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Cambodia Leader Seeks to Assure Investors

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24-Aug-2005
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08.20.2004, 02:46 AM

Cambodia's leader sought to assure investors Friday that his government will introduce business reforms in an apparent response to a recent World Bank report that slammed the country for its corruption and weak rule of law.

Prime Minister Hun Sen said the government had taken "concrete measures" to improve the investment climate, including steps to reduce non-tariff business costs for imports and exports, the elimination of licensing requirements and an overhaul of inspection practices.

"Cambodia has no other better choice than moving forward with all these steadfast reforms," Hun Sen said on Friday at a one-day government forum held annually for local and foreign investors.

"A healthy private sector is key to promoting economic development," he said. "With commitment to continued reforms, our chance to survive would be 90 percent, while surrendering the reforms, the chance would drop to only 10 percent."

Hun Sen's comments came just one week after the release of a damning World Bank report, which said rampant corruption has paralyzed private businesses and is hampering economic growth in Cambodia.

The report, based on extensive survey of 800 firms across the country, said four-fifths of them acknowledged "the necessity of paying bribes" in order to do business.

The report said "the message from the survey is one of weak rule of law, bureaucratic costs, and corruption. Cambodia firms identify corruption as their leading constraint."

Other impediments include a 94-day period for private firms to apply for a business license, an unusually high number of inspections and high "time tax" associated with government inspections, it said.

Hun Sen did not refer to the report at Friday's meeting, but cited reforms that mirrored its recommendations.

The annual meeting attended by government officials, businesspeople and diplomats was scheduled before the report's release.

Bretton G. Sciaroni, a partner at the consulting firm Sciaroni & Associates Ltd., said foreign direct investment in Cambodia has continued to decline in recent years and that "we need to reverse that trend."

He welcomed Hun Sen's remarks, saying they "addressed the critical issues that are holding Cambodia back," and that much needed to be done before the country can compete with its neighbors for investment.

The International Monetary Fund recently issued a bleak assessment of Cambodia's economy, predicting that growth will slow to 1.9 percent in 2005 from a projected 4.3 percent this year because of corruption and stringent regulations.

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