consumption.

Poverty remains most severe in the rural areas, where 75% of the poor live and depend on agricultural production and the

SERVICES 40.7%

consumption of natural resources for their livelihoods (European Union).

Even though,

industrialization during the 1990s has

decreased the agricultural sector’s share of GDP from 55% in 1990 to 31.4% in 2004, agriculture continues to be a vital

AGRICULTURE 34.8%

source of income for the majority rural population. On the other hand, the industrial sector has quickly developed and its GDP increased from 11% to about 27%. Macroeconomic growth and fiscal stability improved since the beginning of 1999 and additionally strengthened under the International Monetary Fund’s (IMF) Poverty Reduction and Growth Facility (PRGF). Other

INDUSTRY 24.5%

efforts include, trade reforms established by the World Trade Organization (WTO) membership and focus on Trade Facilitation Source: Central Intelligence Agency

8

COUNTRY OVERVIEW

and corruption matters is essential in order to help the garment industry compete in a liberalized world market (European Union).

In recent years, economic growth has been favorable, averaging 9% in the from 2000-2005. The growth

rate rose to 9.5% in 2004 and accelerated to13.4% in 2005, in spite of negative external factors such as higher oil prices and avian influenza. The economic growth is mainly dependent on the garment, tourism and construction sectors, with garment exports having declined following the abolition of quotas at the start of 2005 (European Union).

Political Climate

The

process

of

democratic

reconstruction began after the signing of the Paris Peace Agreements in October 1991, following twenty years of conflict and civil war. This also launched the beginning of Cambodia’s transition to a market economy. With King Norodom Sihamoni as head of state since his father’s succession in 2004, the country has begun A women registers to vote in Phnom Penh.

to experience political stability. The last national elections took place on 4 February

2012. In comparison with previous elections, the atmosphere during the campaign period was less tense and there were fewer violent incidents (European Union).

Although Cambodia has made extensive gains in the field of human rights in the last few years, it is still

a country in a post-conflict situation. There are various local and international human rights organizations and civil society groups actively participating in advocacy, training and protection work in the human rights field, but much remains to be done. Violence, continues to be a problem. Weak law enforcement increases the situation, causing significant impunity, fueled by corruption. In order to silence political opposition and critics, the government has began enforcing criminal prosecutions for alleged defamation or incitement (European Union).

9

COUNTRY REPORT: CAMBODIA

COUNTRY OVERVIEW LABOR & LABOR LAWS

Labor Force

Most Cambodians in the workforce are still

Labor Force

by Occupation (2010)

involved in agriculture, forestry, and fishing. Foreign investment is essential to job creation in Cambodia.

Apprehensions

among

foreign

investors

about

political insecurity and corruption have resulted in the lack of foreign capital inflows and only slow advances

AGRICULTURE 55.8%

in job opportunities. An additional problem to foreign investment and job creation has been the country’s limit of trained and experienced labor force having the desired productive skills (Overton).

In spite of these issues, the new garment

SERVICES 27.3%

factories surrounding Phnom Penh have become a vital source of manufacturing employment, mainly for women. The amount of women in the labor force— over the 50% of the total population—is one of the biggest in the world, a disparity created in part by the

INDUSTRY 16.9%

massive destruction of men during the period of Khmer Rouge rule. By law, women are ensured equal rights, Source: Central Intelligence Agency

10

COUNTRY OVERVIEW

but traditional views of the proper role of women have obviated women from entering senior management positions in business (Overton).

Although the country struggles with foreign investment due to political instability and corruption, thus preventing the creation of jobs, Cambodia still has a workforce dedicated to a variety industries, especially the garment and textile and industry. With this dedication, Cambodia proves to be a key investment for companies to choose as its supplier.

Labor Laws A law formed in 1992 allowed the formation

have set wages established on market conditions,

of labor unions. The three leading labor federations

unrestricted by union activities. Wages are usually

are the Cambodian Federation of Independent

so low that most workers hold more than one job

Trade Unions, the Cambodian Union Federation,

(Overton).

and the Free Trade Union of Workers of the Kingdom

of Cambodia. The unions have been unsuccessful

have been the most vital sources of tax revenue in

largely because the government has determined

Cambodia. In 1993, all tax collection and government

public-sector wages, and private-sector employers

spending was integrated and placed under the

Consumption taxes and custom duties

11

COUNTRY REPORT: CAMBODIA

control of the Ministry of Finance, substituting the

less than 18 years old) may not sign an employment

previous system that enabled individual ministries

contract without the consent of their parents or

to assess taxes and spend the resulting revenues.

guardian. A minor may not be employed to perform

Tax collection later became more efficient, and tax

night work. See paragraphs 6.5 and 6.6 below for an

revenues grew. During that period new tax policies,

explanation of night work. Minors aged from 12 to 15

established to encourage domestic and international

years can be hired to do light work provided that: the

investment, delivered for lower corporate taxes,

work is not hazardous to their health or mental and

tax exemptions of up to eight years for companies

physical development, and the work will not affect

in industrial sectors assigned priority status by the

their attendance at school or training programs.�

government, no taxes on reinvested profits, and tax

(International Labor Office).

exemptions on imported capital equipment planned

for export-oriented production (Overton).

a better opportunity to gain interest from foreign

companies for investment prospects.

Although there is still much improvement

needed in labor laws, the government is gradually progressing in making improvements for garment/ textile workers. According to a recent article published by the International Labor Organization, the RGC has made developments in a variety of areas. For example, the country has made stricter regulations on child labor:

“Poverty is a big problem for many families

in Cambodia. This puts pressure on parents to have their children work. Cambodia has laws regulating child labor. One challenge faced by the garment and footwear industries is that workers under the permitted working age of 15 years old may submit or borrowed fake documents during recruitment.

In addition, factories may not carry out sufficiently thorough recruitment processes. In order to avoid hiring underage workers, recruiters should give preference to job seekers with a mature appearance and should cross check documents to ensure that they are not falsified or borrowed. Minors (people 12

With these improvements, Cambodia has

COUNTRY OVERVIEW

COUNTRY OVERVIEW TEXTILE &APPAREL INDUSTRY

Overview

“The global textiles and garment industry

on trade in textiles and garment among World

forms an important component of world trade

Trade Organization (WTO) members. Trade in these

flows, particularly for some developing and least

products is now governed by normal WTO rules,

developed countries where clothing accounts for

which promote free trade agreement among the

large proportion of export. Trade pattern in textiles

members. Cambodia is one of the least developed

and garments are similar although textiles tend

countries who benefited from Generalized System

to be a capital-intensive business, while garment

of Preference (GSP) from many developed and

making is labor-intensive and usually relies on a

developing countries who are members of WTO. For

low-cost workforce. EU is the biggest exporter of

instance, “Everything But Arms” initiative that allow

textile product, followed by China. However, India,

all exported products from Cambodia to EU with

Turkey, Pakistan, Indonesia, Thailand and Mexico all

duty free and quota free except armaments” (PPS).

rank among the top 15 textile exporter whereas the developing countries such as Bangladesh, Vietnam, Cambodia, Indonesia are among the top exporters of garment products” (PPS).

“On January 1, 2005, the quota restraints

of the Multi-Fiber Arrangement (MFA) expired, finally bring to an end four decades of restriction 13

COUNTRY REPORT: CAMBODIA

Size

“Cambodia’s

garment

industry

is

the

and employs an estimated 350,000 people in more

country’s biggest industrial employer, and is

than 300 factories” (Business In Asia).

now struggling against stiffer global competition

and slowing demand. Many Chinese and Korean

are small and lower medium category in size

companies have established a presence in Cambodia

compared to the factories in Bangladesh and

for years. Now, more than 10 Chinese-owned

Vietnam. From a survey, it was found that about

factories have moved to cheaper markets, leaving

65% of the garment factories in Cambodia employ

hundreds of thousands of garment workers from the

500-2,000 workers and the most common size of

provinces facing destitution, reported Phnom Penh

factories with 500-1,000 workers. There are only

Times in early 2008. The garment industry earns 80

3% factories that employ more than 4,000- 5,000

percent of Cambodia’s foreign exchange earnings

workers” (Houssain).

“Most of the garment factories in Cambodia

FACTORY SIZES BY NUMBER OF WORKERS # of Workers

% of Factories

% of Workers

5000+

2%

8%

4000-4999

1%

4%

3000-3999

5%

12%

2000-2999

9%

19%

1000-1999

30%

32%

500-999

35%

20%

<500

18%

5%

Source: ACTIF Report

Overall Position in Country

“The United States and the European

negligible” (Houssain).

Union are Cambodia’s main export destinations,

respectively accounting for 70% and 25% of total

from less than US$20 million in 2002 (when Cambodia

garment exports. Exports to the non-quota-imposing

was granted quota- and duty-free access under the

Japanese market, the third largest in the world, are

Canada LDC market access initiative) to over US$70

14

“Cambodia’s exports to Canada have grown

COUNTRY OVERVIEW

million in 2003, or about 4% of total garment exports,

quota and duty-free access was granted by the EU to

indicating that Cambodia’s garment industry is

all least developed countries under the ‘Everything-

proving responsive to preferential market access

But-Arms Initiative’ in 2001. However, these growth

opportunities” (Houssain).

rates are significantly below those of the pre-EBA

period of 1998-2001 when exports to the EU grew at

“Cambodia’s garment exports to the EU have

also shown growth of about 15% per annum since

over 70% per annum” (Houssain).

CAMBODIA AND U.S. APPAREL & TEXTILE TRADE BALANCE REPORT 2011

2012

2013

U.S. Imports 2,626,545

2,577,615

2,610,949

U.S. Exports 6,093

6,478

7,808

-2,571,137

-2,603,141

Trade Balance -2,620,452 Source: U.S. Department of Commerce, Office of Textiles and Apparel

Government Support

“The Cambodian government has made

signed a memorandum of understanding with

significant progress in creating an enabling legal

Asian Development Bank and International Finance

framework for the private sector by enacting a

Corporation to set a National Arbitration Center to

number of important laws, such as the Law on

help resolve business disputes outside the court

Banking and Financial Institutions, the Insurance

system” (Houssain).

Law, a new Land Law, the Trademarks Law and

the Law on Enterprise Accounting and Auditing.

of factory association and trade unions in order

The Investment Law was also amended to simplify

to ensure that the sector establishes itself

the investment licensing process and modify tax

institutionally and the Garment Manufacturers

incentives offered to qualified investment projects.

Association of Cambodia (GMAC) was established

Further, new laws are also being drafted such as Law

in March 1996. GMAC has played an important role

on Commercial Enterprises, the Law on Commercial

in the development of the garment industry in

Arbitration, the Commercial Contract Law, the Law

Cambodia through lobbying with the government to

on Secured Transactions, the Insolvency Law, Anti-

seek GSP and MFN status. Trade unions also played

corruption Law, the Law on Customs and the Tourism

an active role in ensuring the respect of the ILO core

and Entertainment Law. Cambodian government

labor standards and Cambodia labor law. Although

“The government encouraged the creation

15

COUNTRY REPORT: CAMBODIA

there are problems with the labor unions however, they have had notable success in negotiating with the factory owners and the government in raising minimum wages from US$27 to US$ 40 in 1997 and from US$ 40 to US$ 45 in 2000. Recently, they also negotiated in raising minimum wages from US$ 45 to US$ 61, although they expected at a higher amount of US$82” (Houssain).

Growth Incentives

“Textile and garment industry in Cambodia does not enjoy cash incentives and direct support from the

government like Bangladeshi textile and garment industries. Some indirect incentives are there in the form of investment incentives, tax low income and corporate tax rates, exemption of custom duty on import of raw materials and capital machinery, incentives for special economic zones, etc. and these are also applicable to the garment industries in Cambodia” (Houssain).

Number of Suppliers

“In 2011, Cambodia’s garment and textile industry comprised more than 300 factories employing some

335,000 workers, of whom 91 percent were female, according to the Ministry of Commerce” (Thomasson).

NUMBER OF APPAREL FACTORIES IN CAMBODIA

Source: Garment Manufacturers Association of Cambodia 2010

16

COUNTRY OVERVIEW

Industry Analysis

“The industry began to grow after a the

generated around 90% of its total export earnings

country passed a new labor laws encouraging

and created employment opportunities for 27%

labor unions and allowed the International Labor

of the total industrial employments and it opened

Organization (ILO) to inspect factories and publish

job opportunities for a large number of illiterate

its findings. In turn, the United States agreed to cut

poor rural women into the labor market. China

tariffs on Cambodian garment exports, buying 70

continues to be the principal supplier of imported

percent of all of the country’s textiles in the 1990s.

fabrics, with a share of around 74 percent due to

Cambodia maintained its higher working conditions

its price advantage in quality categories. Fabric

after the deal expired in 2005, and garment-making

consumption in FY 2009-10 is estimated at 6 billion

has made the national economy one of the fastest

meters up by around 3 percent from FY 2008-09,

growing in the region” (Business In Asia).

consumption comprising of 2.4 billion meters for the

“The rapid growth of apparel industry in Cambodia

domestic sector and 3.6 billion meters for the export

has been accelerated by the influx of foreign firms

oriented RMG sector. Fabric imports in FY 2010-11

mainly originated from Asian region. Now a day,

are forecast at 2.25 billion meters, marginally lower

Cambodia is extremely dependent on its export

that the estimated 2.26 billion meters fabric imports

oriented ready-made garments industries, which

in FY 2009-10” (Houssain).

GROWTH OF CAMBODIA GARMENT INDUSTRY (2004-2010) Description

2004

2005

2006

2007

2008

2009

2010

# of Garment Factories

219

247

290

292

284

258

242

# of Direct Employees (000) # of Indirect Jobs (Projected)(000) Total Value of Export (US$ 000) Total Exports in Pieces (Dozen Percentage of Export Value on GDP

269.8

283.9

334

353

324.8

289.4

275.7

229.3

242

283.9

300.1

276.1

246.0

234.3

2,477.30

2,698.28

3,321.76

3,766.89

3,857.13

2,477.30

2,698.28

N/A

N/A

N/A

N/A

N/A

28,375,024

36,238,484

46%

43%

46%

43%

N/A

N/A

N/A

Source: Cambodia Investment Guidebook, Published by CDC

17

COUNTRY REPORT: CAMBODIA

“Currently, state of apparel industry in Cambodia can be described as below: •

More than 300 garment export-oriented factories are operating and registered with GMAC, with 94%

being 100% FDI, 1% joint venture and 5% locally owned.

•

Taiwan tops the list with 68 factories, followed by China, Hong Long, and Korea

•

335,000 workers (92% female) are employed, with average wage of $80 and minimum wages is US $61

•

Main markets are US, EU, and Japan” (Houssain)

“The Cambodia’s Free Trade Union (FTU) said that the factory owners are looking abroad for greater

productivity and lower costs. Kaing Monika, Manager at the Garment Manufacturers Association of Cambodia, commented that many manufacturers could move to Vietnam, Bangladesh or India if they could get lower costs. Production costs, oil and power, are high in Cambodia, and the demand for higher wages also put the country’s garment industry in danger, he said” (Business in Asia).

“Despite challenges, investment in Cambodia’s garment and textile industry has increased: Data from the Council for the Development of Cambodia (CDC) indicate that Cambodia gained 40 new garment factories valued at US$239 million just in the first half of 2012. Prospects for the industry are good, with the Ministry of Commerce reporting that garment and textile exports in 2012 increased 14 percent year-on-year to total US$4.6 billion” (Thomasson).

