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A new joint World Bank Group ( WBG) and Asian Development Bank (ADB) report urged Cambodia to enhance new business investment by improving the reliability of electricity supply, formalizing its financial payment structure and building a skilled workforce.
The Investment Climate Assessment (ICA) 2014 report by the WBG and ADB, which was launched Tuesday afternoon, said those three areas posed the most serious constraints to Cambodia's effort to attract new investments.
"Electricity in Cambodia is not only more expensive than most neighboring countries, but the supply is also intermittent-- especially in the Special Economic Zones (SEZs)," the two lenders said in a joint statement.
"Informal payments are still viewed by registered firms as a major constraint to doing business as well as a skilled workforce. "
World Bank senior economist Julian Latimer Clarke said electricity was expensive and connection was patchy in this Southeast Asian nation.
"Firms report using generators for up to 30 percent of their production needs," he said while presenting the findings at a workshop with government officials, development partners, private sector, civil society groups, and academia.
Corruption was still a major part of doing business in Cambodia as nearly 80 percent of firms reported informal payments in 2012, he added.
"Gift-giving is prevalent and it is still perceived as one of the main constraints to doing business in Cambodia," he said.
World Bank Cambodia Country Manager Alassane Sow said Cambodia has made great strides in diversifying into new products and attracting more sophisticated investors.
"We hope our joint report will help stimulate a healthy public debate leading to a better business environment for private sector development," he said.
The ICA report provided suggestions to tackle the high cost of electricity by looking into tapping other energy sources, and improving agreements with neighboring countries to ensure reliable power supply.
It also urged Cambodia to prioritize the swift passage of the e- Commerce Law and further expand Automated System for Customs Data (ASYCUDA), which has already decreased time and cost for traders.
ADB Country Director Eric Sidgwick said the joint report offered an invaluable contribution to policy-makers and helped them build on the recent progress made in improving Cambodia's attractiveness as an investment destination.
"If effectively implemented, many of the recommendations will have a major impact in achieving the government's Rectangular Strategy III to diversify the sources of growth and continue to reduce poverty and vulnerability," he said.
Speaking at the launching of the report, Sok Chenda Sophea, secretary general of the Council for the Development of Cambodia, said, "Some findings will help the government to take measures to address those constraints so as to build a better investment environment for investors."
