Cambodia desperately needs new businesses and jobs, and risks falling even further behind countries that are simplifying their business regulations and becoming more trade friendly, Michael Klein, the International Finance Corporation’s Chief Economist said in a statement.
Cambodia must reduce red tape and improve the rule of law if it wants to strengthen its economy, an economist for IFC, the private sector arm of the World Bank Group, said in the statement dated Wednesday. The statement was issued to launch a report titled “Doing Business 2005: Obstacles to Growth.”
“Cambodia desperately needs new enterprises and jobs. Currently, it risks falling even further behind countries that are simplifying regulations and making their investment climates more business friendly,” Klein wrote.
Klein also noted that the government has taken steps to improve the business climate by reducing the minimum capital required to start a business from $5,000 to $1,000, lowering business registration costs from $615 to $177 and increasing the speed of registration from 30 days to 10.5 days.
Not all businesses are doing badly in Cambodia, Bretton Sciaroni, president of the International Business Club, said Friday.
Businesses from Europe, Singapore and North America tend to register with the Ministry of Commerce or the Ministry of Finance’s tax department, which pushes up operating costs, he said.
However, some local and regional businesses are avoiding these procedures, instead making private arrangements with some government officials and thus trading more easily, he said. “Cowboys like the unregulated aspects of the economy,” Sciaroni said.
Chea Vannath of the Center for Social Development said Friday that as business opportunities increase for firms dealing unofficially and discreetly with officials, their influence over the government is likely rising.
James Wolfensohn, president of the World Bank Group, will be in Cambodia from Feb 9 to 13 for a conference with donors and the government on business reform, Bou Saroeun, World Bank communications officer said Friday.