Garment Manufacturer’s Association of Cambodia

The Garment Manufacturers’ Association of

Cambodia (GMAC) was established in the year 1999, and grown to have 23 current employees and 350 members.

Members of this association receive the following services: representation at the policy level, capacity

EXPORTS BY MARKET Other

13%

building, information dissemination and sharing, and

30%

networking. Buyers receive services by being matched to suppliers (Hinrich Foundation).

The GMAC has the mission to collaborate with

all stakeholders in pursuing a beneficial business environment for the growth and development of the

US/Canada

57%

apparel industry. It also aims to provide quick and crucial information pertaining to the industry, along with supporting the Cambodian government and export 18

EU

Source: Hinrich Foundation

COUNTRY OVERVIEW

industry in the development of human capital. Lastly,

“With a premium of US$1.60 per worker

its goal is to embrace corporate social responsibility

per month, which is 50% co-funded by employers

in management principles so as to develop mutually

that are part of the Garment Manufacturers’

beneficial relationship and sustainable business

Association of Cambodia, the voluntary group

development (Hinrich Foundation).

health insurance scheme provides comprehensive

“The Garment Manufacturers’ Association of

coverage of medical services, from basic health care

Cambodia provides garment workers comprehensive

to complicated surgeries in contracted public health

coverage from basic health care to complicated

facilities, in and around Phnom Penh. As of 2013,

surgeries in contracted public health facilities.

the health micro-insurance scheme is undergoing

The coverage is subsidized by the employers. The

operational processes refinements so that it can

project aims to cover up to 20,000 garment sector

be transferred to the National Social Security Fund

workers during the project period before the health

(NSSF) for inclusion as a part of the government’s

insurance program is transferred (totally or in part)

social security provision for the formal sector. The

to the National Social Security Fund (NSSF). NSSF

Garment Manufacturers’ Association of Cambodia

will then make the participation in this insurance

had served 5,000 clients as of mid 2011” (CHMI).

program by the formal sector workers compulsory and be in charge of the management of health insurance program going forward” (CHMI).

GARMENT FACTORY STRIKES IN CAMBODIA

Source: GMAC

19

COUNTRY REPORT: CAMBODIA

BUSINESS ETIQUETTE TYPE OF CULTURE

“Before 1970, Cambodian culture and artistic expression were informed by the greatness of the past. The

Khmer empire owed much to Indian influence, but its achievements also represented original contributions to Asian civilization. The magnificent architecture and sculpture of the Angkor period (802–1432), as seen in the temple complexes at Angkor Wat and Angkor Thom, marked a high point of Khmer creativity. Following the capture of Angkor by the Tai (15th century) and the crumbling of the empire, the region underwent four centuries of foreign invasions, civil war, and widespread depopulation. It was not until the establishment of the French protectorate in 1863 that internal security was restored, the country’s borders stabilized, and efforts undertaken to revive traditional Khmer art forms. After Cambodia gained independence from France in 1953, the government placed particular emphasis on accelerating that revival. This coincided with the rapid expansion of primary and secondary school facilities and the emergence of education as the most important factor of social mobility” (Overton).

“The leadership of Democratic Kampuchea,

inspired in large part by the People’s Republic of China, subordinated culture to its own interpretations of MarxistLeninist doctrines. The government in Phnom Penh after 1979, however, made serious efforts to restore such traditional forms of artistic expression as Cambodian classical music, ballet, and popular theatre. Foreign aid from India and Poland was used to clean and maintain 20

BUSINESS ETIQUETTE

some of the temples at Angkor, which had suffered from years of vandalism and neglect. Those aspects of high culture have had to compete for people’s attention with popular music and videotapes imported from Hong Kong, Thailand, and elsewhere” (Overton).

“Cambodia is a collective society - individuals

take second place to the group whether this is the family, neighborhood or company. In such societies, etiquette and protocol guidelines are used to maintain a sense of common harmony - for example, subtle communication styles are employed in order to minimize the chances of causing offense to others. The concept of face also ties in with this collective outlook. Protecting both one’s own and theirs, face is extremely important. Face can roughly be translated as a combination of honor, dignity and public reputation that is attributed to a person. Face can be lost, given and accrued.

Foreigners in Cambodia need to be aware of the mechanics of face to ensure they do not cause anyone to lose face as a result of unintentional actions. Face is lost when someone is criticized, embarrassed or exposed in public. It can be given by complimenting someone publicly, i.e. for their business acumen or hospitality” (Kwintessential).

“Cambodians have great respect for hierarchical relationships. Almost everything in Cambodian life is

led by hierarchical position: parents are superior to children, teachers to students and bosses to subordinates.

Your Cambodian counterparts will always ask you questions to be able to place you hierarchically to know how to behave” (Communicaid).

Gender Roles

“Gender issues tend to differ a bit on the urban/rural divide, but women are still seen primarily as

caretakers and homemakers although it is beginning to change. Women generally marry younger than men and are expected to be virgins. If a family needs help running a family business or a home, a daughter, especially the youngest daughter, may stop studying at school to take on this role. In the countryside, there are woman teachers, doctors, market vendors, business people, but there is still a pervasive traditionalist view of gender roles. Because women are expected to be the primary caretakers and homemakers, they 21

COUNTRY REPORT: CAMBODIA

are also responsible for managing the money of the household and the education of the children. They are expected to attend public social functions, and married women may sometimes go alone to represent their families at gatherings. While young Cambodia men have some social independence, young Cambodian women do not often go out socially unescorted, especially at night. Expectations seem to be different for foreign women, and although a foreign woman exercising her independence may not be well understood by some Cambodians, it will probably be respected. Smoking is generally acceptable for men, but not for women. For women, smoking seems to associated with prostitution” (Culture Crossing).

“Women or girls should be respected at work or home. They are not allowed to touch, hug or kiss

or sit with men who are not their relatives. Some families are offended when the girls are asked to go out without their permission. Women or girls are required to be calm and soft mannered, and to stay home, do housework, cook, and obey their husband. Sometimes they are not allowed to sit and talk with a group of men. Traditionally, men are the breadwinners in the family. They make all the decisions in the family. They have power or control over any issues in the families. Children are mostly the responsibility of the mother.

Nevertheless, some women are in the workplace and today, more and more women can be found at the management level” (FAITC).

“Bilateral kinship and a strong tendency toward matrilocality leave women in a position of relative

strength. The fact that women control family finances may not be regarded as a sign of superiority but represents real power in practical terms. However, women have much less access than men to the highest positions of political and economic power” (Arston).

“Traditional codes of behavior for women are more elaborate and strict than those for men. Their role

is often marked symbolically as inferior. While traditional art and contemporary media images of women show them as active agents, they often are depicted as physically vulnerable to men. Domestic violence against women at the village level is widespread, and those women have little legal recourse” (Arston).

22

BUSINESS ETIQUETTE

Negotiations

“Bargaining is usually expected; don’t get

setting, some bargaining is expected. Some vendors

too emotional, as this will be viewed as a sign of

may see a foreigner and charge several hundred

weakness. Cambodians will generally avoid using no

times the cost of the item, but many will give you a

in answering questions. They tend to say, “maybe”,

fair price after some bargaining. A good benchmark

or “that would be difficult” or even “yes” or “no

is to try and pay half to two-thirds the price quoted”

problem” even if the answer is really “no”. In a market

(Cultural Crossing).

Relationship Building

In Cambodia, building a relationship on

issues. Criticizing someone in public and not staying

mutual trust is imperative so initially time should

true to promises are various ways that may cause

be spent on getting to know your counterparts

people to lose face” (Communicaid). Try not to mix

(Kwintessential).

private life and work.

Cambodians

often

value

relationship building and harmony, so it’s best to avoid hard selling, pressure tactics, and any type of conflict or confrontation (Communicaid). Instead it is better to ask normal neutral questions such as, “how are you doing today?”, “how is your family?”, “how is business going?”. Being friendly and trustworthy as much as possible is key, as well as being aware of other people’s comfort level. Asking to go out for coffee or breakfast is acceptable, but be cautious when asking someone to go out for date.

Avoid losing face with someone from the

workplace. “The concept of face is essential in Cambodian culture.

The Cambodians will do

anything to prevent loss of face, even if it means avoiding confrontation or telling others what they want to hear rather than dealing with immediate

23

COUNTRY REPORT: CAMBODIA

Social & Cultural Elements

“Dress should be normal and clean; no requirement to

have tie. It is recommended that you wear local/traditional clothes when there will be celebrations or events” (Culture Crossing). Men should wear nice pants and collared shirts. As mentioned earlier a tie and jacket are not a must, but it is recommended to have just in case. Up-kept grooming is appreciated in this culture as well. When conducting business it is suggested that women wear blouses and ankle length skirts. Trousers can be worn, but a matching jacket is a must. Women should avoid short, tight-fitting and sleeveless garments if possible. Jeans are not recommended but maybe more appropriate in rural areas (Culture Crossing).

“When you first meet and greet someone at family or work

occasions with the level of respect as described above, you must stand about half meter/ up to 1 foot away from the person and salute by placing both hands together palm in front of the chest with the fingers pointing upward. At a home or temple you need to take you shoes off as well. When greeting a monk, you need to salute them and then beg a spirit for help, or bow down to the floor and salute. When going to see the King the same rules apply. Avoid using names at the first contact. In a family setting, use Lok Ta for a grandfather, Lok Yeiv for a grandmother and Om or Pou, depending on the age of the elder. For a person older than one year you would use Bang.

At work you can use Lok or a person’s title, depending on the work environment. Make sure you bow your head a little bit when you see a person higher rank, as you would for an elder, a monk or a king). Ask them if they allow you to use their name; otherwise you will offend them by using it. Som-peahs are made during initial introductions, or if people have not seen one another in a long time, but it is not necessary to bow every time you meet a friend or coworker. A simple wave hello is fine” (Culture Crossing).

“Greetings

between

Cambodians

are

dependent on the relationship/hierarchy/age between the people. The traditional greeting is a

24

BUSINESS ETIQUETTE

bow combined with a bringing of the hands together at chest level (similar to bringing hands together for prayer).If one intends to show greater respect the bow is lower and the hands brought higher. With foreigners Cambodians have adopted the western practice of shaking hands. Women may still use the traditional Cambodian greeting. The simple rule is to respond with the greeting you are given. In Cambodia people are addressed with the honorific title “Lok” for a man and “Lok Srey” for a woman followed with the first name or both the first and surname” (Kwintessential).

“Greetings in Cambodia depend on levels

of respect. It is important in the family environment to be more respectful to elders (grandparents) and to people who are older than you. The older the person, the more respect they are given. At work, the highest respect would be for your boss/president or manager and you would greet anyone below them afterwards. At temple or a ceremonial place, the monks and priests would receive the highest level of respect. Many educated Cambodians will follow Western customs and offer a handshake, but it can’t hurt to som-peah before shaking hands. Hand-shakes tend to be more on the gentle side and do not linger long. However you greet, you should remember to smile” (Culture Crossing).

“Business cards should be exchanged after the initial

introductions. Have one side of your card translated into Khmer if possible. Present your card so the Khmer side is readable to the recipient. Use the right hand or both hands when offering or receiving a business card. If the receiver is of higher social standing, you should support your right elbow with the fingers of your left hand. It’s best to never write on or fold a business card you are given. It is important to treat business cards with respect as the way you handle 25

COUNTRY REPORT: CAMBODIA

the card is indicative of the way you will treat the person” (Kwintessential).

“Titles are somewhat important and to be safe it is best to address people by using their professional

title or Mr., Mrs., or Miss followed by the surname. Cambodians will often use the honorific title “Lok” for a man and “Lok Screy” for a woman followed by the first name or both the first and surname” (Kwintessential).

“Rotating one or both hands held up in front of the body (similar to the Queen of England’s wave but

faster) means “no”, “I don’t want it”, “we’re closed”, etc. To beckon someone, hold your hand palm downwards with the fingers pointing towards the ground and waggle them loosely in a scratching motion. Beckoning with the palm upwards (Western style) is considered rude. Cambodians tend to have two types of smiles.

One indicates pleasure and the other embarrassment. It is sometimes hard for foreigners to tell them apart, but this is why some Cambodians will smile or giggle nervously when imparting bad news. It is normally courteous to remove your shoes before entering somebody’s home. It is required when entering a Buddhist temple” (Culture Crossing).

COLOR SYMBOLISM IN CAMBODIA WHITE peace purity humility innocence silence elegance modesty

PINK love passion delicacy gentleness grace gratitude appreciation

Source: Orchid Cambodia

26

YELLOW happiness friendship enthusiasm success pride luxury

PURPLE royalty ceremony dignity success accomplishment

ORANGE strong love desire enthusiasm satisfaction confidence

BLUE serenity peace inspiration creativity

RED youth love passion courage admiration constancy respect

GREEN resilience youth health pleasure renewal optimism

BUSINESS ETIQUETTE

“In a business setting, slightly more than arms

length distance is appropriate. This is the same for either sex. When interacting with friends or family, personal often seems to be a question of taste, so its best follow their lead. Typically an arm’s length is the norm. In a business setting, physical contact may be inappropriate, especially between men and women.

When interacting with close same sex friends, close physical contact is acceptable.

Holding hands

and hugging are considered nonsexual displays of affection. Friends of the opposite sex and partners should be careful. Public displays of affection tend to be culturally inappropriate and offensive” (Culture Crossing).

“Gifts are usually given at Cambodian New

Year (Chaul Chnam). Birthdays are not big events like in the West and people of the older generation may not even know their date of birth. Unlike most other cultures, Cambodians do not celebrate birthdays. In fact, many older people may not know the exact date of their birth. A small gift can also be taken if invited to someone’s home for food. If invited to a home, take nicely presented fruit, sweets, pastries or flowers.

Avoid giving knives. Gifts are usually wrapped in colorful paper. Do not use white wrapping paper, as it is the color of mourning. When giving gifts use both hands. Gifts are not opened when received” (Kwintessential).

“Very simple gifts are sometimes exchanged

after a first meeting. They don’t have to be too elaborate. Floral/fruit baskets are common. If invited to a Cambodian home it is appropriate to bring sweets, pastries or good quality fruit baskets. Gifts

should be wrapped, and presented with the right hand. If the receiver is of higher social standing, you should support your right elbow with the fingers of your left hand. If gifts are too large, they can be given with both hands” (Culture Crossing).

“The view of time tends to vary a bit between

the countryside and the city. In the country, when someone is busy, they may choose to finish with their activity and arrive late to a scheduled business appointment or meeting, although this of course depends on whether or not someone is being paid to show up. While it seems not rude to be late, if someone needs you to help him or her, they will expect timeliness. Punctuality sometimes seems only valued by the person who is asking for the meeting/assistance, but generally in rural areas, allowances are made and time is flexible, because unreliable transportation, weather, health services, etc. demand it” (Culture Crossing). “Smile and joke as much as you can. It’s the Cambodian way and people will be more willing to help you” (Frommer’s).

27

COUNTRY REPORT: CAMBODIA

“Meetings do not stick to any schedule or

agenda. Issues may be tackled separately and altogether if need be - once an issue has seemingly been resolved it may later be addressed again.

