Workshop Structure

Infrastructure

Strengths

• Priority for infrastructure: There is widespread recognition in Cambodia and overseas that infrastructure development is a priority.

• Planning and legislation: Legislation is planned and an overall strategy is in place to guide development.

• Demand for infrastructure is evident: There is strong demand for all aspects for infrastructure.

• Multilateral aid availability: There is greater availability of funding than for other purposes, even though the total availability may not be adequate.

• Insurance cover is available: Several aspects of infrastructure are eligible for extended risk insurance, which will help development.

• Low labour costs: Inexpensive unskilled labour is available for construction work.

• ASEAN integration: Membership of ASEAN and the Greater Mekong scheme will help to develop infrastructure at the sub-regional level.

• Infrastructure rehabilitation: Much infrastructure already exists, in dilapidated condition, but can readily be upgraded at a cost lower than new building.

Weaknesses

• Separating realities from illusions: Many plans and projects exist, but it is not clear whether some of them are serious or not.

• Financing: Financing is particularly difficult for recurring costs, such as road upkeep. If infrastructure cannot be maintained, once built, then the cost of building is wasted.

• Resource availability: Developing infrastructure requires access to factors of production, such as electricity fuel land materials, which are scarce and expensive.

• Labour availability: Whereas unskilled labour is abundant, skilled labour is scarce and in high demand making costs higher.

• Legal environment: Many laws need to be enacted in order to improve the environment for infrastructure development, as well as proper, impartial enforcement of laws that do exist.

• Insecurity and safety: Unexploded ordnance remains widespread, creating danger for builders, as well as a poor environment of safety.

• Land title: Where land ownership or leasing is involved, the integrity of land titles and competing claims create risks for developers.

• Hidden costs: There may be all sorts of unexpected costs, especially for foreign contractors.

• Smallness and poverty of market: Where infrastructure is provided by private suppliers, the small market size could represent a problem for project cost payback, as there may not be enough users to make the project viable.

• Perception and image: Cambodia has a poor image internationally, which will discourage foreign investment and potentially increase the costs of financing.

Opportunities

• Small infrastructure projects: It may be best to start out small, to test the bureaucratic system legal infrastructure, labour force quality, and viability of the infrastructure development concept, before going into a major project.

• Potential arising from immature market: Because infrastructure is so limited, there are many opportunities for development.

• Decentralization: Government is becoming more localized and it may be possible to deal more easily with the local rather than the central authorities.

• Regional opportunities: Development of an ASEAN and Greater Mekong Region will create good opportunities, especially for roads and other transport networks.

• Telecommunications: There appear to be special prospects to expand telecommunications, especially if costs and prices can be reduced.

• Consulting opportunities: Required application of international standards will mean introducing various service industries into Cambodia to provide these services, creating selective market entry opportunities.

Challenges

• Risks and return: The perception of Cambodia as a high risk environment will make it difficult to raise finance, and this, in turn, will discourage investment.

• Information gap: Reliable, accurate and adequate data cannot be obtained, making it difficult to assess project viability.

• Specialist skill availability: Cambodia lacks professionals, and it may be difficult to attract overseas professionals into the country because of perceptions.

Action steps and strategies

• Database creation: Government needs to cooperate to create adequate database information about Cambodia to enable potential investors to make decisions and evaluate projects.

• Bureaucratic reform: Procedures need to be simplified and investors need, to be encouraged, not discouraged, by bureaucratic procedures.

• Education and training: Since education and training are urgently needed but adequate funding is not available, private sector support, day-release schemes, and on-the-job training are necessary.

• Creative financing: To assist project viability and ease financing, attractive schemes should be sought to encourage investors. These could include permitting development on either side of a road, or at both ends of bridges, as a means of financing.

• Contractual cooperation: Ways may be sought to encourage different infrastructure companies to work together in partnership to reduce risks and, by experience in smaller projects to develop towards larger projects over a period of time.

• Unified government structures: Projects may be held because of interference of may ministries and organizations. A unified, one-stop approach could help, provided it does not become a "full stop " approach.

• Nationwide free trade zone: Smuggling is very widespread into and out of Cambodia. It may be best to create a free trade zone nationwide, with minimal protective duties. This will cheapen Manufacturing, because of absence of duties on intermediate products, raise efficiency because of need to compete, and create fair competition between local companies and international groups.