Cambodia has moved 10 places higher in an annual World Bank report that ranks the ease of doing business in countries around the world. But despite the improvement, Cambodia is still placed only 135th out of 181 surveyed countries, according to the report released Wednesday.
The World Bank’s “Doing Business 2009” report ranked countries based on 10 categories of business regulation: starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.
Singapore remained in the top position with New Zealand, the US, Hong Kong and Denmark taking the remaining top five spots respectively. The Democratic Republic of the Congo brought up the rear, taking the 181st spot. Thailand and Vietnam both bested Cambodia, placing 13th and 92nd respectively, but Cambodia did top Laos, which came in at 162nd.
“[Cambodia’s] still 135 out of 181. There are a number of areas that the country can improve,” said Stephane Guimbert, World Bank senior country economist for Cambodia.
The World Bank added three countries to the report over last year and changed its formula, he said.
In last year’s report, Cambodia ranked 145th, but under the new system it would have been ranked 150th in 2007, Guimbert said. So, this new system gives Cambodia a 15-place boost over the previous year, the largest ranking improvement of any country in East Asia and one of the biggest in the world, he said.
“Cambodia is in a very dynamic region,” Guimbert said, adding that there are a lot of opportunities for trade.
The improvements in this year’s ranking are mainly due to the implementation of the Land and Secured Transactions Law, which allows companies to use more assets, such as vehicles and equipment, as collateral for bank loans, he said.
But it remains crucial to the economy to improve in the categories of starting a business and trading across borders, he added.
It takes 85 days to start a business in Cambodia, putting the country 169th in that category, an the country is ranked 122nd in the category of trading across borders, according to the report. Cambodia is also ranked 147th in the category of dealing with construction permits, a process that, according to the report, takes 709 days.
While the report doesn’t measure corruption, a higher amount of bureaucracy and poorer rankings indicate that unofficial payments and corruption are more likely, Guimbert said.
A new computer system at the Sihanoukville Autonomous Port is already reducing the time it takes to get through the port, but the implementation of that system was too late to be considered for this year’s report, he said. A new bankruptcy law could also make a difference as well, Guimbert added.
John Brinsden, vice-chairman of Acleda Bank, said that the amount of permits and other documentation required to export, import and engage in other kinds of commercial activity is a problem for businesses in Cambodia.
“Things are improving, but we don’t know how far or how fast they will go,” he said. “The fact that so many companies are coming here does indicate that people can do business here.”
Kaing Monika, external affairs manager of the Garment Manufacturers Association of Cambodia, said trade officials are often slow in generating necessary paperwork, which keeps Cambodian containers in limbo in foreign ports raking up storage fees.
Importing and exporting through Cambodia can also take more than two weeks when it should take only a few days, he said.
Still, he said, he expected that as the ports modernize, so will the civilian servants who are responsible for processing necessary paperwork.
Mao Thora, Commerce Ministry undersecretary of state, said the ease of doing business is improving and the number of businesses are growing.
The government plans to form a committee to help facilitate a “good environment for doing business in Cambodia…. The committee will work in three main areas: to produce standardized laws; secondly, to examine the laws’ implementation; and thirdly, to train human resources and the businesses,” he added.
(Additional reporting by Yun Samean)