Meetings will continue until the attendees feel everything has been satisfactorily covered. Building a relationship on mutual trust is crucial so initially time should be invested in getting to know your counterparts. Hierarchy is important in Cambodian society, so it is always best to defer to the most senior person in the room when it comes to beginning and

In fact if Cambodians disagree with someone they

guiding conversations. The most senior person will

would rather remain silent than make any comment.

usually dictate the duration and flow of discussion

If they disagree with an idea, they generally remain

of the meeting” (Kwintessential).

silent. Periods of silence are considered acceptable

“Small talk should always be employed at

and are to be expected. Avoid interrupting, showing

the beginning of meetings. Cambodians are very

displeasure through facial or eye movements and

indirect communicators so some reading between

talking over someone. Be patient. If unsure about

the lines is a necessary skill. They will always

statements be sure to double check. Cambodians

consider the implications of making statements

prefer ideas to be brought forward in a gentle way

or using particular words especially if it involves

and to wait for others to respond. Pushy, pressured

anything negative as this draws in the issue of face.

or boastful communication styles are a real turn-off” (Kwintessential).

Dining

“The first challenge is cutlery. There will be

push food onto the spoon held in your right hand.

an array of implements in a glass of water on your

For soup, use chopsticks to pick out the meat and

table, which can be cleaned by a simple wipe with

noodles and the spoon for liquid elements. Cutlery

a paper towel. What you won’t find, however, is a

that has been in your mouth should definitely not

knife. Cambodians generally eat with a spoon and

be put into communal dishes, if you’re eating family

fork, unless there’s a bowl of soup in front of them, in

style — which means sharing plates placed in the

which case it’s a spoon and chopsticks. It’s impolite

center of the table” (Gilbert).

to put the fork into your mouth – instead use it to

28

“Table

manners

are

fairly

formal.

If

BUSINESS ETIQUETTE

unconfident with the dos and don’ts simply follow

social gatherings, for example weddings, women

what others do. When invited to the dining table

may drink with men (Culture Crossing). It’s best to

wait to be told where to sit as you would not

avoid talking about business in social settings such

want to upset any hierarchical arrangements. The oldest person is usually seated first. Similarly the eldest person should start eating before others.

Communication

“Verbal communication tends to be non-

Do not begin eating until the eldest person starts”

confrontational and indirect. Many Cambodians

(Kwintessential).

will offer you the response they assume you want

to hear, regardless of their feelings or plans, rather

“While dining, feel free to indulge in slurping,

than offend you in public. Be prepared to receive seemingly contradictory information from different sources, and try to stay calm in these situations.

Showing frustration with people in public does not usually win you any points. It may be more helpful to ask various simple yes/no questions of different people in order to put together a picture of the situation than to ask complicated how/why questions that may make someone uncomfortable.

When there is a conflict, it is often resolved through an intermediary. Don’t expect to discuss the issue lip smacking and any other noises you can find to

directly with the person who has taken offense. Once

convey enjoyment of the meal. You won’t get your

the problem has been resolved, the two parties can

hand slapped for eating with your mouth open, or

meet congenially without addressing the conflict”

for putting your elbows on the table. Bones and

(Culture Crossing).

used paper tissues go straight onto the floor or into

a dustbin provided under the table. Dishes will often

may be substituted for “maybe”, “possibly” or

not be cleared from your table until you pay the bill”

even “yes”. It’s best to pay attention to non-verbal

(Gilbert).

cues such as facial expressions and body language.

Cambodians

generally

do

not

“Yes” does not always mean “yes” and “no”

drink

Cambodians tend to have two types of smiles. One

alcohol. But alcohol consumption has increased

indicates pleasure and the other embarrassment.

in recent years as it correlates to status and

This is why some Cambodians will smile or giggle

discretionary income. For women, drinking seems

nervously when imparting bad news” (Cultural

to be associated with prostitution. Although at large

Crossing).

29

COUNTRY REPORT: CAMBODIA

TRADE AGREEMENTS U.S.-Cambodia Trade Agreements

“Cambodia

joined

the

International

TIFA agenda” (U.S. Commercial Service).

Organization for Standardization (ISO) in 1995

and is also a member of the ASEAN Consultative

is the Cambodia Bilateral Textile Agreement this

Committee on Standards and Quality (ACCSQ).

agreement covers textiles relating to trade in cotton,

Cambodia ratified the ASEAN Framework Agreement

wool, man-made fiber, non-cotton vegetable fiber

on Mutual Recognition Arrangements. It has also

and silk blend textiles. This also includes textile

signed numerous trade agreements, including the

product between the government of the United

U.S.-Cambodia Trade and Investment Framework

States and the Royal Government of Cambodia (US

Agreement (TIFA) in 2006, which facilitates and

Embassy).

promotes greater trade and investment of the two

countries and provides a forum to address bilateral

Bilateral Textile Agreement (BTA), a unique agreement

trade and investment issues. Two successful

that links labor standards to trade. The BTA has been

meetings were held under the TIFA in 2007 in which

an unqualified success. It has boosted Cambodia’s

the U.S. and Cambodian governments discussed

image as a labor friendly country and contributed

WTO accession requirements, trade facilitation and

significantly to its economic development by

economic development initiatives, and progress on

generating employment for over 250,000, mostly

intellectual property rights. In 2008, several bilateral

rural women, as well as providing significant

working level meetings were held to advance the

amounts of foreign exchange. The BTA is responsible

30

Another trade agreement Cambodia has

“In 1999, Cambodia and the US signed a

TRADE AGREEMENTS

for a robust and booming garment industry with

in the Cambodian labor code” (US Embassy).

exports of $1.6 billion in 2003, representing some

40% of Cambodia’s nominal Gross Domestic Product

agreements between the Royal Government of

(GDP) and 73% of Cambodia’s total exports.

Cambodia and the United States, it provides a

The US has been Cambodia’s single largest trading

better opportunity for our swim wear company

partner by far since 1998. Exports to the US totaled

to source from this nation in order to successfully

$1.5 billion in 2004, accounting for at least 70% of

manufacturer merchandise.

With the implementation of these trade

Cambodia’s total exports and over 35% of Cambodia’s entire GDP. US exports to the Cambodia have been minuscule in comparison, albeit increasing from approximately $20 million in 1999 to $59 million in 2004” (US Embassy).

“Products of Cambodia shipped in excess

of authorized limits in any Agreement Period may be denied entry into the United States. Any such shipment denied entry maybe permitted into the United States and charged to the applicable limit in the succeeding Agreement Period. Products of Cambodia shipped in excess of applicable limits in any Agreement Period will, if allowed entry into the United States during that Agreement Period, be charged to the applicable limit in the succeeding Agreement Period” (US Embassy).

“The Parties seek to create new employment

opportunities and improve living standards and working conditions through an enhanced trading relationship; affirm respect for each Party’s legal system and seeking to ensure that labor laws and regulations provide for high quality and productive workplaces; and seek to foster transparency in the administration of labor law, promote compliance with, and effective enforcement of, existing labor law, and promote the general labor rights embodied

Laws of Impact

Laws set up by the United States government

that could possibly affect the importation of Nix products include the following: the Care Labeling Rule, Federal Trade Commission Act, and Textile Fiber Products Identification Act. The following paragraphs will explain what each law covers.

“The

Care

Labeling

Rule

requires

manufacturers and importers of textile wearing apparel and certain piece goods, in or affecting commerce, as “commerce’’ is defined in the Federal Trade Commission Act, to provide regular care instructions at the time such products are sold to purchasers through the use of care labels or other methods described in this rule. Manufacturers and importers of textile wearing apparel and certain piece goods are covered by this regulation. This includes any person or organization that directs or controls the manufacture or importation of covered products” (Federal Trade Commission)

“The Federal Trade Commission Act is a

commission is created and established, to be known as the Federal Trade Commission (hereinafter referred to as the Commission), which shall be

31

COUNTRY REPORT: CAMBODIA

composed of five Commissioners, who shall be

number (“RN number”); and (3) the name of the

appointed by the President, by and with the advice

country where the product was processed or

and consent of the Senate. Not more than three of

manufactured. As part of its ongoing regulatory

the Commissioners shall be members of the same

review program, the Commission published an

political party. The first Commissioners appointed

ANPR in November 2011 seeking comment on the

shall continue in office for terms of three, four, five,

economic impact of, and the continuing need for, the

six, and seven years, respectively, from September

Textile Rules; the benefits of the Rules to consumers;

26, 1914, the term of each to be designated by the

and the burdens the Rules place on businesses.

President, but their successors shall be appointed

The ANPR also sought comment on specific issues,

for terms of seven years, except that any person

including whether the Commission should amend

chosen to fill a vacancy shall be appointed only for

the Rules to incorporate the revised version of

the unexpired term of the Commissioner whom he

International Organization for Standardization

shall succeed: Provided, however, That upon the

(“ISO”) standard entitled “Textiles—Man-made

expiration of his term of office a Commissioner shall

fibers—Generic

continue to serve until his successor shall have been

disclosure requirements for products containing

appointed and shall have qualified. The President

elastic material and trimmings, clarify disclosure

shall choose a chairman from the Commission’s

requirements for written advertising, and modify

membership. No Commissioner shall engage in

the Rules’ guaranty provisions” (Federal Trade

any other business, vocation, or employment. Any

Commission, Textile Fiber Products Identification

Commissioner may be removed by the President for

Act).

inefficiency, neglect of duty, or malfeasance in office.

A vacancy in the Commission shall not impair the right of the remaining Commissioners to exercise all the powers of the Commission” (Cornell University Law School).

“The Textile Fiber Products Identification

Act (“Textile Act”) and Rules require marketers to, among other things, attach a label to each covered textile product disclosing: (1) The generic names and percentages by weight of the constituent fibers in the product; (2) the name under which the manufacturer or other responsible company does business or, in lieu thereof, the company’s registered identification 32

names,”

2076:1999(E),

clarify

IMPORT CLASSIFICATION

IMPORT CLASSIFICATION HARMONIZED TARIFF SCHEDULE

According to the Harmonized Tariff Schedule

“H” as a prefix to the appropriate 10-digit chapter

(HTS) of the United States, our line of swim wear falls

62 tariff number. Certain garments of chapter 62,

in to the Chapter 62 code of products, with a specific

manufactured (cut and assembled) from fabric

code of 6211.12. In addition, swim wear has a general

formed in the United States, may be eligible for entry

rate of duty of 11.8%, while other rates go for 90%

under the Outward Processing Program for textiles

(USTIC). According to the HTS document, “certain

and apparel. Eligibility must be in compliance with

garments of chapter 62 assembled abroad from

procedures established by the Committee for the

components formed and cut in the United States

Implementation of Textile Agreements (CITA). The

which, after assembly have been subject to bleaching,

importer is required to identify such garments on

garment dyeing stone-washing, acid-washing or

the entry summary or withdrawal forms by placing

perma-pressing abroad, may be eligible for entry

the symbol “S” as a prefix to the appropriate 10-digit

under a Special Access Program or Special Regime.

chapter 62 tariff number” (USTIC).

Eligibility must be established under a bilateral agreement, and entry must be in compliance with procedures established by the Committee for the Implementation of Textile Agreements. The importer is required to identify such garments on the entry summary or withdrawal forms by placing the symbol 33

COUNTRY REPORT: CAMBODIA

LOGISTICS IMPORTATION

“Globally, Cambodia stands at 114 in the ranking of 189 economies on the ease of trading across borders.

The rankings for comparator economies and the regional average ranking provide other useful information for assessing how easy it is for a business in Cambodia to export and import goods” (Doing Business).

Cambodia has approximately 32 freight companies that are will ship products around the globe (Freightnet).

A freight company our company is interested in using for the shipment of our merchandise is Hapag-Lloyd.

This company ships from Sihanoukville to Los Angeles, CA which is a city near our store (SeaRates). For a look at the shipping route please refer to the Appendix. According to data collected by Doing Business, exporting a standard container of goods requires 8 documents, these documents include: Bill of Lading, Commercial Invoice, Customs export Declaration, Export permit, Inspection Report (from Camcontrol), Insurance certificate, Packing List, and Terminal handling receipts. In addition, it takes approximately 22 days and roughly $795 per container.

Importing the same container of goods requires 9 documents, which include the same documents needed to export as well as a cargo release order. Importing takes 24 days and costs $930 per container (Doing Business).

“Garments and footwear are the only major export

item. The main market is USA served via Singapore.

34

LOGISTICS & IMPORTATION

Forecasts are for stable volumes, but business is seasonal â&#x20AC;&#x201C; May/June is the slow time. There are over 200 factories. Most imports into Sihanoukville are raw materials in containers coming from China, Taiwan, Philippines, Indonesia. RCL is the biggest carrier. Some project cargo is handled and pipes are imported for gas production and mining and exploration in the north. Some cargo is coming through Phu My (Vung Tau), for instance electrical generator sets. Cement is being imported from Thailand, but now supply may be shifting to Philippines. On the Mekong, the trade flows are reported to be all containerized. Most is to/from Vietnam and China via transshipment in HCMC (Vung Tao). Major imports comprise tiles and other roofing materials from China and Taiwan, empty cans for the breweries and raw materials for the garment factories steel plate and consumer goods. Some used clothing is also imported. Exports from Phnom Penh are predominantly footwear (particularly rubber boots) and garmentsâ&#x20AC;? (PDP Australia Pty Ltd/Meyrick and Associates).

35

COUNTRY REPORT: CAMBODIA

IMPORT/EXPORT REQUIREMENTS U.S. Importing Requirements

“An individual may make his/her own

value of merchandise. The final appraisement is

Customs clearance of goods imported for personal

fixed by Customs. Several appraisement methods

use or business. All merchandise coming into the

are used to arrive at this value. The transaction

United States must clear Customs and is subject

value serves as the primary basis of appraisement.

to a Customs duty unless specifically exempted

Transaction value is the price actually paid or

by law. Clearance involves a number of steps:

payable by the buyer to the seller for the goods

entry, inspection, appraisement, classification and

imported. Other factors may also add to the dutiable

liquidation” (UMass Amherst).

value of merchandise, such as packing costs, selling

“The U.S. Customs Service does not require an

commissions, royalty or licensing fees, etc. When

importer to have a license or permit. Other agencies

the transaction value cannot be determined, then

may require a permit, license, or other certification,

the value of the imported goods being appraised

depending on what is being imported. Customs

is the transaction value of identical merchandise.

entry forms do ask for your importer number. This

If merchandise identical to the imported goods

is either your IRS business registration number, or if

cannot be found or an acceptable transaction value

your business is not registered with the IRS or you do

for such merchandise does not exist, then the value

not have a business, your social security number”

is the transaction value of similar merchandise.

(UMass Amherst).

Similar merchandise means merchandise that is

produced in the same country and by the same

36

“The importer must declare the dutiable

IMPORT/EXPORT REQUIREMENTS

person as the merchandise being appraised. It

ensure that his or her goods being imported

must be commercially interchangeable with the

meet admissibility requirements - such as proper

merchandise being appraised. The identical or

marking, safety standards, etc. - and that the proper

similar merchandise must have been exported to

permits, if required, have been obtained in advance

the United States at or about the same time the

of the goods arriving in the United States” (UMass

merchandise being appraised is exported to the

Amherst).

United States” (UMass Amherst).

