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Updates on Licensing for Rubber and Rubberwood Processing

Updates on Licensing for Rubber and Rubberwood Processing

March 4, 2021

The richness of Cambodia’s soil makes rubber plantations a popular investment in the Kingdom of Cambodia. Seeing the potential growth in this sector, the Ministry of Agriculture, Forestry, and Fishery (“MAFF”) recently issued a new Prakas on the Application Procedure for Establishing and Operating Rubber and Rubberwood Processing Factories and Handicraft Enterprises (no. 040 BrK. MAFF dated 19 January 2021) (“Prakas 040”) in order to systemize and streamline the licensing procedure.

Under Prakas 040, rubber and rubberwood processing enterprises are divided into two categories:

  1. Rubber and rubberwood processing factories:
    • Rubber processing factory: A rubber processing facility with total capital of US$500,000 or more.
    • Rubberwood processing factory: A rubberwood processing facility with total capital of US$250,000 or more.
  1. Rubber or rubberwood processing handicraft enterprises:
    • Rubber processing handicraft enterprise: A rubber processing facility with total capital of less than US$500,000.
    • Rubberwood processing handicraft enterprise: A rubberwood processing facility with total capital of less than US$250,000.

What are the licenses defined under Prakas 040?

Under Prakas 040, two separate licenses are required for an investor to operate a rubber or rubberwood processing facility:

  1. Rubber or rubberwood processing factory/handicraft establishment license (which has no expiration date); and
  2. Rubber or rubberwood processing factory/handicraft operating license (which must be renewed every three years).

Establishment license

For the establishment of the rubber/rubberwood processing facility, the applicant is required to submit an application to the General Department of Rubber of the MAFF (the “GDR”). The following documents are required for the application:

  • Rubber/rubberwood facility application form
  • National ID card or passport of the facility owner
  • Curriculum vitae of the facility owner with photograph attached and certified by the local authority
  • Corporate incorporation documents
  • Feasibility study
  • Location map, master plan, architectural plan, and production plan
  • Environmental and social impact assessment evaluation by the competent authority
  • Lease agreement or immovable property certificate recognized by the competent authority

Even though this license has no expiration date, in the event of relocation, expansion, or branch establishment, the licensee is required under Prakas 040 to reapply for a license with the GDR.

Further, if there is a change in the facility owner, the new owner must notify the MAFF within 30 days of taking over ownership.

Licensees must meet the following obligations:

  • Have a responsible technical staffperson with at least a bachelor’s degree in a relevant major.
  • At all times, ensure the safety of their employees in compliance with the Labor Law.
  • Avoid causing harm to the environment or danger to the people in surrounding areas.
  • Display their license at the facility.
  • Allow MAFF officers to inspect and evaluate the facility’s compliance with technical standards.
  • Cooperate with the GDR in conducting research, training, and promotion in regard to technical matters.
  • Submit monthly reports and relevant statistics to the GDR.
  • Provide at least a 30 days’ advance notice to the GDR of termination of the operation.
  • Comply with other terms and conditions as required by the GDR.

Operating license

After obtaining the factory/handicraft establishment license, at least 15 days before commencing operation, the licensee is required to apply for an operating license with the GDR. As mentioned above, the operating license is only valid for three years; therefore, the licensee is required to apply for renewal at least three months prior to the expiration of the license.

Existing rubber/rubberwood processing facilities

For existing rubber/rubberwood processing facilities that have been licensed and are currently operating must reapply for a license under Prakas 040 no later than six months from the date of Prakas 040 (i.e. 18 July 2021).

AUTHORS

Pauline holds a master’s degree in International and Comparative Law and a bachelor’s of law from the Royal University of Law and Economics (Cambodia) in cooperation with Université Lumière Lyon 2 (France). At VDB Loi she is part of the Corporate and Tax Advisory team and advises a wide range of multinationals, financial institutions, and private equity funds.


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Tharo is a legal associate with an international business focus and a strong grounding in both Cambodian and international commercial law, having obtained his LLM in South Korea. His practice focuses on the energy and infrastructure sector.


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