Cambodia Should Simplify Institutional Red Tape for Effective Post-Pandemic Recovery, Says Analyst

• 11 March 2021
• Local News
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To ensure a robust recovery from the COVID-19 crisis, Cambodia may need some institutional reforms. and reducing investment red tape should be the first step according to an international analyst.

Strong political and social stability have been the selling points attracting more investment to Cambodia in the last two decades. However, fixing the complexity and uncertainty in legal frameworks and the ground implementations remains the top challenge for the kingdom to resolve to gain more trust and confidence from investors in the long term.

The World Bank’s 2020 Doing Business report, for instance, ranked Cambodia 144th out of 190 countries. As for dealing with construction permits, Cambodia is ranked at 178th. (Read more)

The report also stated that there are a total of 20 stages when requesting a construction permit in Cambodia, which take a sum of 652 days and cost over 8 million riels (US$2,000), counting only the official expenses.

Founder and Executive Director of the Asian Trade Center Dr Deborah Elms told the Business Times that one way, among others, for Cambodia to achieve maximum economic growth potential is to simplify domestic rules and regulations.

“Cambodia will need to ensure that domestic rules and regulations are as simplified as possible,” said Dr Elms.

“Companies that are looking for new sourcing locations to diversify risks and new ways to build Asian supply chains have a lot of options. They prefer to locate in markets that are easy to do business with clarity on rules,” he added.

By doing so, when the pandemic eventually subsides, Cambodia will become even more competitive in the region, especially given the fact that some neighbouring countries such as Thailand and Myanmar are experiencing political turmoil.

Local economist Dr Chheng Kimlong also believes that Cambodia has to adjust regulatory governance, public administration and policy coordination among government ministries to lure more FDI, in comments reported in the Phnom Penh Post.

The Cambodian government is indeed working on that matter with the Council for the Development of Cambodia (CDC) recently announcing the draft completion of the long-awaited new Law on Investment.

This law is expected to enter into force within the first semester of 2021 if there is no further input required from Prime Minister Samdech Hun Sen.

According to CDC Secretary HE Sok Chenda Sophea, the new draft law is expected to enhance predictability and boost further incentives for foreign investors.

Refusing to reveal the details of the draft, HE Sok Chenda Sophea only revealed that the new law has been carefully drafted to balance the priority goal of increasing revenue collection with embracing the long-term business and attracting new investment.

Stability and predictability are key for investor confidence, and we are hoping to provide that to them with our new law, he added.

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