“The

importer

must

determine

the

There are several documents required in

order to import into the United States these include:

classification number of the merchandise being

Bill of lading, Cargo release order, Commercial

imported. The Harmonized Tariff Schedule of the

Invoice, Customs import declaration, Import permit,

United States (HTSUS), issued by the United States

Insurance certificate, Packing List, Tax certificate,

International Trade Commission, prescribes the

and Terminal Handling receipts. These will be further

classification of merchandise by type of product;

defined in the appendix.

e.g., animal and vegetable products, textile fibers and textile products” (UMass Amherst).

“The importer must pay estimated duties

and processing fees if applicable. Customs makes the final determination of the correct rate of duty.

The duty rate of an item is tied to its classification number. The HTSUS provides several rates of duty for each item: general rates for countries with which we maintain normal trade relations (NTR); special rates for special programs (free, or lower than the rates currently accorded NTR countries); and column 2 rates for imports not eligible for either general or special rates. Customs duties are generally assessed at ad valorem rates, a percentage of which is applied to the dutiable value of the imported goods. Some articles, however, are dutiable at a specific rate (so much per piece, liter, kilo, etc); others at a compound rate of duty. If formal entry is required - the importer may have to post a surety bond” (UMass Amherst).

“It is the importers responsibility to

Cambodia Exporting Requirements

“All exports goods must be examined by the

General Department of Customs and Excise (GDCE) as a spot check, primary or in detail. Goods are released when documents are approved, the export tax if any is paid for, and examination is completed.

An Export Office at GDCE headquarters takes charge of garments exports, which examines and seals cargo with a container bolt seal (at factory premises) that conforms to international standards. Once they reach Sihanoukville Port, their documents and container seal are checked by GDCE and they are loaded on vessels. Other goods cleared at Sihanoukville Port such as wood products undergo Customs formality and examination on company premises in the Sihanoukville area by GDCE staff” (CDC).

“The majority of goods exported through

37

COUNTRY REPORT: CAMBODIA

Sihanoukville Port are garment exports. Most of

to be paid: 1) Natural rubber, 2) Uncut (unprocessed)

these exported goods are examined by the Export

precious stones, and 3) Fish and crustaceans,

Office in Phnom Penh, and the containers are sealed

mollusks and other aquatic products. There are

there. Customs at Sihanoukville Port do not reopen

three rates of taxes to be paid for exported goods:

the containers. They generally check the related

1) 2%, 5% and 10% for natural rubber (Cambodia

documents and verify the seals on the containers. If

temporary uses cascade rates for this product), 2) 5%

everything is in order, containers are loaded on the

and 10% for processed wood (depends on level and

vessels for export. There are some goods cleared for

type of processing), 3) 10% for fish and other aquatic

export at Sihanoukville such as wood products and

products, and uncut precious stone” (VisaHQ).

garments from factories located in Preah Sihanouk

area. The chief of customs of Sihanoukville Port

order to import into the United States these include:

sends staff to carry out the customs formality and

Bill of lading, Commercial Invoice, Customs export

examination at the investors’ premises” (CDC).

declaration, Export permit, Insurance certificate,

Cambodia Customs has established the

Packing List, Inspection report, and Terminal

following rules for the free export of goods. “There

Handling receipts. These will be further defined in

are three items of exported goods where taxes have

the appendix.

38

There are several documents required in

MANUFACTURING & PRODUCTION

MANUFACTURING & PRODUCTION

Wincam Corporation has key clients like Old

well (Panjiva). This supplier would be a good option

Navy (Canada), which is located in Toronto, Canada.

for our company due to the fact that has experience

This company has received 91 shipments from them

in Women’s swim wear and it has well-known clients,

which included Women’s swim wear composed

signifying that it is a reliable supplier that produces

of Nylon Spandex. Another key client includes

high-quality products. In addition, its top countries

Target Canada Co. located in Ontario, Canada and

for shipments is the United States which is where

has received 25 shipments from Wincam. These

our business will be located.

shipments also included swim wear for women as Name Location Web Address Customers Expertise Capacity

Lead-Times Founding Date

Wincam Corporation Phnom Penh N/A but email available wincam2005@everyday.com.kh Forever 21 Inc., Old Navy (Canada) Inc., Target Canada Co. Spandex, nylon, nylon spandex, swim wear Total Shipments Sent 436 Total Volume Sent 2,189,552 kg Average Shipment 5,021 kg N/A N/A

Source: Panjiva

39

COUNTRY REPORT: CAMBODIA

Quicksew (Cambodia) Ltd. has major clients

Quicksew. These shipments also included swim

such as Pacific Sunwear of California (PacSun),

wear (Panjiva). This supplier would be a good choice

which is located in Anaheim, CA. This company has

for our company due to the fact that its expertise

received 4 shipments from them which included

in Women’s swim wear and it has had well-known

Ladies Swim wear composed of Nylon Spandex.

clients, signifying that it is a reliable supplier that

Another key client includes Spanx, Inc. located in

produces high-quality products.

Atlanta, GA and has also received 4 shipments from Name Location Web Address Customers Expertise Capacity

Lead-Times Founding Date

Quicksew (Cambodia) Ltd Phnom Penh http://www.quicksew.com.kh/ Pacific Sunwear of California, Spanx, Dick’s Sporting Goods Ladies Swim wear, Girl’s Swim wear Total Shipments Sent 727 Total Volume Sent 4,246,850 kg Average Shipment 5,841 kg N/A N/A

Source: Panjiva

Reliable Source Industrial Cambodia Co.,

Ltd. has key clients like Under Armour Inc. which is

Name

Reliable Source Industrial Cambodia Co., Ltd.

Location

Phnom Penh

Web Address

http://www.rsiapparel.com

Customers

Under Armour Inc., Dick’s Sporting Goods, Nike Inc.

Pittsburgh, PA and has received 118 shipments from

Expertise

Sportswear, swim wear

RSI. These shipments also included sportswear for

Capacity

Total Shipments Sent

680

women as well (Panjiva). This supplier would be the

Total Volume Sent

5,537,832 kg

best option for our company due to the fact that has

Average Shipment

8,143 kg

experience in Women’s swim wear and sportswear

Pieces exported per year 25M

located in Baltimore, MD. This company has received 286 shipments from them which included Women’s sportswear composed of Cotton knit. Another key client includes Dick’s Sporting Goods located in

which is a combination of our products and it has

Lead-Times

N/A

well-known clients, signifying that it is a reliable

Founding Date

1972

supplier that produces high-quality products.

Source: Panjiva

40

MANUFACTURING & PRODUCTION

Agx Lines Inc. has important clients like AE

Name

Agx Lines Inc.

Eagle America Inc. which is located in Jamaica, NY.

Location

Phnom Penh

This company has received 3 shipments from them

Web Address

N/A

Customers

ClearFreight, Inc., AE Eagle America Inc., Pier 17 Honduras

Expertise

Polyester, cotton, knitted, ladies, spandex

Capacity

Total Shipments Sent

272

Total Volume Sent

4,240,652 kg

Average Shipment

15,590 kg

which included Women’s knit jumper (Panjiva).

This supplier would be a possible alternative for our company due to the fact that has experience in Women’s knitted swim wear and it has worked with American clients, signifying that it knows how to work with U.S. companies. In addition, it also has a high capacity rate meaning that companies see it as a reliable and stable supplier.

Lead-Times

N/A

Founding Date

N/A

Source: Panjiva

Quint Major Industrial Co., Ltd. has important

windbreaker jackets made of woven nylon (Panjiva).

clients such as Nautica Men’s Sportswear which is

This supplier could be a possibility for our company

located in New York, NY. This company has received

due to the fact that has worked with well known

79 shipments from them which included men’s swim

clients and experience working with nylon which is

trunks composed of nylon fabric. Another client is

one of the fabrics we use in our products. In addition,

Kohl’s Department Stores Inc. which is located in

Quint has experience with manufacturing swim wear

Menomonee Falls, WI. This company has received

which is our product category.

16 shipments from Quint which include men’s Name Location Web Address Customers Expertise Capacity

Lead-Times Founding Date

Quint Major Industrial Co., Ltd. Kandal Province N/A but email available bormeyic@penansain.com.ka Nautica Men’s Sportswear, Kohl’s Department Stores Inc., Taylor Made Adidas Golf Co. Men, polyester, woven Total Shipments Sent 299 Total Volume Sent 1,704,212kg Average Shipment 5,699kg N/A N/A

Source: Panjiva

41

COUNTRY REPORT: CAMBODIA

SOURCING GUIDELINES NIX CODE OF CONDUCT

Nix and its employees must, at all times,

belief in protecting human rights and maintain

comply with all applicable laws and regulations.

the environment. All Nix suppliers are expected to

Nix will not condone the activities of employees

make every effort possible to avoid any abusive,

who achieve results through violation of the law

exploitative or illegal conditions in their factories.

or unethical business dealings. This includes any

Below are some of our efforts to ensure that our

payments for illegal acts, indirect contributions,

suppliers are honoring their promise to uphold our

rebates, and bribery. The company does not permit

principles.

any activity that fails to stand the closest possible

public scrutiny.

have a publicly available policy dedicated to social

accountability and compliance with applicable laws

Nix has developed a workplace code of

Management System. The factory will

conduct that the company, its employees, and its

and other requirements.

suppliers will voluntarily adopt and abide which

1.

includes: â&#x20AC;˘

The prohibition of child labor

â&#x20AC;˘

The prohibition of forced labor

Overview. Nix is dedicated to sourcing

products from suppliers who conduct their business in a just and responsible manner and share our 42

The factory is to operate in full compliance

SOURCING GUIDELINES

with the laws of their respective countries and with

who is responsible for the health and safety of all

all relevant laws, rules, and regulations, including

personnel and is responsible for the implementation

those concerning labor, worker health and safety

of the health and safety elements of this standard.

and the environment.

2.

The factory will allow the Social Compliance

that wages paid for a standard working week shall

Officer unrestricted access to all areas of the facilities

meet at least the legal or local industry minimum

and to all related records at all times, whether or not

standards, which ever is greater and shall always be

advance notice has been provided.

sufficient to meet the basic needs of personnel and

Wages & Benefits. Employers shall ensure

to provide some discretionary income.

Child Labor. No person shall be employed

Customers. To continue to succeed, we need

at an age younger than 15 or under the age for

to win and retain customers by building partnerships

completion of compulsory education or country

with them. Supply products and services that offer

legal working age, whichever is higher.

consumers good value in terms of price, quality,

Forced Labor. There shall not be any use of

performance, style, safety and environmental

forced labor, whether in the form of prison labor,

impact. Ensure that any quality or performance

indentured labor, bonded labor or otherwise.

problems that occur in our products are dealt with

expeditiously with the minimum inconvenience to

Harassment or Abuse. Every employee

shall be treated with respect. No employee shall

our customers and consumers.

be subject to any physical, sexual, psychological or

Employees.

verbal harassment or abuse.

consideration and respect t, providing feedback

Discrimination. No person shall be subject

on their performance. Not ask any employee to

to any discrimination in employment, including

do anything that is illegal or immoral or that fails

hiring, salary, benefits, advancement, discipline,

to comply with the standards of any recognized

termination or retirement, on the basis of gender,

professional body of which he or she is a member.

race, religion, age, disability, sexual orientation,

Encourage employees to speak up about any

nationality, political opinion, or social or ethnic

instances of wrongdoing or breaches of this Code

origin.

that they become aware of.

Health & Safety. Employers shall provide

Environment.

Manage

people

with

Nix requires all supplier

a safe and healthy working environment to avoid

factories and their subcontractors to comply with

accidents and injury to health arising out of, linked

all local and international laws regarding the

with, or occurring in the course of work or as a result

protection and preservation of the environment.

of the operation of employer facilities. The factory

Our supplier audits also verify that factories have

shall appoint a senior management representative

obtained all required operating permits to handle 43

COUNTRY REPORT: CAMBODIA

hazardous materials and waste. Factories are also

of Conduct, in line with international standards,

required to have waste management systems in

conventions and laws which forbids the use of all

place to ensure the proper handling and treatment

forms of forced labor in the manufacture of our

of wastewater and hazardous materials as well as to

products. Our definition of forced labor is inclusive

prevent any catastrophic release of chemicals in the

of slavery and human trafficking.

environment.

Verification and Evaluation of our Supply

Chain. Nix requires all suppliers to complete and

California Transparency Act

sign a questionnaire disclosing information on all factories producing Nix’s proprietary branded

In addition to following the code of conduct

merchandise. Part of this questionnaire requires

listed previously, Nix Swim wear will also abide to

that factories agree to a third party audit to verify

the California Transparency in Supply Chain Act.

compliance with Nix’s Vendor Code of Conduct.

“As of January 1, 2012, the California

Additionally, whenever possible, our sourcing teams

Transparency in Supply Chains Act (SB 657) requires

will conduct factory walkthroughs to evaluate

companies doing business in the state of California

their suitability to produce Nix goods. Part of this

to disclose their efforts to eradicate slavery and

evaluation includes assessing workplace conditions

human trafficking in their supply chain. This law is

and notifying our social compliance team of any

designed to increase the amount of information

human rights issues observed during the walk-

made available by companies on their efforts to

through.

eliminate slavery and human trafficking, thus

allowing consumers to make more informed choices

third-party monitoring firms to audit factories

regarding the products they buy and the companies

manufacturing

they choose to support. Nix believes that workers

merchandise to verify compliance with our code of

at our supplier factories have the right to freely

conduct. Audits are conducted on a semi-announced

choose where they work and be treated with dignity

and announced basis. In some cases Nix will accept

and respect. Our efforts to ensure that slavery and

global certifications such as WRAP, SA 8000 or recent

human trafficking are not used in the production of

audits from apparel companies whose code of

our goods include the following:

conduct include the prohibition of all forms of forced

Supplier Certifications. Through our supplier

Third Party Audits. Nix uses independent Nix’s

proprietary

branded

labor including slavery and human trafficking.

Accountability. Nix has a zero tolerance policy

agreements, Nix vendors and their factories certify

that their factories adhere to all terms and conditions

for violations involving any form of forced labor,

of the agreement which includes prohibiting the use

slavery and human trafficking. Vendors or factories

of forced labor. Nix has also created a Vendor Code

found in violation of this policy will be immediately

44

SOURCING GUIDELINES

terminated as a supplier. Our social compliance

policy for factories engaged in slave labor or human

team works closely with our senior leadership and

trafficking. Suppliers have been informed that they

General Counsel to ensure that our suppliers are in

must make every effort possible to guarantee that

compliance with our Code of Conduct. Our executive

workers in their factories and the factories of their

management is accountable to the Nominating and

subcontractors are employed at their free will. Any

Governance Committee of Nix’s Board of Directors

supplier or subcontractor found in violation of this

who are provided updates on our social compliance

policy will be terminated.

program on a regular basis.

Nix takes issues involving human rights

Training. Nix has conducted training with

seriously and we expect our suppliers to do their

our sourcing teams on adherence to our Code of

best to ensure that forced labor in any form is not

Conduct. Additional training with stakeholder groups

used in the production of our goods. We will continue

within Nix is planned for 2012 that will focus on

to update our policies and procedures as needed to

monitoring the risk for human trafficking and slavery

make certain that the appropriate safeguards are

within the supply chain. We have also met with our

in place to prevent any mistreatment of persons

key suppliers and reiterated Nix’s zero tolerance

involved in our supply chain” (PacSun).

