Notes from the Field

From Cambodia: Improving Local Business Environments

September 19, 2007

“Keep making your voice heard, keep informing us of your concerns, we need to hear from you,” Senator Ung Huot, Vice Chairman of the Senate Commission on Economy, urged representatives of provincial small business associations in a meeting at the Senate on September 7th in Phnom Penh. “Improving your business environment will take time,” he warned, “but raising your voice is the only way to get things moving.”

The message was well received by representatives of provincial small and medium business associations who made the long trip to the capital city of Phnom Penh to, for the first time, directly engage with national policy-makers on private sector development in Cambodia. Their goal was to bring attention to the priorities of the private sector in provincial Cambodia and, ultimately, improve the efficiency and capacity of commerce throughout the country.

The September 7th discussion was based on the results of a 2006 survey of five hundred business people in provincial Cambodia. This survey, conducted by The Asia Foundation in partnership with the International Finance Corporation’s Mekong Private Sector Development Facility (IFC-MPDF), provides a complete look at 10 provinces’ local economic practices. The survey reviews entry costs, transparency and access to information, time costs of regulatory compliance, informal charges, dispute resolution, and other issues that can affect local businesses. The survey’s results inspired Cambodia’s first Provincial Business Environment Scorecard (PBES) in which the provinces are assessed and ranked according to the performance, capacity, and willingness of their governments to develop business-friendly policy environments. This analysis of local business environments is a clear and valuable tool for national policy-makers, public services, local authorities, the private sector and others to identify priority areas for reform.

The meeting’s participants agreed that improved dialogue and cooperation among the different stakeholders, at all levels, is essential if Cambodia is to experience significant improvement in its local business environments. To address local business issues, national public authorities have to work in synch with local governments, local civil servants and the private sector. In some provinces, the business community has already taken action. Local businesses have created associations, identified priority policy issues, and are actively working with local governments to help improve business efficacy. In public-private dialogues in the provinces, local business owners now speak with local authorities on issues such as taxes and informal fees, implementation of national and local regulations, and information boards on licensing procedures..

The support Senator Ung Huot expressed for small business entrepreneurs echoed the sentiments of over one hundred members of Cambodia’s Senate, Parliament and Representatives of the Ministries who attended this meeting. This vigorous participation demonstrates a growing commitment among policy-makers to engage with small businesses, which constitute the majority of Cambodia’s economy. In a context of dynamic but highly unbalanced economic growth, this increased cooperation between the public and private sectors is vital to ensuring an overall positive, sustainable impact on Cambodia’s development.

Veronique Salze-Lozac’h is the Regional Director for Economic Programs at The Asia Foundation’s office in Phnom Penh.

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