Experts: Businesses Bound By Kilometers of Red Tape

Excessive government fees, high utility prices, kilometers of bu­reau­cratic red tape and a paucity of loans and credit are stunting the growth of small- and medium-sized businesses across the country, a panel of experts said this week.

The panel addressed the nu­mer­ous complaints from local businessmen at a conference this week sponsored by the World Bank.

“Too many fees are the most serious obstacle,” said Kong Chandararot, an economist at the Cambodia Development Research Institute, on Monday.

He based his report on interviews conducted by CDRI with more than 2,000 small business owners.

Echoing a long-standing complaint, Kang Chandararot said excessive fees on small business “result from overlapping tasks among government authorities, the defiance of tax collectors and uninformed taxpayers.”

He noted that businesses operating in Cambodia are often reluctant to expand, lacking capital and wary of insufficient demand, unfair competition and delinquent customers. Authorities must be better coordinated to simplify the pro­cess of starting and expanding small businesses, he said.

Strengthened road infrastructure would open domestic markets, he said, and the government should eliminate unnecessary business permits and fees.

Keat Sokun, an assistant dean at Pannasastra University, also blamed a culture of corruption for hindering the growth of small businesses.

As a result, small- and medium-sized businesses try to make a quick profit and don’t invest often in long-term projects, he said. He suggested the creation of a special government authority to promote small businesses.

Several studies and reports in recent years have chided the government for obstructing healthy economic development in the country. The high costs of fuel, electricity and water have also made business difficult.

But the government has im­proved the business climate by combating smuggling as well as reducing bureaucratic costs in time and fees, said Hang Chuon Narun, secretary-general of the Ministry of Finance.

“The government can provide a favorable environment for growth opportunity, but the amount of success they can have is based on the businesses themselves, and the value of their eth­ics will be the most important factor in their success or failure,” Hong Chuon Narun said.

Current government efforts to provide credit to small businesses is like “pouring water on mushrooms,” Hong Chuon Narun said. “We know how to develop our economy,” he added.

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