45

COUNTRY REPORT: CAMBODIA

COSTING

Pricing

The Nix cost sheet consists of: fabric cost, component cost, packaging and packing cost, labor, and

shipping cost. After determining the overall cost it takes to produce Nixâ&#x20AC;&#x2122;s Murex One-piece swimsuit, the retail price was calculated.

The total cost to produce one unit of the Murex one-piece swimsuit is $5.57, however Nix plans on

selling this product for a retail price of $220. A In order to determine the gross margin percentage, we took the selling price (revenue)/unit and subtracted the manufacturing cost/unit. This solution is our profit which equals $214.43. The profit is then divided by the selling price, which leads to a gross margin of 97.47%. The markup percentage for the Murex onepiece is 3,849.73%, which was found after dividing the profit by the cost. The wholesale price will be half of the selling price which is $110.

46

COSTING

47

COUNTRY REPORT: CAMBODIA

48

RISKS & BENEFITS

RISKS & BENEFITS RISK ASSESSMENT

Risks

“There is still a huge trade deficit due to high

at a time when the sector is growing rapidly. The

capital goods imports, inputs for the textile industry

number of banks has doubled since 2006, with a

(24% of imports) and oil products (15%) and especially

50% increase in assets and loans between 2010 and

because of export growth, mainly of textiles and

mid-2012. Moreover, the banks remain vulnerable

clothing (78% of exports), remains moderate due to

to currency risk, due to strong dollarization, and

ongoing weakness in the U.S. and European demand.

especially because the Central Bank’s foreign

The increase in tourism, higher international aid

exchange reserves are insufficient to cover foreign

and income transfers by expatriate workers will

currency deposits which accounted for 99% of total

largely offset the rise in dividend repatriations by

deposits in July 2012” (Global Edge).

foreign companies. FDIs are expected to cover the

current account deficit and their recovery since 2011

Cambodian People’s Party, led by Prime Minister Hun

is mainly directed to major energy infrastructure

Sen. At the January 2012 elections to the Senate, the

construction projects (hydroelectric dams and coal

Party won 46 out of 57 seats and the June 2012 local

power stations) launched by the government based

elections confirmed their dominance with a victory

on public/private partnerships” (Global Edge).

for the party in 1592 out 1633 municipalities. Given

“Meanwhile, weakness persists in the

the opposition’s weakness, along with repeated

banking sector due to lack of supervision (limited

harassment by the CPP, the latter will probably win

and declining number of qualified employees)

the next legislative elections (lower chamber) in

“The political stage is dominated by the

49

COUNTRY REPORT: CAMBODIA

2013. If the party wins two thirds of the seats, it will

especially energy infrastructure (frequent power

be in a position to amend the constitution, making

cuts). Growth is also likely to be driven by the

democratic progress less likely. Meanwhile, tensions

construction sector, which is benefiting from a

between Cambodia and Thailand are still high, due to

rebound in residential property, boosted by rapid

the border dispute between the two countries (near

private sector credit growth (20% of GDP in January

the Preah Vihear temple) linked to key economic

2008 and nearly 37% in July 2012). Tourism will also

issues. Finally, the business environment will remain

expand thanks to the start of new direct flights from

marked by lack of transparency, considerable legal

several countries in Asia” (Global Edge).

uncertainty and high levels of corruption” (Global

Edge).

deficit, it “ is expected to fall slightly thanks to the

After

analyzing

the

risks

Despite the fact that Cambodia has a

previously

steps announced by the government (“revenue

mentioned, it can be concluded that Cambodia

mobilization strategy with IMF technical assistance)

still has certain problems in its government and

to improve tax collection and gradually cut spending.

economy, however actions are being initiated in

For example, the 2013 budget makes no provision for

order to improve these conditions.

civil servant wage rises. However, social spending will remain substantial to cover efforts to combat

Benefits

Although the economy is less than ideal,

growth is expected to occur. “As in 2012, growth is expected to be driven by domestic and external demand (linked especially to public investment in major energy infrastructure projects) in 2013.

External demand is expected to increase, although this increase will be moderate, with the still weak demand coming from the U.S. (main trading partner) and the EU. In this context, manufacturing, highly focused on the external market (clothing, textiles) is likely to remain steady, though less robust than before the crisis. The textile sector will no doubt benefit from the delocalization of Chinese factories due to rising wages in China. However, growth in the sector will still be limited by lack of infrastructure,

50

poverty. In this context, the public finances will remain heavily dependent on foreign aid (3% of GDP)” (Global Edge). This information shows that even though the country still faces problems with its economy, steps are being taken in order to improve it and make it a better option for foreign investors.

SWOT ANALYSIS

SWOT ANALYSIS STRENGTHS

WEAKNESS

• Flexible textile industry and highly promising tourism sector • Potential offshore hydrocarbon reserves (oil and gas) • Country benefiting from financial support of bilateral and multilateral donors • Political stability since 1997 • Regional integration (ASEAN)

• Considerable share of agriculture in GDP; vulnerable to climatic vagaries • Underdeveloped electricity industry • Lack of skilled labor • Dependent on concessional finance due to weak fiscal revenues • Significant governance shortcomings • High poverty levels

OPPORTUNITY

THREATS

• • • • • •

• • • • •

Oil and gas exports Higher crop yields FDI potential Tourism development Better governance Emerging private sector

“Oil Curse” Worsening governance Loss of aid Garment exports competition Growing unemployment/insecurity

Source: United Nations Development Program

51

COUNTRY REPORT: CAMBODIA

CONCLUSION

In conclusion, Cambodia, is a land mainly

country seems to be living by the words of the

covered in plains and great rivers which connect to

Cambodian proverb, “Fear not the future, weep not

major trade routes to China to India and Southeast

for the past.” (Overton).This has helped to make it

Asia. It is a land full of many influences of a variety

a place of potential for foreign investment once

of Asian cultures, along with those of France and the

the issues in the country are better resolved by the

United States in its urban capital of Phnom Penh.

Royal Government of Cambodia. In addition, with

Possible risks of manufacturing in Cambodia

the garment industry being one of the country’s top

could result from the country’s past experiences

industries, it provides a better opportunity for Nix to

with political, economic, and social instability,

manufacture its products there.

however the future outlook of Cambodia seems to

be positive. Although the nation is developing and

can deduced that this country provides a great

assimilating Western culture, there is the possible

opportunity for our business of Nix swim wear to

disadvantage of miscommunication due to culture

choose as a manufacturer for our products with its

differences.

gradually improving apparel and textile industry.

The advantages of manufacturing in this

country include its improved economy, and the

52

After performing a full country analysis, it

APPENDIX

APPENDIX COUNTRY TRAITS

Population

In 1962, Cambodia took its first national

critically affected the geographic distribution of the

census as an independent country and reported

country’s population.

a

population

of

approximately

5,700,000.

Furthermore, hundreds of thousands of

Unfortunately in the years after 1970, population

citizens living in urban areas were forced to relocate

figures of the country are complicated to measure

to rural areas in order to cultivate rice and maintain

due to the vast amount of people who died or were

irrigation works. Still, the towns and cities began to

displaced during this time. Once stability returned

grow, and most have regained or surpassed their

to the country in the 1990s, a second national census

pre-1970 population levels. Once peace agreements

was conducted measuring the population at more

were made neighboring countries, the population

than double that in 1962 (Overton).

continued to expand throughout the years (Overton).

Subsequently, Cambodia’s population has

As of June 2013, Cambodia’s population was

continued to grow at rate above the world average.

measured at 15,205,539 people. This number also

The largest group of the population is made up

takes into account the effects of additional mortality

of children under the age of 15, which is common

due to AIDS; often resulting in:

in many developing countries. However, the age

•

Lower life expectancy

distribution began to become more balanced as the

•

Higher infant mortality rate

country began to recover from the losses from the

•

Higher death rates

Khmer Rouge regime. During the 1970s, the country

•

Lower population growth rates

suffered political and economic disruption which

Without the previously mentioned taken into 53

COUNTRY REPORT: CAMBODIA

account, the population distribution would vary by

estimated at 2.13% annually. The largest area of

age and sex, forecasted at 1.67%. While still majority

urban population is the nationâ&#x20AC;&#x2122;s capital, Phnom

a rural population with 80% (as measured in 2011) of

Penh, which was last measured at 1.55 million

Cambodian inhabitants living outside urban areas,

people in 2011 (Central Intelligence Agency).

the rate of urbanization is gradually increasing now

Age Structure

According to the Central Intelligence Agency, the Cambodian age structure was most recently measured

at the following for the year of 2013:

AGE STRUCTURE IN CAMBODIA Age Range

Percentage

Male Population

Female Population

0-14

31.7%

2,428,507

2,397,327

15-24

21.2%

1,597,990

1,627,161

25-54

38.2%

2,828,752

2,985,226

55-64

4.9%

287,073

464,991

65+

3.9%

221,356

367,156

Source: Central Intelligence Agency

This

data

displays

that

majority of the Cambodian population falls into the age range of 25-54 years old, with the second highest age group being those from the ages 0-14 years old. The overall median age for the countryâ&#x20AC;&#x2122;s population (as of 2013) is 23.7 years old, with males having an average age of 23 years old, and females measured at 24.4 years old.

The average life expectancy at birth for the total population of Cambodia is measured at 63.41 years old, with 54

Source: Central Intelligence Agency

APPENDIX

males only making it to the average age of 61.01 years, and females live to be a little bit older at 65.93 years old (Central Intelligence Agency). Nevertheless, this measurement is far below that of developed countries, reflecting the impact the socio- economic struggles has on the nationâ&#x20AC;&#x2122;s population and life expectancy.

Ethnic Groups

The Khmer (also referred to as Cambodians)

make up the large majority of the population, creating a distinctive homogeneity unique in Southeast Asia that has stimulated a strong sense of national identity. Ethnic minorities include Chinese, Vietnamese, Muslim Cham-Malays, Laotians, and different indigenous peoples of the rural highlands (Overton).

The Khmer, those of which belong to the

Mon-Khmer ethnolinguistic group, inhabit in the lowland regions around the Mekong River and the Tonle Sap, on the transitional plain, and along the coast. After centuries of intricate cultural and ethnic fusing, the Khmer migrated southward before 200 BC into the lush Mekong delta from the Khorat Plateau

DISTRIBUTION OF ETHNIC GROUPS

Indingenous Cambodian

(now Thailand). From there they were exposed to large amounts of Indian influence and,during the 8th century, and then to Indo-Malayan influence, possibly due to the immigration from Java. During the 10th to 15th century, the emergence of the Tai people took place, and then the Vietnamese amid the beginning of the 17th century, and finally the Chinese in the 18th and 19th centuries (Overton).

Vietnamese

5%

Within the ethnic minorities in Cambodia

90%

before 1975, the Chinese were the most significant,

Chinese

1%

Other

4%

since they regulated the countryâ&#x20AC;&#x2122;s economic life.

Khmer

Source: Central Intelligence Agency

55

COUNTRY REPORT: CAMBODIA

However, during the revolution of the 1970s, they

After the Vietnamese, the next most important

were pushed aside and made to become ordinary

minority is the Cham-Malay group. In Cambodia

peasants. Once the revolution ended, those who

they are also referred to as Khmer Islam or Western

remained in the country or later returned, eventually

Cham. This ethnic group has preserved a high degree

gained some of their previous influence as the urban

of ethnic homogeneity and was often discriminated

centers Those who did not seek refuge abroad after

against under the Democratic Kampuchea rule.

1975 and other who subsequently returned regained

Even the indigenous people received slightly better

some of their former influence as urban centers were

treatment than the Khmer Islam. These indigenous

recovered (Overton).

communities are collectively known as the Khmer

On the other hand, the Vietnamese minority

Loeu or â&#x20AC;&#x153;Upland Khmerâ&#x20AC;?. They include the Katu,

had a slightly lower status than that of the Chinese,

Stieng, Mnong, Rhade, and Jarai, among others,

especially after majority of them relocated to

and live in the northeastern provinces neighboring

Vietnam after 1970. However, during the 1980s, a

Vietnam and Laos (Overton).

considerable amount of Vietnameses immigrants (many of them former residents of Cambodia) resettled in the country. Following centuries of reciprocated dislaike and distrust, Vietnamese and Khmer interaction and relations has been clouded, creating infrequen intermarriage (Overton).

Religion

Although, predominantly Buddhist, other

religions do exist in Cambodia. Majority of the ethnic Khmer are Theravada Buddhists, this sect of Buddhism belongs to that of an older and more traditional of the two great schools of Buddhism,

DISTRIBUTION OF RELIGION

with the other being Mahayana. Buddhism was recognized as the official state religion of Cambodia until 1975, following this year the Khmer Rouge banned all religious practices. However, once the Khmer Rouge was replaced by the pro-Vietnamese communist regime during the 1980s, the religion was allowed but limited until it was restored as the state religion in 1993. After almost 20 years of Buddhist

Source: Central Intelligence Agency

56

96.4%

Muslim

2.1%

Other

1.3%

Unspecified

0.2%

neglect, Theravada Buddhism has not been able to repossess the popularity and prestige it once had before 1975 (Overton).

APPENDIX

Nevertheless, the social and psychological

characteristics commonly attributed to the Khmer such as individualism, conservatism, patience, gentleness, and little concern for material wealth; depict Buddhist ideals that are still aspired by Cambodians, especially in rural areas. However, Buddhist doctrines do not have as much of an influence in Cambodian education and ideology as it did before the Khmer Rouge in 1975 (Overton).

Languages

Khmer vocabulary used in literature, the military, and

Nearly all of the Cambodia population

administration is influenced by Sanskrit, or Pali. Yet

speaks Khmer, which is one of the major tongues

due to the colonization by the French, many French

of the Mon-Khmer subfamily of the Austorasiatic

words have been assimilated into the language as well

language family. Even the Cham-Malay (Khmer

(Kwintessential).

Islam) speak Khmer as well. Since the country also has Vietnamese and Chinese inhabitants, these

DISTRIBUTION OF LANGUAGE

languages are spoken in the nation as well, but on a much smaller scale. The indigenous communities such as the Katu, Mnong, and Stieng speak MonKhmer languages, whereas the Jarai and Rhade speak languages of the Austronesian language family (Overton).

Khmer is the official language of Cambodia

and is practiced in most social contexts such as the government administration, education, and mass media. Almost 90% of the population speaks the language. However, there are slight differences in various regions and typically comprehensible.

Modern Khmer is based on the dialect of the capital city, and is practiced throughout the country and understood by most of its inhabitants. The bulk of

Khmer Chinese/Vietnamese

90% 4.16%

French

5.2%

Other

1.56%

Source: Central Intelligence Agency

57

COUNTRY REPORT: CAMBODIA

Arts

“Dancing and drama were also important

“In the past, the traditional visual arts of

forms of artistic expression. The Royal Ballet in

Cambodia revealed the conservatism of the Khmer.

