In a study of the ten most economically active provinces and municipalities in Cambodia,

Sihanoukville ranked as the worst place to do business. The coastal city was followed

by Siem Reap in ninth place, and Phnom Penh, which ranked eighth.

The study, which gives a Provincial Business Environment Scorecard (PBES) to ten

of the total 24 provinces and municipalities, found that Siem Reap, Sihanoukville

and Phnom Penh, the main tourism centers, were the worst provinces and municipalities

for economic activity. The scorecard takes into account transparency, easy dispute

resolution, secure property rights and ease of paperwork.

The International Financial Corporation's Mekong Private Sector Development Facility

(IFC-MPDF) and the Asia Foundation supported the PBES study and released a summary

on its assessment of economic governance and regulatory policy on October 26.

The 10-province study of more than 500 businesses found that Kampong Cham and Svay

Rieng topped the list as good business environments, followed by Kampong Chnang,

Kampot, and Kandal.

The report said the PBES is solely a measure of economic governance and regulatory

policy.

"If we were measuring the total investment environment, it is obvious that Phnom

Penh, Sihanoukville and Siem Reap would rank significantly higher," the report

stated.

Dorothy Berry, IFC Vice President for Human Resources and Administration, said during

the launching ceremony that the study is to help Cambodia realize its potential for

both economic development and poverty reduction by identifying regulatory problems

at the provincial level and helping authorities implement reform.

"If poorer countries reform business laws and regulations and implement them

effectively, annual economic growth could rise by as much as two percent," Berry

said.

She said that reducing the time and costs of enforcing contracts is important to

business environment reform and reforming the business environment is important to

developing country.

"If communication between national and local authorities is poor and local authorities

lack the resources to implement reforms effectively, reforms will not be successful,"

Berry said.

She added that in Cambodia, business owners are reluctant to take risks with those

they don't know very well. This conservatism limits the growth of their companies

and with it, the private sector's ability to create jobs and contribute to overall

economic growth.

She said that as 91 percent of Cambodia's poorer people live in rural areas and many

do not have access to jobs with stable incomes, fostering an environment conducive

to private sector development, and especially agribusiness, could create many more

opportunities to earn a living.

Berry said that if provincial authorities are willing to do their part and commit

to reform, the IFC stands ready to provide support authorities need to implement

reform.

Minister of Industry, Mines and Energy Suy Sem said he has supported the PBES study

and will encourage local officials to be more responsive to the needs of entrepreneurs.

He said the PBES will lead to a better business environment, greater investment and

ultimately to job creation and a reduction in poverty.

"We will re-examine the complicate issues and we will try to facilitate for

SMEs (Small and Medium Enterprises)," Sem said.