Doing Business in Cambodia

A Complete Guide to Doing Business in Cambodia

Your comprehensive guide that highlights essential information on starting a business in Cambodia, from setting up a business to taxation and more. For questions, or assistance in starting a business in Cambodia, please contact us. 

Starting a Business in Cambodia

Cambodia’s open economy creates a lot of business opportunities, not just for Cambodians, but most especially for foreigners. It has no restrictions on foreign business registration which allows 100% foreign-owned businesses to operate in the country with nearly the same rights as local-owned businesses (except for the ownership of the land the business sits upon).  

But before making this country your next entrepreneurial ground, here are the significant things you need to know upon starting a business in Cambodia. 

Selecting a business structure really depends on personal circumstances and preferences. But, to be able to decide on the right type of business you’re going to venture on, it might be necessary to ask these questions first:

What type of company structure is right for you? 

Use this chart to determine the most appropriate business entity for you. 



Each structure has its own pros and cons in terms of liability, operations, taxation, and registration and filing fees. Requirements on business registration depend on the type of business that is going to be established. At present, these are the legal forms of businesses in Cambodia: 


1. Sole Proprietorship 

A business entity that is owned entirely by a single person. It has the simplest operating structure that is common for small-scale businesses. 

Because the owner is the sole proprietor, he/she takes the entirety of all profits and losses, and is fully liable for the decisions, obligations, and debts of the business.  

2. Partnerships 

General PartnershipA business entity which involves two or more natural persons. Each partner involved is equally responsible for the business actions and decisions; are authorized to administer and bind the partnership, thus are fully liable for all debts and obligations of the business. 

Limited PartnershipIf the partners agreed on a “limited partnership,” there should be: 

  • one or more (general) partners who will take full responsibility, who are the high authorities, and who are liable for all the debts and obligations of the business.  
  • one or more (limited) partners, also known as the “silent partners” that contribute money without having any say in the company, hence are  entitled  to  a  share  of  profits  and are  only  liable  to  the  extent  of  the  sum  of  money  or  value  of  the  property  that  they  have agreed to contribute. 



Whilst most foreign entrepreneurs who have set up a company in the Kingdom are under a Sole Proprietor structure, larger businesses will setup under a ‘Limited Liability Company’ structure. This type of business limits the liabilities of shareholders to the capital invested in the company. 

3. Limited Liability Company (LLC) 

A common form of business and investment that is highly recommended for foreign entrepreneurs in Cambodia as it limits the potential liabilities of shareholders to their investment in shares. This type of business can have between 1 and 30 shareholders to which the minimum capital requirement is only USD$1,000 (or 4 million KHR). 

A business entity that gives flexibility to a partnership and the protection of a corporation. It can be 100% Cambodian-owned, 100% foreign-owned, or any combination of both shareholdings that may be subject to certain restrictions. As the name suggests, a member’s personal liability is limited when it comes to business decisions and actions. 

Note: Unlike other enterprises, LLC does not require an involvement of a Cambodian investor for it to be run and be established in the country. 

Three Types of Limited Liability Company 

  • Single-Member Private Limited Company – a business entity with one physical or legal shareholder and at least one director, with all advantages of a PLC. 
  • Private Limited Company – a business entity with two to thirty shareholders and at least one director. It may have some restrictions on the transfer of each class of shares based on the Articles. 
  • Public Limited Company – a business entity that the law authorizes to issue securities to the public. It must be headed by at least three directors who are elected by the shareholders for a period of 2 years. 

Some other business structures that apply exclusively to companies owned by a foreign parent company include; 

 4. Representative Office (RO) 

A business entity that is available to a foreign parent company that wishes to engage in sales liaison and market research activities in Cambodia. The RO is not a separate legal entity from the parent company and is strictly limited in its business activities. 

It is only intended as a cost center that holds the same name as the parent company, gathers information for the parent company, enters into contracts on its behalf; but should not offer paid service and derive income from its operations. 

The activities that RO may engage in are detailed in Article 274 of Law on Commercial Enterprise (LCE): 

  • Contact customers for the purpose of introducing customers to its principal 
  • Research commercial information and provide the information to its principal 
  • Conduct market research4 Market goods at trade fairs, and exhibit samples and good in its office or at trade fairs 
  • Purchase and keep a quantity of goods for the purpose of trade fairs 
  • Rent an office and employ local staff 
  • Enter contracts with local customers on behalf of its principal 

5. Branch Office 

A business entity that is still owned by a parent company, therefore maintaining liability with the parent company. A branch office in Cambodia is a less restricted form of business that can, in practice, be engaged in the same business activities as regular Cambodian business. 

