Talking Legal With Bretton Sciaroni



The B2B team sits down with founder and senior partner at Sciaroni & Associates, Bretton Sciaroni. We discuss taxation law, accountancy practice and ASEAN integration, among other issues, and Bretton gives insightful advice to entrepreneurs hoping to start a new venture in the Kingdom.

One of the first foreign lawyers in Cambodia, Sciaroni continues to provide professional advice on numerous investment projects and is very active in the business community as Chairman of the American Chamber of Commerce and the International Business Chamber.

Sciaroni & Associates is a leading professional services and investment advisory firm that has been doing business in Southeast Asia since 1993.  Based in Cambodia with legal offices in Laos and Myanmar, they provide knowledgeable business insights and experienced guidance to many of the world’s leading companies, financial institutions, governments and international organizations to help maximize the value of investments.
B2B: What kind of legal guidance would you advise people to seek before initiating the process of starting their own small or medium-sized enterprise (SME) in Cambodia?

Sciaroni: The first rule of order is to make sure you do things according to the law. A lot of times entrepreneurs are approached by people who are fixers or middlemen, and they would give advice which is not consistent with the legal requirements, but are ways to get the business set up quickly. But if you take shortcuts, and you don’t follow the law, you will be vulnerable later on. Don’t listen to those who say there is a ‘Cambodian way’ of doing it.

B2B: What legal issues are most often overlooked by people coming into Cambodia and setting up their own small business?

Sciaroni: Again, there is an impression among many foreigners that this is a lawless country, and this is not true. It is a country of laws, and those laws will be enforced. And so, if you follow the siren song of people who say “I have a friend at this or that Ministry; we can do things quickly and easily”, then you are gonna end up paying, sooner or later. So, know what the laws are and follow them; you will avoid a lot of the problems that can occur later on.

B2B: For what issues do people seek Sciaroni & Associates’ advice the most?

Sciaroni: It could be a variety of issues. It could be dealing with labor relations, property law, tax law, work permits, etc. There are many issues that people are concerned about when they first come here to set up their businesses.

B2B: What law changes pertaining to the process of starting a business are we likely to see as a result of integration into the ASEAN Economic Community (AEC)?

Sciaroni: Actually, integration into AEC is going to be easier for Cambodia than for a number of other countries. The reason is we already have a very free market economy to begin with. This is a very user-friendly environment in terms of the business climate. The government has from the first days of the first mandate made this a good place to do business, so there is going to be fewer problems for us than for other people in ASEAN.

B2B: How is accounting practice developing in Cambodia?

Sciaroni: It really is marvellous how the accounting profession here has grown. One reason it grew was because from the early days we had major international accounting firms like KPMG, PWC, Ernst & Young, and so on, and what they have done, generation after generation, is train Cambodians who wanted to become accountants, tax professionals, etc, and sooner or later the Cambodians got out and started their own firms. Also, you have some very good accountancy schools here, such as CamEd and so on. So it is a very robust and, I would say, very competitive environment for the accounting profession.

B2B: Can you comment on any recent developments with regards to Cambodia’s development policy, including any legal and regulatory changes?

Sciaroni: Last week [August 2015] there was the launch of an industrial development policy at the Peace Palace by the Prime Minister. The launch of such a policy is a step in the right direction for Cambodia, as it will give a framework to the country’s development policy and lead to a number of legal and regulatory changes. Among those, there will be an amendment to the Investment Law. Likewise, the SEZ sub decree will be split off into a full-fledged law. The private sector and international stakeholders, such as the International Finance Corporation, are in dialogue with the Royal Government to make sure we make the most out of this process.

The Investment Law — which was promulgated in 1994 and amended in the last decade once already  — is a good law, but there are significant ways it could be improved to make Cambodia a more interesting investment destination. We are not uninteresting today, don’t get me wrong. We’ve been having a 7%-plus GDP growth year after year, so we live in a very robust environment. But there is always room for improvement, and we are looking forward to improving this law further this coming year. Also, with the advent of an SEZ law, I am hopeful the country will become even more attractive.

As important as the garment industry is to Cambodia — and to salaries, economic growth and taxes — we have to graduate at some point to get light manufacturing into the country. We have had some coming in here in recent years, particularly the Japanese, but we need more. With a more robust SEZ law, I am hopeful we will be seeing more light manufacturing pouring into the country.
B2B: How do you rate recent efforts by the government to improve the tax system?

Sciaroni: The General Department of Taxation (GDT) is no different from other departments of the Government in so far as they are trying to modernise their system. Anytime that you undergo modernisation there can be problems because you are changing the way that things are traditionally done. You see this in ministry after ministry, and agency after agency: As they implement changes to emulate other systems of taxations or company registration there is always going to be some dislocations. It is a delicate process, full of hardships, and we are going through it right now. I am the co-chair of a working group in law, tax and governance and I also sit in a more specialised tax working group, and what I’d say is that we are working closely with his excellency Kong Vibol and officials at the GDT to try to get investor-friendly policies, laws and regulations. We had a very intense period of negotiations and consultations with the GDT.

B2B: From a legal point of view, what advice would you give to someone that wants to come into the Kingdom and set up a business?

Sciaroni: I recommend they seek legal advice, but I also recommend they just talk to their compatriots in the business community because there’s a wealth of knowledge to be absorbed. Usually people that work here, especially people that have been here for a long time, are willing to work with newcomers and give their advice; give their experience on the ground. And that can be invaluable, especially for avoiding pitfalls.



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