Cambodia has been removed from a Cold War-era blacklist of the US government’s export finance agency, according to a statement released by the White House on Friday.
The US Export-Import Bank provides financing for American companies exporting goods and services overseas; before Friday, companies exporting to both Cambodia and Laos were legally barred from receiving funding from the bank.
In a brief communication, US President Barack Obama wrote, “I hereby determine that the Kingdom of Cambodia has ceased to be a Marxist-Leninist country.”
He also issued a similar statement concerning Laos, which still remains a single-party socialist republic.
With the removal of Cambodia and Laos from the blacklist, only companies exporting to Cuba, Burma, Iran, North Korea, Sudan and Syria are barred from receiving funds from the bank for trade with those countries.
The bank’s country limitation schedule, available on its website, still lists Cambodia as “support legally prohibited.”
John Johnson, spokesman for the US Embassy in Phnom Penh, described the news as “a positive development” when contacted by telephone Sunday.
However, he added that, “This is just the first step in what will be a lengthy process,” explaining that it will take some time before the president’s order translates into an increase in trade between the US and Cambodia.
Mr Johnson said that he could not comment on why Cambodia was removed from the blacklist now.
Cambodia moved to end decades of authoritarian single-party rule with the 1993 UN-backed election, and has had several national elections since.
Government spokesman and Minister of Information Khieu Kanharith said by telephone Sunday that he welcomed the news.
“This is a good move, and we are looking forward to [US] investors,” he said. “Previously, the US government has provided us with much assistance in terms of exportation of Cambodian products, and this elimination will bring more investors to Cambodia.”
Mao Thora, secretary of state for the Ministry of Commerce, said that he hoped the US will follow up this announcement with a reduction in taxes for Cambodian products exported to the US.
“We are pleased, and we are looking for a reduction, so we can export more products with less tax,” he said, adding that Cambodia exported about $2.6 billion worth of garments to the US in 2008, for which companies were charged 10 percent tax.
While Mr Thora agreed that the announcement from the US was a good start for attracting investors to Cambodia, Cambodian Economic Association chairman Chan Sophal said that the Cambodian government must respond in kind by strengthening its business institutions, including the creation of a commercial court and drafting of an investment law.
“This is not enough to attract [Foreign Direct Investment],” Mr Sophal said by telephone Sunday. “We still need much stronger institutional support, especially in the investment sector.”
Bretton Sciaroni, chairman of the International Business Club and owner of Sciaroni and Associates law firm, said Sunday that he had not heard of the blacklist before Friday’s announcement.
“However,” he added by e-mail, “It appears that this is a law that is left over from the Cold War, and the current administration is rectifying a situation which changed some time ago.”
President of the Cambodia Chamber of Commerce and chairman of the Royal Group Kith Meng said Sunday that he was also unaware of the US president’s decision, but added that he was pleased by the news.
“This elimination that you mention is because of the right policies of the Cambodian government…so we will get more capital from the US market,” Mr Meng said.