Cambodia’s postal service will gain complete independence from the Ministry of Posts and Telecommunications by becoming a public enterprise, a step that could attract interest from private investors, officials said Friday.
During Friday’s executive session at the Council of Ministers, a sub-decree was approved aiming to “reform the management system of the current post office into a public enterprise, which is part of the working plan within the Ministry of Posts and Telecommunications,” the council said in a statement.
The sub-decree would also lay down a framework for the “modernization of the postal services sector by using modern information technology to trace packages” and “upgrade the post office network to remote areas,” the statement read.
Council of Ministers spokesman Phay Siphan said the independence afforded the post office under the legislation could attract private investors.
“They are asking for their own responsibility,” Mr Siphan said. As a public enterprise “it is open to private investment.”
Mr Siphan said the advisory board at the post office will be completely independent of the ministry and, therefore, will be able to decide on all operational activities including aspects such as business partnerships and workers’ salaries. The board will consist of three positions from the Ministry of Economy and Finance, the Ministry of Posts and Telecommunications and the Council of Ministers, who will consult experts from the private sector, Mr Siphan said.
All profits generated by the post office will be directed toward state coffers, he said.
No decisions have been made on whether the post office will be looking to attract outside investors, or to be listed on the forthcoming stock exchange, now a possibility in its status as a public enterprise.
Song Leng, director of the department of postal regulation, declined to comment when reached by telephone Friday.
But a senior official at the postal department of the Ministry of Posts and Telecommunications, who spoke on the condition of anonymity due to the sensitivity of the matter, said the decision to make the postal service a public enterprise would spur innovation and speed up operations.
The official also said plans to attract foreign investors were already on the agenda, with talks having been held with Canadia Bank to provide banking services as well as separate talks with international delivery firm DHL.
“Public enterprise is better, as we will have more freedom,” the official said.
Kevin Kee, manager of DHL in Cambodia, said his company did not see itself as a business partner with the postal service.
“We are not focusing on anything in domestic postal services,” Mr Kee said.
Nevertheless, analysts said the decision to go public would create the right business environment to attract investors. But with more independence comes additional responsibilities, they said.
Scott Lewis, a managing partner at Leopard Capital, a private equity fund based in Cambodia, said the success of the future post office would be contingent on how its management performs.
“It depends on how the managers are motivated,” he said, adding that proper reward-based incentives for those in charge should be at the core of the post office’s future business model.
Mr Lewis said privatization would likely improve the postal service—letters currently sent to the provinces take copious amounts of time to arrive, and door-to-door delivery is still very limited.
Hang Sochua, secretary general of the Cambodia Stock Exchange, said he was unaware of any interest from the government to list the post office on the bourse.
So far, the Phnom Penh Water Supply Authority, Cambodia Telecom and Sihanoukville Autonomous Port are the only state-owned entities that have officially been put forward by the government to be listed, he said.
(Additional reporting by Phann Ana)