Phnom Penh specialized in the classical, highly

Ancient themes were preferred, and rarely was there

stylized apsara dances, as well as dance-dramas

an effort to improve or adapt. The principal crafts

recounting the Reamker (Ramayana) epic and other

were weaving, silver- and gold-smithing, jewelry

tales. These forms were adapted over the centuries

making, and wood and stone sculpture. In the 1970s

by both the Khmer and the Thai from the ancient

and ’80s, visual arts were often made to serve the

dances of Angkor. In the countryside other dramatic

purposes of government propaganda, and little

genres and folk dances were performed at festivals

original art has developed in Cambodia since then”

and weddings by wandering troupes. The national

(Overton).

classical ballet, reconstituted in the early 1980s by

“Although broadly valued as symbols of

a handful of surviving dancers, has become highly

national and ethnic identity, Cambodian classical

professional and has toured successfully abroad.

performing arts have little practical appeal for the

King Norodom Sihanouk’s daughter, Princess

younger population. Cambodian, Thai, and other

Bopha Devi, a former star performer in the royal

Asian popular songs have a much wider audience,

troupe, vigorously supported the revival of classical

as do locally made video compact discs (VCDs)—

dance during her tenure as minister of culture at the

the typical medium through which movies are now

beginning of the 21st century. The Royal University

produced and distributed in Cambodia. Among

of Fine Arts has been integral to the resurrection

urban Cambodian males, karaoke bars are a major

of Cambodian classical music and dance following

source of entertainment” (Overton).

their virtual extermination in the 1970s. Cambodian

58

APPENDIX

communities abroad have also established schools

designed by Cambodian architect, Vann Molyvann,

and cultural institutions to help perpetuate these

and is shaped in the form of a lotus, which also can

traditions” (Overton).

be seen at Angkor and other Khmer historical sites” (Tourism of Cambodia).

Monuments

“An Angkorian style tower, the inimitable

Cuisine

place in the whole city, located in the heart of the

“The history of the Khmer is written in their

capital. It was built in 1958 to Sybilles Cambodian

food. Many dishes and sauces are similar to those

Independence Day after winning back their

of their neighbors in Thailand. Stir-frying from

independence from the French protectorate on

the Chinese culture and curry dishes from India

the 9th of November 1953. The monument attracts

have all added to the taste of Cambodian cuisine

many tourists for its peculiar looking but unique

throughout the centuries. There are also traces of

style distinguishes it from all the buildings in the

French cuisine from the time when Cambodia was

city. It is also used as a memorial place dedicated to

part of French Indochina. (The baguette, or the long

the Cambodian patriots who died for the country”

French bread, is a part of the cuisine and has come

(Tourism of Cambodia).

to be Cambodia’s national bread.) A typical meal

“The Independence Monument (Vimean

consists of at least three or four separate dishes.

Ekareach) was inaugurated on November 9, 1962 to

Each meal usually includes a sweet, sour, salty,

celebrate the independence from the French in 1953,

and bitter sauce, to satisfy each taste bud. Rice is

but now also serving as a cenotaph to Cambodia’s

a staple eaten at most meals. When prahok is not

fallen patriots. The 20-meter high monument was

used as either a paste or dipping sauce, it is most likely to be replaced with kapi, a fermented shrimp paste” (Starr).

“By blending subtle flavors and spices, Khmer

cuisine sets itself apart from the many other styles of food in Southeast Asia. It is similar to Thai cuisine, but is distinctive in creating full flavor without the use of chili. (Khmer cuisine was established before the introduction of chili.) The Khmer culture has mastered the use of herbs and spices to create flavor without the use of fats and meats as well. The Independence Monument

hallmark of Khmer cuisine is prahok, a fermented

59

COUNTRY REPORT: CAMBODIA

paste made from a small fish called trey riel

pounds of tiny fish, men and women remove the

(Henicorhynchus siamensis). The grey or brown

heads, guts, and scales, while children use their feet

color, strong odor, and intense flavor can intimidate

to crush the bodies of the small fish. The fish can

the uninitiated, but prahok is the cornerstone of

also be processed by a machine, rather than crushed

Khmer cuisine: even the national currency is named

underfoot, but machines fail to remove the bad fish

after the trey riel. It is so desirable that farmers from

and tend to not process all the fat, which is crucial

outlying provinces will travel great distances to

to prahok flavor. Once processed, the fish pulp is set

trade rice for it. Prahok is used both as a condiment

out to dry in the sun for a day; then it is packed in

and as a main element in a variety of Khmer dishes,

plastic bags or jars to ferment over weeks or months

and it accounts for a large portion of protein in the

to produce the signature pungent punch. The result

Khmer dietâ&#x20AC;? (Starr).

is a spicy mash-like paste of which a little goes a long

way. The best quality prahok may be fermented for

â&#x20AC;&#x153;Traditionally, the production of prahok is

a community affair. Surrounded with hundreds of

60

as long as three yearsâ&#x20AC;? (Starr).

APPENDIX

APPENDIX GOVERNMENT

Government

In 1991, a new national government was

The conventional long form for Cambodia is

formed after opposition groups and the government

the Kingdom of Cambodia. In the past it has been

signed peace accord. A transitional authority

referred to as the Khmer Republic, Democratic

was established by the UN, which oversees the

Kampuchea, People’s Republic of Kampuchea, and

implementation of the accords, as well as elections

the State of Cambodia. The country’s government

in 1993 that created a coalition government led by

is described as the multi-party democracy under

Prince Norodom Sihanouk. Later that year, a new

a constitutional monarchy (Central Intelligence

constitution was established in order to restore to

Agency).

the pre-1970 Kingdom of Cambodia, assembling

However, it took several decades for

the constitutional monarchy and multi-party

Cambodia to reach a defined type of government. In

liberal democracy. After King Sihanouk vacated the

1981, the Vietnam backed communist government

throne in 2004, his son Prince Norodom Sihamoni

in Phnom Penh set up a government based on a new

succeeded him (Overton).

constitution. Yet, in 1982, three factions opposed this government and assembled a coalition governmentin-exile. Even though the coalition was unable to rule in the country, it attained global recognition maintained Cambodia’s seat at the United Nations, and was able to negotiate with the Phnom Penh government (Overton).

Elections

Under this new constitution, is Cambodia’s

bicameral legislature, which consists of the directly elected National Assembly as its lower chamber and the indirectly elected Senate as its upper chamber.

61

COUNTRY REPORT: CAMBODIA

king appoints judges of both courts, which are the Supreme Court and the Constitutional Court (Central Intelligence Agency).

Stability

Cambodia’s

domestic

political

status

continues to be stable. Local elections were held in 2012 while national elections were conducted in The executive power dwells with the cabinet,

2013. Due to the large majority vote, prime minister

governed by a prime minister—who is selected

Hun Sen and the Cambodia’s People’s Party will

by the king, based on the recommendation of the

remain as the leading political party and return to

chairman of the National Assembly. Other ministers

power. The risk of a coup are few and dwindling,

of the government are chosen from all parties

however, violence affiliated with the election

presented in the assembly (Overton).

campaigns are likely to

continue (Asia Risk).

The elections in 1993 formed the coalition

government led by Prince Norodom Sihanouk,

The government’s policies are consistent

yet the United Nations established a transitional

and, thus, easy to foretell. They encourage

authority so that they could oversee the implantation of accords and elections (Overton). Elections for the executive branch are conducted by the Royal Throne Council who also chooses the king from qualified males of royal descent. After legislative elections, a member of the majority party or majority coalition elect a prime minister by the Chairman of the National assembly who is appointed by the King.

Similar to that of the legislative and executive branches, the judicial branch holds elections by having candidates for the Supreme Court and

Cambodian People’s party leader Chea Sim (center)

Constitutional Court judge being advocated by the Supreme Council of Magistracy. This council is a

an economy guided by the private sector and

body served by 9 members and headed by the king

foreign investment for most industries. Cambodia’s

and includes other high-level judicial officers. The

domestic political status is stable so far as the current

62

APPENDIX

government is likely to maintain power and be reliable in its policies. These policies are yielding real economic growth,

inviting

foreign

direct

investment in a various industries, and thus stimulating development that is benefiting bulk of the population.

The stability of government policies lessens the risk of shocks or changes that could be distressing for business (Asia Risk).

model

Those measures in the risk that

evaluate

longer-tem

political trends like the stamina of the political system are progressing with time. Cambodia has made improvements in developing democratic institutions and practices. The risks of a coup or extra-constitutional changes in government are much less likely now than in previous decades. Violence related to elections is declining, and the results of elections are progressively seen a true reflection of public inclinations. Cambodia rates better than many other countries in Asia, based on these measures (Asia Risk).

Head of Government

As mentioned previously, Cambodia is a multi-party

democracy under a constitutional monarchy, which is headed

by King Norodom Sihamoni, the constitutional monarch and head of state, who has been in power since 2004. Prime minister Hun Sen is head of government and has been since 1985 (Central Intelligence Agency). The monarch is chosen by a Royal Throne Council, while the prime minister is appointed by the monarch after a vote of confidence by the National Assembly. The executive branch also has a cabinet or Council of Ministers, which is selected by the king but actually named by the prime minister (Country Watch).

King Norodom Sihamoni 63

COUNTRY REPORT: CAMBODIA

U.S. Representative Ambassador William E. Todd has been the United

• Examining communications to or from mission elements;

States Ambassador to Cambodia since 2012.

• Taking direct responsibility for the security of

According to an article from the U.S. Embassy, the

the mission—including security from terrorism—

responsibilities of the Ambassador include:

and guarding all U.S. Government personnel on

•

official duty and their dependents;

Speaking with one voice to others on U.S. policy—and making sure the mission staff to do

• Wisely operating mission resources through

likewise—while delivering to the President and

consistent reviews of programs, personnel, and

the Secretary of State expert advice and honest

funding levels;

counsel; • Guiding and organizing all executive branch offices and personnel; • Liaising with the U.S. legislative and judicial

64

• Reforming the mission to serve American interest and values and to safeguard that all executive branch agencies involved to the mission do likewise; and

branches so that U.S. foreign policy goals are

• Serving Americans with professional superiority,

superior; security is upheld; and executive,

the utmost standards of ethical conduct, and

legislative, and judicial duties are carried out;

diplomatic discretion.

APPENDIX

APPENDIX ECONOMY

Economy

one of the poorest countries in Asia. The nation also

Cambodia’s economic growth has largely

continues to face long-term economic development

been driven by garments, construction, agriculture,

as a formidable challenge, prevented by prevalent

and tourism, since 2004. During the years 2010 and

corruption, few educational opportunities, high-

2013, the Gross Domestic Product (GDP) increased

income inequality, and poor job outlook. Roughly, 4

more than 7% per year. Cambodia’s garment

million people live on less than $1.25 per day, and

industry is its most significant, accounting for 70%

37% of Cambodian children under the age of five

of the nation’s total exports and employs more

suffer from lingering malnutrition. Over half of the

than 400,000 people. In 2005, usable oil deposits

population is younger than 25 years old. In addition

were found beneath Cambodia’s regional waters,

to these problems, many Cambodians lack proper

presenting a possible revenue stream for the

education and skills to succeed, specifically in the

government, if commercial extraction becomes

destitute rural regions, which also lacks simple

viable. In addition, mining has lured interest from

infrastructure (Central Intelligence Agency).

and the government has publicized opportunities

for the mining of bauxite, gold, iron and gems

the government of Cambodia is working with

(Central Intelligence Agency).

bilateral and multilateral donors, such as the Asian

The tourism industry has sustained rapid

Development Bank, the World Bank and IMF, to

growth with foreign arrivals beyond 2 million

focus on the country’s many demanding needs.

per year since 2007 and reaching over 3 million

These donors contribute to more than 50% of

visitors in 2012. However, Cambodia remains as

the government budget. Cambodia will face the

In order to improve these conditions,

65

COUNTRY REPORT: CAMBODIA

country’s agricultural methods (Overton).

When the pro-Vietnamese government came

into power in 1979, it disassembled the collectivized agriculture that had been ferociously imposed on a national scale by Democratic Kampuchea in 1975– 79. Yet, part of the collectivization continued to be an ideal of the new administration, in an effort to develop efficiency. The Krom samaki (voluntary challenge of developing an economic environment in which the private sector can generate enough jobs to manage Cambodia’s demographic imbalance, over the next decade (Central Intelligence Agency).

cooperative groups) later replaced collective farms in several areas, however majority of Cambodian farming was continued by family units who grew crops for sustenance and for cash or barter. In 1989, a law was passed that allowed Cambodians to buy and sell real estate for the first time. This law had

Brief History

an immediate effect on the economy by causing a

Cambodia’s economy was one of the least-

rapid growth in urban areas along with an increase

developed in Southeast Asia, even before 1975.

in investment, particularly in the capital. Laws were

The country massively depended on rice and

also put into effect to restore traditional rights of

rubber and subsequently was susceptible to annual

land tenure and inheritance in rural areas (Overton).

fluctuations caused by impulses in the weather

In 1992–93, tourism became (and also remains) a key

and world market prices. The economy was largely

source of national revenue, but the rural economy

dominated by agriculture, with many rural families

continues to be hindered by poor communications,

involved in rice cultivation. Although the tradition of

bad weather, widespread poverty and disease. In

landownership was solid, family landholdings were

addition, it is frequently outdated and ineffective

comparatively small, and the rural population was

farming techniques. While the nation’s per capita

mainly self-sufficient. Two and a half acres of rice paddy supported for the needs of a family of five people, and additional requirements were usually satisfied by fishing, cultivating fruit and vegetables, and raising livestock. Famine was uncommon in Cambodia, however the self-sufficiency of the rural family created a conservatism that opposed government efforts before 1975 to improve the 66

APPENDIX

income has increased, it still is among the worldâ&#x20AC;&#x2122;s

customs data, exports of garments and footwear

lowest (Overton).

to that market grew by 26% to $2.0.billion in 2013

During the 1990s, the countryâ&#x20AC;&#x2122;s external debt

and those to the United States surged by 6.0% to

suddenly increased, with foreign aid continuing to

$2.1 billion. Industry growth also increased due

be a key source of revenue. Many of the international

to construction and rice milling. Bank credit to

donors, with Japan being number one, have used aid

construction expanded by 29% to $577 million, and

to urge the Cambodian government to implement

exports of milled rice nearly doubled to 366,000

reforms directed to promote economic development

tons, valued at $262 million. However, the floods of

and democratization. Targeted areas include

later 2013 damaged crops and lowered growth in

refugee reconstruction and resettlement, education

agriculture to 1.8% last year (Brimble).

and training, health and sanitation, agriculture, and

community development. Creditors have postponed

private consumption, sustained by higher household

and in some cases canceled repayment of loans, but

incomes. Investment also made a considerable

they have also cut aid disbursements when they

contribution. Domestic investment remained secure,

have differed with government policies or actions

particularly in small-medium size enterprises (SME).

(Overton).

Influxes of net foreign direct investment (FDI)

GDP growth was fueled by an increase in

were resilient at $1.3 billion, though that figure reflected a decrease from the previous year, partly

Current Economic Condition

due to political tensions after Cambodiaâ&#x20AC;&#x2122;s national

elections in July 2013 (Brimble).

In 2013, vigorous growth in services and

export industries improved the economy by 7.2% (Figure 3.32.1). Services continue to be the main source of growth from the supply side, increasing by an estimated 8.4% in 2013. This stemmed largely from advancement in wholesale and retail trading, real estate services, and tourism related services.

Bank credit to wholesale and retail trading grew by 24.5% to $2.5 billion and to real estate by 36.5% to $250.5 million. Tourist arrivals increased by 17.5% to 4.2 million (Brimble).