Responsibility for the debts and liabilities of the branch office are jointly held between the branch itself and the parent company, which makes it a riskier form of entity. 

6. Subsidiary Company 

A business entity that must be limited and incorporated company owned by a parent company. A subsidiary in Cambodia must own the majority of shares, particularly at least 51%, of a foreign parent company. 

7. Land Holding Company 

 A business entity that must be limited and incorporated company 51% owned by a Cambodian national. Such a company is legally able to purchase land and property in Cambodia. The 51% Cambodian shareholding can be held by Nominees who may, through a Power of Attorney and other legal instruments, give control of their shareholding to the 49% minority foreign shareholder. 

Note: A business is considered a “Cambodian business” if it has a registered office in Cambodia; whereas 51% of shares is owned by a Cambodian legal person/s. 

The enterprises can be classified into four categories namely micro, small and medium sized enterprises, SMEs as they’re known for, and large enterprises. Generally, the SMEs refer to any enterprises with up to 100 employees. 

In Cambodia, this is the definition for SMEs: 


Number of employees 

Financial Assets excluding land (USD) 


Less than 10 

Less than USD 50,000 


11 to 50 

USD 50,000 to USD 250,000 


51 to 100 

USD 250,000 to USD 500,000 


Over 100 

Over USD 500,000 

Source: Small & Medium Enterprises Development Policies in Cambodia 

The Law on Financial Management 2016 has restructured the Regime of Taxation into Self-Assessed Regime or The Real Regime of Taxation. According to the law, everything will be done by the company or business itself. From preparing the tax filing, calculating, to actually paying (through the bank) and submitting a receipt to the Tax Department office. 

However, the Tax office, at some point, audits all the taxes and evaluates the taxpayers (as indicated on its auditing policy), so the business needs to be knowledgeable about the tax procedure. If not, the business can hire a knowledgeable person or hire a trusted firm to do all the process. IPS can assist with finding an accountancy firm to assist with this. 

The Real Regime of Taxation is composed of Small, Medium and Large taxpayers. Below are the details that define what type of taxpayer your business must fall into: 

1. Small Taxpayers (Small businesses) 

Sole proprietorship or partnerships that: 

  • Have annual taxable turnover from USD$62.5K to USD$175K 
  • Have taxable turnover, in any period of three consecutive calendar months (within this tax year), exceeding USD$15K 
  • Expected taxable turnover of USD$15K or more in the next three consecutive months 
  • Participate in any bidding, quotation or survey for the supply of goods and services including duties 

2. Medium Taxpayers (Medium businesses) 

  • Enterprises that have annual turnover from $175K to USD$1Mill 
  • Enterprises that have been incorporated as legal entities, representative office or; 
  • National & sub-national government institutions, associations, and non-government organizations 
  • Foreign diplomatic & consular missions, international organizations and foreign cooperation agencies 

 3. Large Taxpayers (Large businesses) 

  • Enterprises that have annual turnover over USD$1M 
  • Subsidiary of multinational companies, branch of foreign companies.
  • Enterprises registered as a Qualified Investment Project (“QIP”) as approved by the Council for Development of Cambodia (CDC) 


Each form of business varies in documentation and eligibility requirements. It is worth noting that the more complex the business structure is, the more complex it is to incorporate a business in Cambodia. 

Generally, all companies must prepare the Memorandum and Articles of Association prior to the business registration. According to the law, the Articles must at least contain the following: 

  • Name of the company 
  • Registered office address in Cambodia 
  • Company objectives, activities, and restrictions 
  • Investment capital in Riel 
  • Rental contract & property tax receipt 
  • Passport/ID card of shareholder(s) 
  • ID Picture/s 
  • Permanent residential address in home country 
  • Permanent residential address in Cambodia 
  • Telephone and email address of shareholder(s) 
  • Articles of Incorporation/Association 
  • Share classes and any maximum number of shares, including the par value 
  • A description of any restrictions on share issue, transfer, or ownership, if applicable 
  • Number of directors, or a minimum and maximum range of directors 

Additional requirements for branch office/subsidiary/representative office: 

  • Company certificate, Articles of Incorporation and other legal documents 
  • Letter of appointment/Power of attorney.


