Phnom Penh, 27 February 2006 — An important initiative launched in Cambodia today could significantly improve the business environment at the provincial level. For the next three years, a yearly survey of business owners will compare the ease of doing business in ten Cambodian provinces and municipalities.
The partners in the Provincial Business Environment Scorecard project are the Cambodian government, the International Finance Corporation’s Mekong Private Sector Development Facility (IFC-MPDF) and The Asia Foundation (TAF), with funding from the Australian Agency for International Development (AusAid).
Speaking at the launch, Keo Rottanak, Director of the Minister’s Cabinet & Deputy Director General of the Ministry of Industry, Mines & Energy, strongly endorsed the new project. “This is very timely, considering that it comes a week after the launch of government’s Small & Medium Enterprise Development Framework. This Framework, which is the official roadmap for development of small and medium enterprises or SMEs, places a strong emphasis on the need to improve the general business environment. SMEs account for some 90% of private enterprise and almost half of all employment.”
Australian Ambassador, H.E. Lisa Filipetto welcomed the project for its potential to improve incomes of the rural poor. “Ninety percent of Cambodia’s poorest people live in rural areas where economic growth and poverty reduction are significantly slower than in Phnom Penh. We hope that the results of these surveys will strengthen the demand for an improved business environment, and improve the ability of provincial authorities to supply conditions that will satisfy demand.”
In 2006, the Scorecard project surveys which will be undertaken by Indochina Research Ltd., examine key aspects of business environment health that include: the ease of registration and licensing; efficiency of basic services (police, waste disposal and education); transparency of business documentation and predictability of policy change; and dispute resolution methods. The ten provinces and municipalities covered by the project are Kampong Cham, Kampong Chhnang, Phnom Penh, Kandal, Svay Rieng, Kampot, Sihanoukville, Siem Reap, Battambang, Banteay Meanchey. The results of the 2006 survey will be released by the end of June this year.
For the last three years, the World Bank Group has been conducting surveys on business environment health in over 135 countries worldwide and publishing the comparisons in its annual Doing Business Report. These have proven to be a strong stimulus for reform of business regulations. For example, in 2005 the country of Serbia and Montenegro made eight reforms – the most worldwide. In Asia, Vietnam was the top reformer, with five reforms, Indonesia and the Philippines made three each, and Cambodia made one (related to the time and cost of business registration).
Adam Sack, General Manager of IFC-MPDF, which is a lead agency on the Scorecard project, stated that agriculture and agribusiness are considered promising means of contributing to sustainable economic growth and poverty alleviation in Cambodia. But entrepreneurs have been deterred from making the necessary long term investments. The two main reasons are ill-defined property rights and poor governance. The risks in agriculture and agribusiness are high enough without having to worry about one’s property being taken over or the unpredictable cost of unofficial fees.
“We, and our partners, hope that in the provinces that do not do well, the Scorecard project will prompt bottom-up demand for improvement from business owners, and top-down demand from national authorities.”
The Asia Foundation’s Representative Dr. Jacqueline Pomeroy stated that the clearest, strongest conclusion of the just released Cambodian poverty assessment was that “the ONLY hope Cambodia has of meeting its Millennium Development Goal commitment of cutting poverty in half by 2015 is through encouraging rapid economic growth in rural areas.
“Based on TAF’s successes with similar projects in Indonesia and Vietnam, we believe that the Scorecard project here can contribute significantly to rural growth. In the other countries, the surveys have become a very valuable tool for district governments to use in considering local policy reforms, and are also valuable for businesses when they are looking for good investment locations.”
