IFC Urges Gov’t to Improve Business Climate

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.