Due to the strong demand for Cambodia

garments and footwear in the European Union, industry grew by an estimated 10.5%. According to 67

COUNTRY REPORT: CAMBODIA

Economic Forecast

Due to political tensions of the national

elections last July, along with strikes for higher wages by garment workers, investor confidence has been strained and the production of garments and footwear has been disrupted in late 2013 and early 2014. The uncertainties could affect tourism and real estate activity as well. Therefore, economic growth is projected to ease to 7.0% this year before increasing to 7.3% in 2015 (Figure 3.23.5) (Brimble).

investment in irrigation. Growth in merchandise exports could be hampered by the disruptions to garment and footwear production and by descending pressure on global rice prices. Strong domestic demand will maintain growth in imports, so that the current account deficit, discounting official transfers, is forecast to increase to 11.3% of GDP in 2014 before decelerating to 10.9% next year (Figure 3.23.7) (Brimble).

The government developed a policy for 2013–

2018, which focuses on average annual economic The economic recovery forecasted for the European Union and U.S. will benefit the garments and footwear industry, which grants Cambodia’s exports duty-free access. Together these markets purchase 76% of the country’s exports of garments and footwear. The forecast for the industry as a whole is expected to grow by 8.7% and services by 7.1%, which both have decelerated from 2013 (Brimble).

Agriculture is beginning to recover from the

floods of the previous year, and expected to grow by 4.7% in 2014. Crops and livestock are advancing from a growth in the area under cultivation and by 68

growth at 7% and a reduction in the poverty rate by at least 1% point a year. This latest policy places emphasis on commercializing agriculture, building urban infrastructure, supporting the development of the private sector, expanding vocational training, and strengthening social protection, which includes health and nutrition. Notably, the government’s commitment to economic reform appears to have strengthened (Brimble).

APPENDIX

Growth Incentives

Overall, economic growth of Cambodia

is directed by four pillars: agriculture, garment, tourism, and construction. The Royal Government (RGC) of Cambodia has developed a Rectangular Strategy, a National Poverty Reduction Strategy (NPRS) and National Strategic Development Plant

economic growth and poverty reduction. The reform agenda of RGC basically focuses on a developing of economic reforms and macroeconomic stability, including fiscal and monetary reform, trade and investment promotion, administrative reforms, military demobilization, and improved forestry and fisheries management (Savath).

(NSDP) which is based upon a policy position of

Exchange Rates

Official exchange rates, however, can be artificially

Cambodia’s official exchange rate as of 2012

fixed and/or subject to manipulation - resulting in

was $14.24 billion of its GDP. According to the Central

claims of the country having an under- or over-valued

Intelligence Agency, an exchange rate is defined as:

currency - and are not necessarily the equivalent of

“This entry gives the GDP or value of all final

a market-determined exchange rate. Moreover, even

goods and services made within a nation in a given

if the official exchange rate is market-determined,

year. A nation’s GDP at official exchange rates (OER)

market exchange rates are frequently established by

is the home-currency-denominated annual GDP

a relatively small set of goods and services (the ones

figure divided by the bilateral average US exchange

the country trades) and may not capture the value

rate with that country in that year. The measure

of the larger set of goods the country produces.

is simple to compute and gives a precise measure

Furthermore, OER-converted GDP is not well

of the value of output. Many economists prefer

suited to comparing domestic GDP over time, since

this measure when gauging the economic power

appreciation/depreciation from one year to the next

an economy maintains its neighbors, judging that

will make the OER GDP value rise/fall regardless

an exchange rate captures the purchasing power

of whether home- currency-denominated GDP

a nation enjoys in the international marketplace.

changed” (Central Intelligence Agency).

Inflation Rate

13,46% (Savath).

According to reports from researchers, the

As of January 2014, Cambodia’s inflation rate

inflation rate reached its peak during the second

was recorded at 4.54% (Trading Economics). Year

quarter of 2008 to 25.72%. This resulted from high

on year inflation averaged 1.8%, in January-June,

oil prices, food prices, and the fluctuation of the U.S.

indicating minor increases in food and fuel prices.

dollar. By the end of the year it was contained to

Growth in credit to the private sector lessened

69

COUNTRY REPORT: CAMBODIA

to 29.0% in June, from 34.1% in 2012. In light of

reserves increase by 9.9% to $3.6 billion in the first

suddenly low inflation, the average for the year

half of the year, which is enough to cover 4 months

is forecast to ease to 2.5%. Predictions for current

of imports of goods and services (Brimble).

account deficits are kept from April. Gross official

INFLATION RATE FORECAST Actual

Forecast

Prices

Value

Date

Value

Date

Quarterly Forecast Q2 Q3 Q4 Q5

Inflation Rate (%)

4.54%

Jan-14

1.25%

Feb-14

1.76 1.78 1.56 1.42

Long-Term Forecast 2015 2020 2030 3.98

3.96

4.02

Source: Trading Economics

Fiscal Policies

additional revues. The economical fiscal policy

In 2009, the Royal Government of Cambodia

has allowed the Royal Government to sustain price

conducted a larger budget. Overall the deficit

stability in Cambodia’s highly dollarized economy

increased to 2,653 billion Riels ($662,939), up

(CRDB).

from 1,198 billion Riels ($299,360) in 2008 and 987

The Royal Government’s fiscal policies are intended

billion Riels ($246,634) in 2007.The deficit grew

to ensure a level of spending that is reliable with

considerably to 6.2%, as a percentage of GDP in

macroeconomic stability. The expenditure program

2009 from an average of 3.1% during the time of

is being reorganized as part of a systemic reform

2004 to 2007. This increased deficit was caused by

package designed to promote domestic savings,

a decrease in government revenue as result of the

productive investment, and efficient resource

global financial crisis and a growth in government

allocation. The fiscal performance in 2004 and

expenditure caused by larger spending on military

2005 was good, with improved domestic revenue

and security and increased salaries for public

collection and public expenditure control (CRDB).

servants (Runsinarith).

The goals of the Royal Government’s fiscal

Structural Reforms

policy are to preserve a sustainable fiscal balance

with steady increases in budget distribution for

government used fiscal policy to advance cumulative

social and economic divisions by regulating and

demand during the crisis. Due to its limited fiscal

rationalizing public expenditure and by expanding

space, the Cambodian government is unable to

the tax base, averting leakages, and by bolstering

start a large scale economic. During 2008 to 2009,

the customs and tax administration to gather

the government pursued fiscal expansion through

70

Given limited scope of monetary policy, the

APPENDIX

a mixture of state spending and targeted tax relief to hard-hit segments. This resulted in doubling the budget deficit, which increased from less than 3% of GDP pre-crisis to nearly 6% in 2009 (See Figure 5) (International Labor Organization).

CAMBODIA GROSS DOMESTIC PRODUCT GDP (Purchasing Power Parity

$39.64 B (2013)

Country Comparison to the World

$37.04 B (2012)

GDP (Official Exchange Rate) GDP Real Growth Rate Country Comparison to the World

$15.64 B

GDP per capita

$2,600 (2013)

Country Comparison to the World

$2,400 (2012) $2,300 (2011)

$34.52 B (2011)

7% (2013) 7.3% (2012)

7.1% (2011)

GDP-composition by Household 74.7% end use (2013) Government 7.7%

Gross Domestic Product

The Gross Domestic Product (GDP) in

Cambodia was worth $15.64 billion in 2013. It currently holds a GDP value of 0.2% of the world economy. The World Bank Group accounts for reports on the nation’s GDP. From 1960 to 2013, the country’s GDP averaged at $3.9 billion reaching an all time high of $15.64 billion in 2013, and a low of $0.5 billion in 1972. “The gross domestic product (GDP) measures of national income and output for a given country’s economy. The gross domestic

Investment in fixed capital Investment in inventories Exports of goods and services Imports of goods and services GDP-composition by Agriculture sector of origin Industry Services

product (GDP) is equal to the total expenditures for all final goods and services produced within the

16.4%

2.1%

65.3%

-66.2%

34.% 24.5% 40.7%

Source: Central Intelligence Agency

country in a stipulated period of time.” (Trading Economics).

71

COUNTRY REPORT: CAMBODIA

Industries

The Cambodian economy expanded at a

rate of 10% between the year of 2004 and 2007. This was mainly caused by industries such as garment, tourism construction and agriculture. Other major industries that contribute to the gross domestic product in the Cambodia industry divisions beverages, food and beverage, and wood processing (EconomyWatch Content).

With 59% of the Cambodia population

involved in agriculture, this is the main industry of the country. Rice is the major food crop, while rubber is the key commercial crop in Cambodia.

Many international aid organizations are aiding farmers through crop diversification programs to cultivate other crops. Agriculture division provided 29% of the country’s GDP in 2007 (EconomyWatch Content).

“Tourism is the second largest source of

foreign exchange for Cambodia for decades after textile. Tourism saw a setback during 1997-1998 due to internal troubles in the country. However, the number of visitors rose to 1,055,000 in 2004, from 219,000 in 1997. In 2008, 2 million foreign tourists

According to Cambodia’s Ministry of Commerce, the global economic downturn had a huge impact on this sector. The value of garments exported in January 2009 fell to US$70 million from $250 million in January 2008. During 2008-09, Cambodia had to shut down over 30 garment factories due to recession and lay off more than 30,000 laborers in the garment industry. In 2008, the country imported raw material worth US$1 billion, as revealed by the Garment Manufacturers Association of Cambodia.

The government is taking steps to cut costs

by encouraging local production and improving access to the Western markets” (EconomyWatch Content).

“In 2005, Cambodia attracted immense

foreign investment due to new found reserves of oil, bauxite, gold, iron and gems. Major investors were the US, Thailand, Australia, South Korea and China.

Unfortunately, its mineral resources remained unexplored to a great extent in 2006. Moreover, commodity prices plunged in the late 2000s due to economic depression putting a impeding the nascent mining industry of the country” (EconomyWatch Content).

arrived in Cambodia which was 5.5% more than the 2007 level. The major tourist destinations in the

Imports & Exports

country are Siem Reap, Phnom Penh, Sihanoukville,

Kampont, and Kep. The tourism industry fell by

enormously after the civil and political disorder

2% in early 2009. The Cambodian government

receded in 1999. The per capita income has grown

is seeking help from the U.S. to give a boost to its

rapidly although it continued to be lower than other

tourism sector” (EconomyWatch Content).

South East Asian countries. Cambodian imports

declined in value from $6.534 billion in 2008 to

“Traditionally, Cambodia’s garment industry

has been the biggest foreign exchange earner.

72

Cambodia’s foreign trade has improved

APPENDIX

$5.374 billion in 2009. However, as a result of the global economic recession, the economy had to suffer through a substantial downfall in its exports. The value of exports came down to $3.582 billion as of 2009, from $4.708 billion in 2008 (EconomyWatch Content).

For decades, Cambodia has been exporting primary products and importing finished goods. There

was a sharp decrease in exports during the war and the country had to survive on US-subsidized imports.

Trade went through a period of virtual cessation during the reign of Pol Pot, the leader of the Khmer Rouge communist movement. In 1977, the country exported $3 million worth of goods, while it imported $22 million worth of products (discounting trade with China) as per Western estimations (EconomyWatch Content).

Cambodia’s foreign trade saw some ascending movement after the implementation of PRK

government. In 1985, the country exported goods worth about $10 million and imported goods worth $120 million, approximately. Cambodia was trading mostly with the former USSR and its allies in the mid 1980s (EconomyWatch Content).

Until 1992, agricultural products, such as rubber and timber, were the key export items of Cambodia.

Considering the high export of logs, the forest cover of the country fell to 40% of the land area, as estimated by the United Nations Development Program (UNDP) (EconomyWatch Content).

TOP 5 PRODUCTS EXPORTED BY CAMBODIA

TOP 5 PRODUCTS IMPORTED BY CAMBODIA

Postage Stamps

15%

Knit Sweaters

15%

Knit Sweaters

14%

Refined Petroleum

10%

Knit Women’s Suits

8.7%

Knit Women’s Suits

9.4%

Leather Footwear

6.1%

Leather Footwear

6.1%

Non-Knit Women’s Suits

5.4%

Non-Knit Women’s Suits

5.9%

TOP 5 IMPORT DESTINATIONS OF CAMBODIA

TOP 5 EXPORT DESTINATIONS OF CAMBODIA

United States

28%

United States

31%

Thailand

9.8%

Hong Kong

12%

Germany

6.7%

Germany

7.7%

Vietnam

6.9%

United Kingdom

6.9%

Singapore

6.0%

Singapore

5.8%

Source: Observatory of Economic Complexity

73

COUNTRY REPORT: CAMBODIA

APPENDIX GEOGRAPHY

Geography

“Cambodia, about one-third the size of France and somewhat larger than the U.S. state of Missouri,

is bordered to the west and northwest by Thailand, to the northeast by Laos, to the east and southeast by Vietnam, and to the southwest by the Gulf of Thailand. The country’s maximum extent is about 280 miles (450 km) from north to south and 360 miles (580 km) from east to west” (Overton). Cambodia has a total area of 181,035 sq km, with 176,515 sq km, and 4,530 sq km (See Appendix). Comparatively, it is slightly smaller than Oklahoma (Central Intelligence Agency).

Phnom Penh is the country’s

capital, and largest urban center.

As a result, many of the textile and garment manufacturers are located here. Other cities include Kandal Province and Sihanouk Ville (GMAC).

74

APPENDIX

Climate

season while other phenomena also frequently occur

“Cambodia’s climate is governed by the

such as; tropical storms, droughts and forest fires etc.

monsoon winds, which define two major seasons.

Those hazards are major factors cause occurrence of

From mid-May to early October, the strong prevailing

natural disasters that lead to contributory reduction

winds of the southwest monsoon bring heavy rains

of the pace of sustained economic development

and high humidity. From early November to mid-

in this country. Many Cambodian communities,

March, the lighter and drier winds of the northeast

mainly communities situate along the two major

monsoon bring variable cloudiness, infrequent

watersheds; Tonle Sap and Mekong Rivers, have

precipitation, and lower humidity. The weather

proven to be extremely vulnerable to the effects of

between these seasons is transitional.

those natural hazards. Localized flooding caused by

monsoon thunderstorms is a serious threat as they

Maximum temperatures are high throughout

the year, ranging from about 82 to 83 °F (28 °C) in

periodically sweep the country” (ADRC).

January, the coolest month, to about 95 °F (35 °C)

in April. Annual precipitation varies considerably

and a blessing as the farmers depend on the annual

throughout the country, from more than 200

rainfall for crop production and have developed an

inches (5,000 mm) on the seaward slopes of the

extensive water management system to trap and

southwestern highlands to about 50–55 inches

store water to be utilized during periods of drought.

(1,270–1,400 mm) in the central lowland region.

In this way, many parts of the country are capable

Three-fourths of the annual rainfall occurs during

of harvesting a primary rice crop and a secondary

the months of the southwest monsoon.” (Overton).

harvest of vegetables or other cash producing

“These natural phenomena are both a curse

commodities. But in the series of consecutively extreme flood years, high water of flood wash away

Natural Hazards

dams, dikes and distribution structures, destroy

“Severe destructions resulted from the above

crops and livestock, damage homes, temples,

decade conflicts still cause Cambodia vulnerable.

schools, clinics, roads, and other community

Natural disaster, on the other hand, which lately

infrastructure and even cause loss of human life.

emerged consequently from the above experiences,

This increasingly lead Cambodia to food shortage,

has caused Cambodia highly potential- exposed

loss of economic output, health contamination and

to both economical and social vulnerabilities; as

consequently hunger and poverty” (ADRC).

a result, Cambodia is highly susceptible to natural disasters, primarily floods” (ADRC).

