Good governance of Kompong Cham province makes it the best place to do business in Cambodia, while problems in local government make Sihanoukville the worst out of the 10 most economically active provinces and municipalities in the country.
These are among the results of a new study of 500 provincial businesses overseen by the International Finance Corporation’s Mekong Private Sector Development Facility.
The survey, conducted by Indochina Research, was combined with statistical data to rank the 10 most economically active provinces and municipalities in Cambodia. The IFC plans to expand the survey next year to include the rest of the country.
“The problem right now is that provincial government is interfering too much [with businesses],” report author Edmund Malesky, a professor from the University of California at San Diego, said at a Phnom Penh press conference for the release of the report.
In terms of business environment, taking in elements including transparency, easy dispute resolution, secure property rights and quick processing of documents, Kompong Cham leads the list with Svay Rieng province close behind. The rankings put Kompong Chhnang, Kampot, Kandal, Battambang and Banteay Meanchey next. At the bottom are Phnom Penh in eighth place, Siem Reap in ninth while Sihanoukville came in last.
“Siem Reap’s placement near the bottom of the list may come as a surprise to anyone familiar with the large investment and growth in the hotel and tourist industry in the province,” the report notes. “Those who have worked there, however, may be less surprised by Siem Reap’s especially low scores in entry costs, transparency, crime prevention and taxes.”
The report says that Siem Reap officials may not need to work as hard to accommodate businessmen as Angkor Wat already draws them. But if they did improve governance, the economy could grow much faster, it adds. It notes that if Battambang, with all its resources, had the governance of Kompong Cham, businesses would be 17 percent more likely to invest in order to expand there.
When structural advantages such as resources and infrastructure are combined with the governance indicators, Phnom Penh, Siem Reap and Sihanoukville move higher in the “total investment environment” ranking, but Kompong Cham remains the best.
Thav Kim Long, first deputy governor of Kompong Cham, said by telephone that he was very pleased with the results. He said that since Prime Minister Hun Sen devolved business decisions to the provincial governors, the current governor and brother of the prime minister, Hun Neng, has made helping businessmen his priority.
“Hun Neang is very strict with officials. He warned his officials that were late in issuing licenses, or whoever takes bribes or extra fees, would be banished from the administration,” he said.
Sihanoukville Governor Say Hak said that the survey results were wrong.
“Sihanoukville has quite good governance,” he said. “Every time a project worth less than $2 million in capital comes to Sihanoukville, I approve it very fast,” he said. Large investments are controlled by the [Council for the Development of Cambodia] in Phnom Penh, he added.
Sou Phirin, the governor of Siem Reap, acknowledged there are problems in his administration and said he is trying hard to change things.
“What I am doing now is clean roads, clean city and clean administration,” he said. “I am new in Siem Reap but I don’t want to be slow…. The slogan for my province is ‘quick, cheap and transparent.’ ”