The Future of the Government-Private Sector Forum:

Capacity-Building for the Business Community

Remarks by Bretton G. Sciaroni

Senior Partner, Sciaroni & Associates

Co-Chair, Working Group on Law, Tax, and Good Governance

Chairman, International Business Chamber

Chairman, American Cambodian Business Council

Cambodia Development Cooperation Forum

2-3 June 2010, Government Palace, Phnom Penh, Kingdom of Cambodia

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Excellencies, Ladies and Gentlemen,

I am pleased to address this assembly on the development of Cambodia. It has been more than ten years now since the Government-Private Sector Forum (G-PSF) was formed, and its achievements thus far have been considerable. At the initiative of Samdech Akka Moha Sena Padei Techo Hun Sen, Prime Minister of the Kingdom of Cambodia, the G-PSF was created in 1999 to provide a reliable dialogue mechanism for consultation between the government and the private sector on investment climate issues and to encourage private sector initiatives. With its enlarged cabinet meeting status and being chaired by the Prime Minister, the biannual G-PSF has been a valuable platform for the business community to raise important problems which have not been settled at the working group level and have them resolved in the context of a cabinet meeting. For about a decade of its existence, many issues ranging from long-term policies to day-to-day operations have been raised and resolved satisfactorily.

In particular, during the most recent forum, the 15th G-PSF held on April 27, 2010, 11 of 20 key issues raised by the private sector were solved. These include elimination of rice export licensing requirements, administrative process improvements and tax incentives for small and medium enterprises, reduction of export processing fees, and possible betterments in the industrial relations environment. We are hopeful that the remaining issues will be settled in the near future.

The G-PSF serves as a significant tool to encourage economic development in Cambodia. It both provides the business community with a favorable business environment, and creates employment opportunities for the Cambodian people. In addition, it provides a positive image for Cambodia that can attract more foreign direct investment. In addition to boosting Cambodian economic growth, the G-PSF is also an indicator showing that Cambodia is on the right track in exercising democracy as the private sector interacts freely with the government through the dialogue process.

According to a recent World Bank report on public-private dialogues in various countries, Cambodia’s G-PSF was ranked number one among 24 countries surveyed. We were ranked even ahead of Vietnam, which started its business forum before ours and has had far more donor support. ¹ Moreover, based on an assessment in July 2007 by the International Finance Corporation (IFC), the G-PSF received high marks for organizational effectiveness and impact on the reform process. The evaluation also cited examples for judging the forum’s economic impact and an estimate of US$70 million savings, a return of US$105 for each dollar invested in the forum by the IFC and other donors, and US$350,000 saved per year for the pro bono inputs by business leaders.²

All of us can be proud of this accomplishment, and the greatest credit goes to Samdech Prime Minister, who created and has led the dialogue process.

I wish to particularly thank the IFC, who has played an important supporting role over the years and contributed significantly to our success. However, the IFC will move towards a new role in supporting the G-PSF and is preparing to relinquish its coordination role for the private sector side of the Forum by the end of this year. 

However, the quality and sustainability of the public-private dialogue could be threatened following the IFC’s departure. One main reason is the imbalance of the capabilities between the Royal Government and the private sector counterpart. Whereas the Royal Government has improved its capacity over the ten years of the Forum in terms of personnel and internal processes, the private sector, for the most part, has not kept pace. More and more private sector members are required to provide comments on draft laws, regulations, and sectoral and overall economic strategy through the G-PSF. Whether one examines the Cambodian Chamber of Commerce, under whose aegis the private sector coordinating role will exist, or the variety of business associations which are already supporting the various working groups, none have the capacity at this time to play an effective advocacy role.³

For example,  a report by the Confederation of Danish Industry in 2009 shows that the business associations in Cambodia do not yet have a professional secretariat with the qualified staff needed to support their members and to work with the Royal Government.⁴ Business associations in Cambodia have been building and improving their capacity, but it is still insufficient. 

 For this reason, we need bridge financing and technical assistance, which support would focus on enhancing the capacity of the private sector chambers. This would continue the work done by the IFC to date in promoting business associations so that we can look forward to the day that the private sector has full ownership of our side of the G-PSF and independent of any donor support.

Because of the great importance of the G-PSF for economic progress and development in Cambodia, we must ensure that this dialogue mechanism is sustainable in the future. Many things need to be done for the transition, yet the time is short for business associations to prepare. We therefore look forward to the financial and technical assistance from development partners as well as the private sector in order to ensure that each secretariat supporting the working groups will be fully capable in administration and coordination duties.

Thank you for your attention!

¹ IFC, Review of World Bank Group Support to Structured Public-Private Dialogue for Private and Financial Sector Development (April 2009)

² IFC/AusAid, Impact Assessment of the Cambodian Government-Private Sector Forum (July 2007)

³ See, e.g., AusAid, Cambodia’s Provincial Chambers of Commerce: Needs Assessment & Technical Assistance Program Recommendations (March 2006); and USAID, G-PSF Sustainability (May, 2008)

⁴ Confederation of Danish Industry, Final Report on Capacity Building Intervention in Selected Business Associations in Cambodia (January-June 2009)