“Currently Cambodia is particularly prone to

Annual River Flooding during the monsoon-raining 75

COUNTRY REPORT: CAMBODIA

Natural Resources

“In general, Cambodia’s mineral resources appear to be limited. In the late 1950s and throughout

the 1960s, however, exploration by Chinese experts in Kampong Thum Province disclosed commercially exploitable deposits of iron ore amounting to about 5.2 million tons. Western sources indicated possible reserves of high-grade iron ore, ranging from 2.5 million to 4.8 million tons, in the northern part of the country.

Chinese explorations also revealed manganese ore reserves, estimated at about 120,000 tons, in Kampong Thum Province” (Mongabay).

“Deposits of phosphate, limestone, and clay of exploitable quality and quantity have also been

reported. A few thousand tons of phosphate are extracted annually in Kampot Province and are processed locally or at a small plant in Batdambang Province. In addition, salt and coal also may be present in Cambodia’s geological strata. Rubies, sapphires, and zircons have been mined since at least the late 1800s, mostly at Ba Kev, Stoeng Treng Province, and at Pailin, Batdambang Province. Limited gold and silver deposits have been reported in several parts of the country” (Mongabay).

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APPENDIX

APPENDIX LABOR

Labor Force

Most Cambodians in the workforce are still involved in agriculture, forestry, and fishing. Foreign

investment is essential to job creation in Cambodia. Apprehensions among foreign investors about political insecurity and corruption have resulted in the lack of foreign capital inflows and only slow advances in job opportunities. An additional problem to foreign investment and job creation has been the country’s limit of trained and experienced labor force having the desired productive skills (Overton).

In spite of these issues, the new garment factories surrounding Phnom Penh have become a vital

source of manufacturing employment, mainly for women. The amount of women in the labor force—over the 50% of the total population—is one of the biggest in the world, a disparity created in part by the massive destruction of men during the period of Khmer Rouge rule. By law, women are ensured equal rights, but traditional views of the proper role of women have obviated women from entering senior management positions in business (Overton).

Although the country struggles with foreign

investment due to political instability and corruption, thus preventing the creation of jobs, Cambodia still has a workforce dedicated to a variety industries, especially the garment and textile and industry. With this dedication, Cambodia proves to be a key investment for companies to choose as its supplier.

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COUNTRY REPORT: CAMBODIA

Unemployment Rate

However, despite problems faced with

foreign investment and job creation, Cambodia still holds the leading place as far as unemployment rate comparison to the rest of the world, with 0% as of 2011 (Central Intelligence Agency). As mentioned earlier, the non-existent unemployment rate proves the nation’s dedication to working therefore being an excellent location for manufacturing.

A decrease in Cambodia’s garment export

ensued only with the outbreak of the world financial crisis when the demand weakened particularly in the U.S. However, even without this drop in world demand for Cambodian garment which is projected to be a temporary problem, the government is well mindful that the export structure needs to be set on a broader basis in order to remain on the path of export-fuelled economic growth. A good indicator, also, the Cambodian garments products export began recently to stabilize (Cambodian Top Ten

Products

Products). With garments and textiles being one

Cambodia’s agricultural products that are

of the most prominent exports of Cambodia, swim

completely traded within the region’s countries,

wear can take advantage of the opportunity to use

while Cambodia’s industrial exports (garment and

Cambodia as a potential supplier.

footwear exports) are typically delivered to the main

markets U.S., E.U., Canada, Japan among others.

industry had been founded mostly through foreign

Garment and textile has unlocked a new age

investors (mainly from Taiwan) who built in the

of international trade integration for the country.

mid-1990s factories in order to profit from favorable

Since the mid-1990s when garment and textile

market access offered by key overseas markets

exports began in Cambodia from practically nothing

to Cambodia. In 2008, the main regional market

(until the mid-1990s only a small-scale production

of Cambodian footwear was the European Union

for domestic market existed) this sector has nearly

where tariff-free market access is granted because

steadily grown in position. Despite numerous

of Cambodia’s standing as a Least Developed

warnings that Cambodia’s garment industry

Country (LDC). Germany and the UK make up about

success will collapse once the MFA ends due to the

44% of Cambodian footwear exports. Japan is the

lack of domestic input suppliers, it the garment

largest individual country market, with 33% where

industry proved to be much more sustainable than

Cambodia relishes in a very moderate tariff of

predicted (Cambodian Top Ten Products). This

2.7%. Initially, Japan had a much higher share in

allows Cambodia to export regardless of higher

Cambodia’s footwear exports but lost its position

production costs to buyers who are apprehensive of

due to the rise of Cambodian exports to the EU

labor standards are to order at least some of their

market (Cambodian Top Ten Products).

supply from labor-friendly production sources.

78

Comparable to garment also the footwear

Cambodia has a long history of rubber

APPENDIX

farming that began in French colonial era.

With growing international market orientation rubber is once again a vital crop in Cambodia. It can

be plainly specified that rubber is a predominantly dynamic sector in Cambodia that draws an increasing number of domestic farmers as well as foreign investors who use land-concession to form large-scale rubber plantations. Yet, due to informal trade the real number is considerably higher and growing as many farmers change from their former crops to rubber due to a favorable rubber price development in recent years (Cambodian Top Ten Products).

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COUNTRY REPORT: CAMBODIA

APPENDIX IMPORTING/EXPORTING DOCUMENTS

Bill of Lading

The Bill of Lading (BOL) is a required document to move a freight shipment. The BOL functions as a

receipt of freight services, a contract between a freight carrier and shipper and a document of title. The bill of lading is a legally binding document supplying the driver and the carrier all the details needed to process the freight shipment and invoice it accurately (FreightQuote).

This document includes shipper’s and receiver’s/consignee’s names and complete addresses. It also

includes a Purchas Order or special account numbers used between businesses for order tracking. The BOL has special instructions for the carrier to ensure prompt delivery, date of shipment, and number of shipping units. It also includes the type of packaging, including cartons, pallets, skids and drums; a note if commodity is a Department of Transportation hazardous material. Special rules and requirements apply when you are shipping hazardous materials. In addition, it also has a description of items being shipped, include the material of manufacture and common name, the NMFC freight classification for the items being shipped, and the exact weight of the shipment. If multiple commodities are being shipped, then the weight of each commodity is listed separately. And finally, the last inclusion for the BOL is the declared value of the goods being shipped (FreightQuote).

80

APPENDIX

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COUNTRY REPORT: CAMBODIA

Cargo Release Order

“Cargo release processing is available only to users operational on entry summary in the specified

port of release. When the entry summary, CBP Form (CBPF) 7501, data is not available, or if use of summary data is not desired, entry (CBPF-3461) data may be used for cargo release processing. Data submitted for the first time must be provided on an add transaction. Data may later be replaced or deleted. For air shipments, cargo release selectivity processing is initiated on or after arrival depending on when the cargo release data is added to the file and is certified. On vessel shipment, cargo release selectivity processing is initiated on the cargo release data no sooner than five days prior to the arrival of the vessel, or on or after arrival, depending on when the cargo release data is added to the file and is certified. Cargo release data may be submitted for release processing with the estimated date of arrival up to 90 days in the past and 60 days in the future” (International Logistics Management).

“Cargo release processing is available only to users who are operational on entry summary. The entry

data or entry summary data to be certified must process error free and be in the Automated Commercial System (ACS) entry file. Cargo release processing results are provided shortly after cargo release processing occurs. Output consists of the provisional release status for all entries and entry summaries provided through ACS, which were certified for cargo release processing” (International Logistics Management).

Commercial Invoice

“A

commercial

invoice

form

is

used for all shipments containing nondocuments. The commercial invoice is the primary document used for importation control, valuation, and duty determination.

This document identifies the products being shipped” (UPS).See commercial invoice on page 83.

Cargo Release Order Sample 82

APPENDIX

Customs Import Declaration

“When you import goods from a third country, you

have to declare the presentation of the goods – that is, their physical arrival – to the customs authorities. After a defined period, you have to place the goods in a customs procedure such as free circulation or a customs procedure with economic impact. You have to report data on customs control and for determining the customs duties to the customs authorities in the corresponding customs import declaration. You can simulate calculation of the customs duties in Customs Management in the Global Trade Services (GTS) system. You can run the simulation for either a specific customs declaration or for individual customs tariff numbers” (SAP).

Commercial Invoice

“The types of customs declaration can differ by

country. For example, you can submit single customs declarations for each goods receipt or use simplified customs declarations to

speed up your import processes. If you use simplified customs declarations, you have to submit separate supplementary customs declarations to declare missing data for individual transactions or use a collective declaration for all the transactions in a period” (SAP).

Import Permit

“An import permit is a document

issued by a national government authorizing the importation of certain goods into its territory. Each import license specifies the volume of imports allowed, and the total volume allowed should not exceed the quota. In many countries, the importer must obtain a specific import license for each import shipment, but a shipment valued Customs Import Declaration

below a minimum requirement does

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COUNTRY REPORT: CAMBODIA

not require a permit. The purpose of import license is include- to control kind and quantity of import product, to control the import origin of the product, and stop illegal importers” (Cambodia Export Import).

“An experienced importer knows that it is

necessary to possess a valid license for importing goods to do this business legitimately in most countries. An import license is very essential for businesses engaged in the import of goods” (Cambodia Export Import).

“Sometimes, the imports of many goods

are under government control of respective countries. Goods such as military or paramilitary goods, technology, artworks, plants and animals, medicines and chemicals when imported require a valid license for import and many times even for export. Importers should be aware that importing certain goods such as weapons or other sanction

Import Permit

goods to countries without proper license is unlawful and if they do so they will charge as stringent criminal action” (Cambodia Export Import)

Insurance Certificate

“A document issued by an insurance company/broker that is used to verify the existence of insurance

coverage under specific conditions granted to listed individuals. More specifically, the document lists the effective date of the policy, the type of insurance coverage purchased, and the types and dollar amount of applicable liability” (Investopedia).

“A certificate of insurance is often demanded in situations where liability and large losses are a concern.

For example, a company wishes to hire a driver from a temp agency. The company will most likely ask the agency to show them a certificate of insurance that proves that certain liabilities will be covered by insurance in the event the driver causes problems, such as incurring damages from driving the company’s vehicles” (Investopedia).

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APPENDIX

Packing List

“Packing List (also known as a bill of parcel, unpacking note,

packaging slip, (delivery) docket, delivery list, manifest or customer receipt, shipping list) is a document which details the contents, and often dimensions and weight, of each package or container. It serves to inform all parties involved with shipping, including transport agencies, government authorities, and customers, about the contents of the package. It helps them deal with the package accordingly” (KK Freight).

Tax Certificate

Packing List

“The certificate issued to the purchaser of land at a tax sale

certifying to the sale and the payment of the consideration thereof,

and entitling the purchaser upon certain conditions and at a certain time thereafter to a deed or instrument of conveyance (called a tax deed) of the land, to be executed by the proper officer” (The Free Dictionary).

“Patent tax is an annual business registration tax

which all enterprises carrying on business activities in Cambodia are required to pay by 31 March. A “patent tax certificate” will be issued by the Tax Office upon registration.

If an enterprise carries out different types of businesses, a separate patent tax certificate is required for each distinct business activity. Likewise, if a taxpayer carries out business in different cities or provinces, a separate patent tax certificate is required for each location. The standard patent tax payment is KHR1,140,000 (roughly USD$285)” (KPMG).

Tax Certificate

Terminal Handling Receipts

“Terminal Handling receipts or also referred to as terminal handling charges (THC) is used in

containerized sea freight to describe the charges raised by the Port of Arrival or Discharge to lift the container onto or off the vessel. The cost normally embraces movement within the harbor to get the container to or from the ‘stack’. The ‘stack’ is literally the place where the containers are stacked during their period in the

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COUNTRY REPORT: CAMBODIA

harbor and it is common for different vessels to involve different stacks. In a group (consolidation) shipment, cost will also include unloading of the cargo from container and discharging in a warehouse” (Cargomaster).

“It is not common for the THC at origin or destination to be included in the actual ocean freight charges,

although it might be possible to arrange this. The reason for this is that Ocean Freight is generally charged out in US $ whereas the THC would be cost incurred in a local currency - which may be weaker than the dollar.

To pay the THC as part of the freight could, therefore, actually increase the cost of that event. THC is also sometimes referred to as FIO: Free In & Free Out. While not the same, FIO refers only to the unloading of the

Customs Export Declaration

“If you wish to export products, you must declare the

export to the customs authorities and be able to produce appropriate customs documents during the transport. For this purpose, you must create a customs export declaration for communication with the customs authorities and print export documents. The system automatically requests an export confirmation for the customs declaration” (SAP).

Export Permit

“An export license grants permission to conduct a certain

type of export transaction. It is issued by the appropriate licensing agency after a careful review of the facts surrounding the given export transaction. Most export transactions do not require Customs Export Declaration specific approval in the form of licenses from the U.S. Government. In fact, a relatively small percentage of all U.S. export transactions require licenses from the U.S. government. It is up to the exporter to determine whether the product requires a license and to research the end use of the product, in other words, to perform “due diligence” regarding the transaction. Exporters should learn which federal department or agency has jurisdiction over the item they are planning to export in order to find out if a license is required” (Export.gov).

Export Permit 86

APPENDIX

Inspection Report “Inspection Reports are required when mandated by the government of the importing country. Governments assert that inspections ensure that the price charged by the exporter reflects the true value of the goods, prevent substandard goods from entering their country, and mitigate attempts to avoid the payment of customs duties” (Export.gov).

“If no discrepancies are noted during the inspection, and once all final documents are received from the importer and exporter, a “Clean Report of Findings” is issued confirming the shipment’s value, customs classification, and clearance. The importer uses the inspection report to get the imported goods released from Inspection Report

customs. If goods reach the border of the importing country without inspection, they usually have to be re-exported to a nearby country

for inspection prior to re-entry or are subject to heavy penalties” (Export.gov)

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COUNTRY REPORT: CAMBODIA

MAPS Map of United States & Cambodia

88

MAPS

Shipping Route From Cambodia to U.S.

Source: SeaRates

Natural Hazards

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COUNTRY REPORT: CAMBODIA

DESIGN SHEET Page #01 STYLE NUMBER: #NX418 STYLE NAME: Murex

SKETCH

ADDRESS: Santa Cruz, CA 95060

PHONE: (314) 341-9003 EMAIL: nixswimwear@gmail.com

GARMENT INFORMATION GROUP NAME: One-Piece / Maillot CLASSIFICATION: Swimwear SEASON: Spring / Summer 2015 FABRIC: Mesh: 90% Nylon, 10% Spandex Neoprene

COLORWAY: White, Sea-Foam Green, Reef Print DESCRIPTION: Panelled one-piece suit with 1/2" thick straps, upside down triangle cut out on back below center chest, Low scoop necklines in both front and back, Modest leg line providing full coverage in front with minimal coverage in back

Designer's Initials: N.D. DATE CREATED: APR 5, 2014

90

DATE MODIFIED:

DATE RELEASED:

TECH PACKS

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COUNTRY REPORT: CAMBODIA

92

TECH PACKS

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94

TECH PACKS

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96

TECH PACKS

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TECH PACKS

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COUNTRY REPORT: CAMBODIA

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