IPS is able to offer guidance and advice on choosing the most appropriate company structure for your specific business and will manage the entire process of establishing your business, as set out below;   


After choosing a business entity type, you need to choose a business name. The company name must not be misleading, offensive, or confusing, and must not be too similar to an already existing registered company name. 

Duration: 3-4 business days 


The incorporation of business in Cambodia is done with the Ministry of Commerce.  

IPS will help to prepare the articles of association and memorandum of the company, in accordance with applicable law, regulations, and standards set out by the Cambodian Ministry of Commerce. 

IPS will also work with you to collate and submit all the documents required for your application, which include: 

  • Company name 
  • Corporate form 
  • Business objectives
  • Company duration 
  • Proof of registered office address (lease contract, utility bill, land title) 
  • Share per value in KHR and USD 
  • Stated capital in Khmer currency and shareholding 
  • Name, address, contact details, and nationality of shareholders and the directors 
  • Proof of identity of shareholders and directors (copy of IDs or passports) 
  • Consent form stating that directors must not have been convicted of a crime and cannot be a government official in Cambodia 
  • Announcement of the company establishment 
  • And, if the business already has employees: the number of employees classified by its nationality, gender, position, employee ID, together with other supporting documents such as work permit. 

 After completing the process, the application will then be submitted for review and approval. Once the application has been approved, a digital certificate of incorporation will be made available (the hard copy of the certificate can be obtained soon after) 

Duration: 7 to 10 working days 


With the company incorporation complete, you may now open a company bank account and begin the tax registration process. 

Before starting the tax registration process, a business bank account is required with a legal deposit amount of KHR 4 million or USD 1,000. In opening a bank account, the business must apply to a domestic bank in Cambodia. The bank must provide a bank statement certifying the deposited amount. 

Duration: 1 Day 


After obtaining the certificate of incorporation from the Ministry of Commerce, IPS will assist you in submitting the following to the General Department of Taxation office; 

  • Memorandum and Articles of Association 
  • Certificate of Incorporation 
  • Ministry of Commerce Letter of Approval 
  • Bank Statement 

The GDT will then register the business and issue Value Added Tax or VAT certificate, Taxpayer Identification Number I.D or TIN I.D, and Patent Tax certificate. 

Duration: 7 to 10 working days after obtaining Certificate of Incorporation 


Businesses are required to submit a written declaration to the Ministry of Labour before they can commence operations, assuming that it already has employees. If none, the declaration can be done after the first hiring. 

For businesses with at least 8 employees or more (and those that reach this threshold): 

  • Declaration must be submitted prior to opening the business 
  • Internal regulation must be filed within 3 months from the date of commencement 
  • Maintain a payroll ledger, declaration of personnel, a book of establishment, and labour regulations 
  • Must have their employees register with National Social Security Fund 

Businesses with lesser employees can submit the declaration after opening as long as it’s done within the first 30 days. All employers are required to submit a written declaration to the Ministry of Labour when an employee is hired or dismissed, within 15 days of the date of hiring or termination at the latest. 

The documentation completed during this procedure may include: 

  • Announcement of the opening of a new company and its registration with the Ministry of Labour 
  • Declaration of staff 
  • Development of internal regulations 
  • Obtaining the payroll ledger and book record of establishment 
  • Electing staff delegates 
  • Filing employment contracts 
  • Obtaining employee handbooks and work permits for foreign employees 
  • Registration with the National Social Security Fund 
  • Payment of contributions to staff for the NSSF and obtaining occupational risk insurance cards 

Duration: 7 to 10 working days after the receiving the tax certificate. 


Labour Inspector from the Ministry of Labour will inspect the business in conjunction with the declaration of commencement of the business. 

Duration: Occurs at the same time as the declaration of opening business 

Overall, when IPS sets up a business for you in Cambodia (including registration with tax and labor authorities), it typically takes around 30 to 40 working days, assuming all paperwork is provided to us in a timely manner. Although, once you have incorporated your company (within 7 to 10 days of applying), you can begin company operations whilst you are awaiting the remaining business certifications. 

