New Law on Public and Private Partnership Replaces the 2007 Law on Concession
On 18 November 2021, the new Law on Public and Private Partnership (the “PPP Law”) was enacted in Cambodia to replace the 2007 Law on Concession. This Law aims to promote just management and implementation of public and private partnership (“PPP”) projects in an effective, efficient, sustainable, transparent, and accountable manner.
The PPP Law applies to all qualified projects dealing with the development of public infrastructures and public services in strategic sectors namely transportation, digital and telecommunication, energy, environment, social affairs, science, and agriculture, etc.
As noted above, the PPP Law abrogates and replaces the entire Law on Concession (the “LOC”) except for (i) concessionaire projects or contracts with the approved terms and conditions for implementation; and (ii) projects or contracts (exclusive of clauses on dispute resolutions) that entered prior to the promulgation of the PPP Law.
With the purpose to ease and encourage infrastructure investments in Cambodia, the PPP Law lays out the following approaches and supports to the PPP projects as well as to the prospective private partners:
- Government’s financial support to PPP project: The Government of Cambodia provides a subsidised package of the state’s budget to qualified projects through a form of financial fulfillment, payment of services fee based on the state budget, state eventual debt obligations, and contribution of property.
- Investment incentive: Under the PPP Law, the selected private partner may sustain the approved project by obtaining a Favourable Tax Regime, a Security Rights over properties of the projects, as well as a Guarantee by the Government to underwrite on any contracts to advance the project such as the guarantee on Credit Facility with potential Lenders.
- Non-restriction and opened option for private partner to implement the project. The PPP Law enables the choice of a private party whether to perform the work itself or to assign a third party contractor, through construction contract to carry out the work on behalf of the private party.
Dispute resolution mechanisms
On top of the above offers, the PPP Law disposes various choices of dispute settlements. The parties are open to furthering their case to Arbitration including the National Commercial Arbitration Centre of Cambodia (“NCAC”) and/or other International Arbitration or the Court of Cambodia should the conciliation facilitated by the Ministry of Economy and Finance (“MEF”) does not succeed.
This alert is for general information only and is not a substitute for legal advice.