Seizing the Global Opportunity : Investment Climate Assessment and Reform Strategy for Cambodia

This report has been accepted as a key input to Cambodia's private sector development strategy following extensive consultations with the Royal Government of Cambodia, its development partners, and the private sector. It was prepared to help these stakeholders identify and prioritize policy reforms to achieve three related objectives: to enable the private sector to lead growth, to help diversify the economy, and to increase the role of the private sector in public service delivery. The report takes as its starting point Cambodia's pro- poor trade strategy, which recognizes that as a small country, exports are critical to expanding job opportunities. However, Cambodia's policymakers are aware that the export opportunities cannot be captured if firms face an uncompetitive domestic business environment. The report employs an investment climate survey of 800 urban, rural, and informal firms to identify how the policy and institutional environment impacts individual firms, and benchmarks the responses of Cambodian firms with those in China, Bangladesh, India and Pakistan. It builds on (a) Towards a Private Sector Strategy for Cambodia: Value Chain Analysis (2003); (b) a study of the policy and institutional environment for private participation in infrastructure; (c) the Bank's Doing Business indicators for Cambodia, attached as Annex IV; and (d) options for trade facilitation reform included in Chapter 5. A number of recommendations are proposed, with a particular focus on improving trade facilitation practices, integrating markets through institutions such as private value chains, and injecting competition and transparency in private participation in infrastructure. The most important reforms are questions of political will, and as such are facilitated as much by frank, factual discussion as by technical recommendations. The intent is also to contribute to the quality of discussion surrounding private sector development. particularly through the Government-Private Sector Forum.