During the process of opening your business, your business will be classed as either a Small, Medium, or Large Taxpayer. 

The three categories of taxpayers are defined by the following qualifications: 

Small Taxpayers 

Taxpayers that are Sole Proprietorships or Partnerships that: 

  • have annual taxable turnover from KHR 250 million (USD 62,500) to KHR 700 million (USD 175,000); 
  • have taxable turnover, in any period of three consecutive calendar months (within this tax year), exceeding KHR 60 million (USD 15,000); 
  • expected taxable turnover of KHR 60 million (USD 15,000) or more in the next three consecutive months; and 
  • participate in any bidding, quotation or survey activities for the supply of goods and services. 

Medium Taxpayers

  • enterprises that have annual turnover from KHR 700 million (USD 175,000) to KHR 4 billion (USD 1 million); 
  • enterprises incorporated as legal entities; and 
  • government institutions, foreign diplomatic and consular missions, international organizations and agencies. 

Large Taxpayers 

  • enterprises with annual turnover over KHR 4 billion (USD 1 million); 
  • branch of a foreign company; 
  • subsidiary of multinational companies; and 
  • enterprises registered as a QIP as approved by the Council for the Development of Cambodia/CDC. 

Once a business has completed its tax registration, all taxpayers must return monthly and annual taxes. IPS will introduce you to an accounting agent who can handle all the following taxes: 


Each taxable year, the company’s profit and revenue is subject to taxation through either the tax on income or the minimum tax on every 31st of March, whichever tax is greater.  

  • Tax on Income (TOI) 

The Tax on Income rate depends on what type of taxpayer you are. 



Sole   proprietorships   and   general partnerships 

Progressive rates of between 5% to 20%, based on Income earned 


Small Taxpayers 

Progressive rates of between 5% to 20%, based on Income earned 


Medium Taxpayers 

Subject to a rate of 20% 

Insurance companies relating to property or risk in Cambodia 

Subject to the type of insurance offered 

Profits are calculated by a company’s revenue minus deductible expenses. Expenses can be deducted if they are paid for or incurred in a tax year to carry on the business. Non-deductible expenses are those used for personal needs, entertainment and amusement, donations for charity, or anything that does not benefit the business. 

  • Prepayment of Income Tax (PIT) 

Every month, a taxpayer must make a prepayment of 1% of its monthly revenue, also referred to as turnover. PIT is essential in calculating the annual tax on income; whereas if the tax on income exceeds the prepayments made over the past year, an additional tax payment will be due, but if the prepayments exceed the tax on income, the minimum tax is applied with no additional payments required.  

  • Withholding Tax (WHT) 

Taxpayers carrying on a business in Cambodia must withhold certain amounts from payments made to resident and non-resident taxpayers. The amounts withheld are remitted to the GDT.  

Although withholding tax applies at all businesses, the tax rates depend on the type of payments and the residency of the recipient. 

For payments made to a Cambodian resident, the rates are as follows: 



Services provided by Cambodian residents not registered for tax 




Interest payments, except those paid by domestic banks 


Interest paid by a domestic bank on fixed-term deposits 


Interest paid by a domestic bank on non-fixed term deposits 


Rental payments, except for subleases to a rental business 



For payments made to non-residents, the rates apply: 



Interest payments 


Royalties, rent and other property-related income 


Management and technical fees 





  • Tax on Salary (TOS) 

ResidentsMonthly salary tax rates vary between 0% and 20% based upon the level of personal salary as shown in the table belowFor resident employees, the tax to be paid is determined on the monthly taxable salary and must be withheld at these progressive rates: 

Taxable Monthly Salary (USD) 

Salary Tax Rate 

Tax on Salary Calculation (USD) 

$0 – $325 



$325 – $500 


(Salary x 5%) – $16.25 

$500 – $2,125 


(Salary x 10%) – $41.25 

$2,125 – $3,125 


(Salary x 15%) – $147.50 

$3,125 + 


(Salary x 20%) – $303.75 


Note: Exchange/Conversion rate of USD to KHR is at $1 USD = 4,000 KHR 

Non-Residents For non-residents, the tax to be paid is at a flat rate of 20% which constitutes a final tax. 

  • Value Added Tax (VAT) 

VAT is applicable to the supply of goods and services used for production, trading and consumption in Cambodia (including goods imported into Cambodia). 

