Ly Tayseng, managing partner of HBS Law, addressed a Cambodia-Philippines Business Forum in Phnom Penh on January 22. Yousos Apdoulrashim
Legal experts have emphasised the importance of understanding Cambodia’s legal framework for successful business operations, despite the country’s generally open and pro-business environment.
Speaking at the Cambodia-Philippines Business Forum in Phnom Penh on January 22 – which focused on fostering ties between the two nations through Women in Business – Ly Tayseng, managing partner of HBS Law, explained that Cambodia generally adopts a civil law system.
However, in practice, the Kingdom’s legal framework is becoming a mixed system of civil law, common law and international best practices, particularly in the business sector.
“Cambodian laws are gradually influenced by international legal practices, including those from Asia and beyond. As a signatory to many international treaties and agreements, international laws have played important roles in the country’s modern legal framework. This necessitates expert interpretation and consultation,” Tayseng explained.
He noted that Cambodia’s legal system is evolving rapidly.
“Many of our laws are newly enacted, particularly in 2022 and 2023, and cover crucial business areas. These laws are modern because they align with international norms and best practices,” he added.
Tayseng used the occasion to explain the importance of understanding the Kingdom’s rapidly evolving legal environment, especially for those wanting to do business. Yousos Apdoulrashim
Tayseng also highlighted how legal experts within government institutions are constantly studying foreign legal systems, noting that this contributes to the modernisation of the Kingdom’s legal framework, making it sophisticated and meeting the needs of business community accordingly.
Regarding foreign ownership, he pointed out that Cambodia is one of the few countries in the region that allows 100 per cent foreign ownership in businesses, with the exception of the owning of land and ground-floor properties, such as houses or apartments. While foreigners cannot own land, they can lease it or invest through mechanisms like economic land concessions.
For business conflict resolution, Tayseng explained that Cambodia offers various options, including mediation, negotiation and arbitration, before resorting to the courts.
He also praised the streamlined business registration process at the Ministry of Commerce, which typically takes just a few days for approval.
Despite these advancements, Tayseng acknowledged ongoing challenges regarding the law enforcement.
“The Cambodian government is committed to modernising the legal system, but as more laws are enacted, understanding them becomes increasingly complex. Even as an experienced lawyer, I need to continually study new laws,” he said.
Tayseng advised business leaders to seek expert legal counsel with local knowledge and experience to navigate the intricacies of Cambodia’s legal system.
“While the laws are good, thorough interpretation and explanation are often required. Additionally, sub-decrees, prakas and instructions play a critical role in law implementation and understanding,” he added.
In a recent report, the UN Development Programme (UNDP) highlighted Cambodia’s strong political and macroeconomic stability, liberal trade and investment policies, and openness to foreign business. However, the report also pointed out weaknesses in institutional capacity and the enforcement of laws and regulations.
When asked about challenges in legal perspective in starting a business in Cambodia, Tayseng cited the complexity of modern laws as a key issue. The strict legal compliance is becoming more and more compulsory for both local and foreign businesses in Cambodia.
“Not all laws are available in English, and even when they are, they often require careful interpretation,” he explained. Although some laws are available in English, they could be either abrogated or significantly amended by new laws. So, seeking advice from Cambodian lawyers who read laws in Khmer language would be helpful for foreign businesses too.
Tayseng concluded by reiterating the importance of legal expertise for businesses looking to thrive in Cambodia’s dynamic and evolving economic environment.
