Foreign investment law to be modernised

CAMBODIA's new Government will modernise its foreign investment law under the constitution which was adopted this week by the 120-member elected assembly.

Finance Minister Sam Rainsy was confident the constitution and swearing-in of the Government would ensure the political stability needed to attract legitimate overseas funds vital to rebuild the war-ravaged country.

Mr Rainsy said Cambodia had managed to attract only small investors and traders attempting to make a quick profit from the presence of United Nations Transitional Authority (UNTAC).

''These people were rather like adventurers. Big international investors did not dare to enter Cambodia because of political uncertainty and the lack of guidelines,'' he said.

The UNTAC withdrawal in recent weeks, widespread corruption and the uncertain political climate have combined to keep serious investors away.

But early this week all three factions of the previous provisional government agreed to the new constitution which effectively marginalised the power of the Khmer Rouge - which holds no seats in the newly elected Government - and restores Prince Norodom Sihanouk to the throne.

Mr Rainsy said the unified Government would help restore the confidence of foreign investors who had taken a wait-and-see attitude.

He said: ''We are now working hard to set up a legal framework which will attract a new type of investor concerned with the long term and who wants to operate on a clear and sound basis.

''So far we have an investment law which dates back from the former State of Cambodia which will be amended and used as a base for the new law.

''The existing law will remain attractive to investors who will also be encouraged with cost incentives and government-backed guarantees.'' It is expected the practice of offering tax holidays of several years will be maintained.

The revised investment law is expected to be based on Thailand's Board of Investment and a new agency, the National Committee of Investment, would be set up to attract investment.

Australian Trade Commission (Austrade) manager Seng Lo said the old law would not be cancelled but revised to become more practical and aimed at creating profits for investors and the Government.

Mr Lo said in the past companies had been afraid to make long-term investments because the Government was not fully recognised by the international community, ''which is fair enough because businesses want government assurances and guarantees before theyare willing to commit large sums of capital''.

Overseas operators anticipate opportunities as international assistance is provided to rehabilitate and reconstruct roads, hospitals, schools and telecommunications.

Around US$1 billion has been pledged by 30 countries to help reconstruct Cambodia although only a fraction has yet been dispersed.

Mr Rainsy said it was hoped there would be further pledges of aid next year following a return to the climate of peace and security in which better assessments could be made of the basic needs of the people and for reconstruction.

Mr Rainsy, a member of the royalist Funcinpec party which won the May election and who is expected to remain as finance minister, is also committed to fighting corruption.

''Corruption is widespread in Cambodia, in fact it is a political, social and economic disease which needs curing,'' he said.