The standard rate for activities not specifically detailed as VAT-exempt is 10%. Goods exported from Cambodia are subject to a zero-rate, and certain business activities are also considered exempt. 


Although all taxpayers are subject to the same annual and monthly tax obligations, each taxpayer is oblige to pay at different tax rates: 





Tax Registration Fee 

5 USD 

100 USD 

100 USD 

Registration Tax 

250 USD 

250 USD 

250 USD 

Patent Tax 

100 USD 

300 USD 

– if the annual turnover is less than 2.5 million USD the Patent Tax is 750 USD 

– if the annual turnover exceeds 2.5 million USD the Patent Tax will be 1,250 USD 

Prepayment of Profit Tax 

1% of monthly turnover inclusive of all taxes except VAT 

1% of monthly turnover inclusive of all taxes except VAT 

1% of monthly turnover inclusive of all taxes except VAT 

Withholding Tax 

Exempted from WHT obligation except WHT on rental of movable 

and immovable properties 


  • 15% Performance of Services, Royalty for Intangibles, Interests in Minerals, Payment of Interest to Non-bank 
  • 6% Payment of Interest to Taxpayers who have Fixed Term Deposit Accounts 
  • 4% Payment of Interest to Taxpayers who have Non- Fixed Term Deposit Accounts 
  • 10% Payment of Retail/Lease of Movable and Immovable Property (Legal person), Retail/Lease of Movable and Immovable Property (Individual) 


  • 14% Payment interest, royalty, rental/leasing, and income related to the use of property, management fee and technical services, Payment of dividend, Service 

Tax on Salary 

0% on Salary From 0 Riel – 1 300 000 riels 

5% on Salary From 1 300 001 Riels – 2 000 000 Riels  

10% on Salary From 2 000 001 Riels – 8 500 000 Riels 

15% on Salary From 8 500 001 Riels – 12 500 000 Riels 

10% on Salary From 12 500 001 riels – above 

Value Added Tax 

20% of the 10% VAT based on declared sales 

10% VAT based on declared sales 

10% VAT based on declared sales 

Minimum Tax 


1% of annual turnover inclusive of all taxes except VAT 

1% of annual turnover inclusive of all taxes except VAT 

Tax on Accommodation 

2% on monthly declared income from accommodation 

2% on declared monthly income from accommodation 

2% on declared monthly income from accommodation 

Tax on Profit 

between 5% to 20% profit tax on all profit earned (all income minus all expense) 

I: between 5% to 20% profit tax on all profit earned (all income minus all expense) 
II20% tax on all profit earned (all income minus all expense) the prepaid monthly profit tax payments made will be deducted from this required payment 

20% tax on all profit earned (all income minus all expense) the prepaid monthly profit tax payments made will be deducted from this required payment 

Financial Records 

Must obtain 3 years financial records  

Must obtain 10 years financial records 

Must obtain 10 years financial records 

Audit from Tax Department Office 

Rarely gets audited 

Randomly gets audited every 1 to 3 years 

Randomly gets audited every 1 to 3 years 


Note: If you’re a small taxpayer and grow into a medium taxpayer, the tax office will eventually advise you to change from small to medium taxpayer. 

To ensure that the tax return is properly monitored and followed, a business must practice accounting and bookkeeping. Small taxpayers can use simplified accounting through excel sheet. Medium and large taxpayers require a more complex task which must comply to the Cambodian Accounting Standards. 

Under the Cambodian Labour Law, the employers must be aware of the following: 

1. Hiring Employees 

In hiring employees, the company must present a written employment contract (in English or Khmer) to the employee which should state: 

  • Employer and Employee full names 
  • Starting date 
  • Work location 
  • Compensation 
  • Job Title 
  • Job Responsibilities 
  • Terms on working during holiday/s 
  • Annual leave (vacation and sick leaves, and absences) 
  • Termination Provisions 
  • Other benefits 

Other information can be indicated in the contract if they do not violate the legal requirements of the labour law.  

2. Hiring a Foreigner 

The Cambodian Labour law does not allow companies to hire a greater number of non-Cambodian employees; thereby allowing companies to hire only 10% of non-Cambodian national employees. 

