Cambodia Ease of Business Is Improving, But More Needed

Government reforms have made doing business in Cambodia easier over the past year, according to an annual World Bank report released Wednesday, a contrast to previous years in which doing business in the country has become increasingly complicated compared to other countries.

The report, “Doing Business 2016,” ranks countries based on 10 factors including starting a business, getting electricity, registering property, getting credit, paying taxes, enforcing contracts, trading across borders and resolving insolvency.

In the past year, Cambodia has risen in the overall ranking among the 189 countries surveyed in the report, from 133 last year to 127 this year, due in part to reforms in the processes of starting a business and improving access to electricity.

“Cambodia made starting a business easier by simplifying company name checks, streamlining tax registration and eliminating the requirement to publish information on the new company’s incorporation in the official gazette,” the report says.

These changes saw a slight improvement in Cambodia’s ranking in the “starting a business” category, up to 180 from 185 last year.

At a National Assembly session on Monday, Commerce Minister Sun Chanthol emphasized the importance of the World Bank rankings while announcing plans to move business registration online on December 7.

“We are not happy with the score,” Mr. Chanthol said of last year’s ranking, adding that with business registration moving online, Cambodia should rank 21st in the world in the ease of doing business “assuming that other countries stay the same.”

The World Bank report also found that power outages declined in both frequency and duration in Cambodia as power production capacity increased since last year, leading to the country rising in the rankings from 156 to 145 for getting electricity.

Despite these improvements, however, Cambodia’s ranking declined in six of the remaining seven categories because no procedural changes were made as other countries improved.

Most significantly, it fell five spots in the ease of paying taxes, from 90 to 95, and three spots in the ease of getting credit, from 12 to 15.

In trading across borders, Cambodia shifted only one position from 97 to 98. It slipped by two rankings in registering property (121), protecting minority investors (111), and in resolving insolvency (82). Cambodia maintained its ranking in enforcing contracts (174) and rose by one ranking in dealing with construction permits (181).

Cambodia’s overall ranking placed it well behind more developed regional countries Singapore, Malaysia and Vietnam, which came in at 1, 18 and 90, respectively, but ahead of Laos and Burma, which ranked 134 and 167.

David Van, managing director in Cambodia for consultancy firm Bower Group Asia, said that even in areas that have seen successful reforms, more work needs to be done.

“Better access to electricity does not necessarily mean better ‘affordability’…as our electricity rates remain the killer of all industries in Cambodia compared to our next door neighbors,” he said.

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