In hiring a non-Cambodian employee, the employer must require the employee to submit the following: 

  • Valid Passport 
  • Cambodian Visa 
  • Residence Permit 
  • Health Certificate 
  • Work Permit (processed and annually renewed by the employer through the Ministry of Labor and Vocational Training or MLVT) 

2. Working Hours and Conditions 

Cambodia requires employers to adhere to health and safety requirements in line with the International Labour Organization or ILO’s Promotional Framework for Occupational Safety and Health Convention (No. 187) 2006. Adherence to these standards is monitored by the Ministry of Labor. 

  • 8 Hour Working Day
  • Working day must not exceed 10 Hours (including overtime)
  • No more than 48 hours per week
  • Minimum of 1 Day-Off per week
  • Employees who work overtime are entitled to 150% of regular salary
  • Employees who work overtime at night or weekly rest days are entitled to 200% of regular salary.

All garment factories must agree to be monitored by ILO’s ‘Better Factories Cambodia’ programme in order to obtain an export license.  

4. Paying Employees 

Salaries must be paid directly to employees, whether in cash, check, or bank transfer. Employees must be paid on the agreed date of salary payment, as indicated in the employment contract.  

The most common term of salary payment is given twice a month, 50% every second week (usually 15th) and 50% every last week (usually 30th) of the month. Employees working on a commission basis should be paid every three months, at most. 

Each paycheck is to be deducted with a salary tax, which then must be paid directly to the General Department of Taxation. Every paycheck, an employee must receive a pay stub which indicates the pay rate, tax deducted, overtime payment, used leave, remaining unused leave, and any bonuses or deductions.  

5. Public Cambodian Holidays 

An annual paid leave of 18 days applies to full-time employees, plus one additional day for every three continuous years of employment. A new employee only has the right to a paid leave after working for one year in a company. Any untaken leave must be paid-out at the end of the contract. 

Every year, a list of paid holidays is indicated in a Prakas from the Ministry of Labour. As stated in Prakas, when a holiday falls on Sunday, the holiday takes place on the following Monday. When a business must operate even on a public holiday, affected employees are entitled to double pay. 

6. Paid Leave 

  • Sick Leave is a leave of absence for the purpose of illness or other health reasons. 

Provided the employee presented a doctor’s certification confirming the illness, employers must pay: 




100% of regular wages and attendance bonus 

60% of regular wages and attendance bonus 

Employers are not required to pay wages but must hold the position until the employee has been off work for a total of six months. Beyond that, employer is entitled to terminate the contract 


  • Special Leave is a leave of absence for the purpose of family matters or personal reasons. 
  • Maternity Leave is a 90-day leave of absence that is only applicable for female employees that has served the company for one continuous year. 

7. Terminating Employment 

All employment contracts are subject to end either through employee’s resignation, termination, retirement, or death. Nevertheless, whether through resignation or termination, the procedures and payouts will depend on the contract signed by both parties. 

Ten Categories of Occupations and Professions Prohibited for Foreigners 

  1. Drivers of all kinds of vehicles as business such as two- and three-wheeled vehicles, tuktuk, four-wheeled motorcycles, van or truck.
  2. Sellers/vendors in public locations with having all kinds of vehicles.
  3. Masseuse in public locations.
  4. Barbershairdressers and beautician 
  5. Shoes sewer and polisher 
  6. Tailor 
  7. Street mechanic/Tire repairer 
  8. Khmer souvenirs craftsman/Producer of Khmer Souvenir 
  9. Instruments, statue artisan/Producer of Khmer Instruments, monk’s alms bowls or Buddhist statue 
  10. Goldsmith and Jeweler/processor of precious stone 

As you’re already aware of the business structures and registration procedures, you may find it really daunting to incorporate a business in Cambodia. Foreigners often struggle with the process especially when communicating with local authorities on Cambodian laws.  

IPS-Cambodia assists all clients from finding the best real estate to helping them with every paperwork needed even after property purchase. As an expat-owned business itself, IPS-Cambodia has gone through every process in setting up a business in Cambodia and understands your needs way more than anyone else.  

Should you decide to finally moving and setting up your business in Cambodia, you can contact us or email /

For further information or clarification please contact us or you may visit these websites for references: 

General Department of Taxation 

Ministry of Commerce – Business Registration Portal 

National Social Security Fund 

Ministry of Labour and Vocational Training 

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