By David VAN
Why the Next Stage of Growth Depends Less on New Policies and More on Building a Government That Can Deliver Them
For more than twenty years Cambodia has been praised for maintaining sound macroeconomic fundamentals.
Inflation has remained relatively stable.
Trade openness ranks among the highest in the world.
Foreign investment has flowed into the country.
Public debt has remained manageable.
These achievements deserve recognition because they helped transform Cambodia from one of Asia’s poorest economies into a lower middle-income country. CDRI is correct in arguing that these policies alone can no longer generate the same rates of economic growth as before. The era of simply adding more workers, more factories and more capital is gradually reaching its natural limit.
But the real question is not whether macroeconomic policy has become insufficient.
The real question is why it has become insufficient.
The answer may not lie primarily in economics.
It lies in institutions.
Productivity Does Not Grow Inside Policy Documents
Economists often speak about productivity as though it automatically increases once governments encourage technology, innovation and better skills.
Reality is far less elegant.
Technology does not install itself.
Workers do not magically become more skilled.
Businesses do not innovate simply because a strategy document tells them to.
Someone has to make these things happen.
Someone must approve investment.
Someone must reform regulations.
Someone must coordinate ministries.
Someone must remove unnecessary administrative barriers.
Someone must ensure implementation happens on schedule.
In every country that successfully escaped the middle-income trap, government institutions evolved together with the economy.
Productivity is therefore not merely an economic outcome.
It is an administrative outcome.
Cambodia Does Not Suffer From a Shortage of Policies
Cambodia has no shortage of ambitious national strategies.
The Pentagonal Strategy.
Industrial Development Policy.
Digital Economy Policy.
Logistics Master Plan.
Science, Technology and Innovation Roadmap.
Skills development initiatives.
Investment laws.
Public-private partnership frameworks.
Collectively these already provide a comprehensive vision for Cambodia’s future.
If strategy alone created competitiveness, Cambodia would already rank among Asia’s leading economies.
The challenge lies elsewhere.
The challenge is execution.
Businesses Experience Government Differently From Economists
When economists analyse competitiveness, they examine productivity statistics.
Businesses experience competitiveness very differently.
An investor sees:
- How many approvals are required before construction begins.
- How long customs clearance takes.
- Whether ministries communicate with one another.
- How predictable regulations remain.
- How quickly problems are resolved.
- Whether permits can be obtained digitally.
- Whether agencies interpret regulations consistently.
- Whether officials have authority to make decisions without referring files endlessly upwards.
None of these appear directly in GDP calculations.
Yet every one of them influences investment decisions.
For businesses, government efficiency is itself part of the investment climate.
Productivity Begins Inside Government
CDRI argues that Cambodia must improve worker skills, management capability and technology adoption.
That is entirely correct.
But each of these depends upon government capability.
Consider skills.
Building a modern workforce requires education authorities, labour ministries, industry associations and employers to work toward a common objective.
Consider technology.
Digital transformation requires telecommunications, finance, education, investment policy, cybersecurity and regulatory agencies moving together.
Consider exports.
Export competitiveness depends simultaneously upon transport, logistics, customs, standards, ports, taxation and trade facilitation.
None of these functions belong to one ministry.
Every productivity reform therefore becomes a coordination challenge.
The Real Constraint Is Fragmentation
Cambodia’s greatest obstacle today is not a lack of policy.
It is fragmentation.
Too often ministries continue operating within institutional boundaries rather than national economic priorities.
Each organisation measures its own activities.
Few measure shared national outcomes.
One ministry completes its assignment while another has yet to begin.
Businesses wait while files move sequentially through multiple agencies.
Projects slow not because government lacks commitment but because coordination remains difficult.
The economy moves at digital speed.
Administrative systems often move at procedural speed.
Vietnam Offers an Important Lesson
Vietnam’s recent reforms demonstrate that institutional reform can become economic reform.
Rather than continuously adding new policies, Vietnam simplified central government structures, accelerated digital government, streamlined administrative procedures and improved coordination across ministries.
The philosophy was straightforward:
A country cannot build a 21st-century economy with a 20th-century bureaucracy.
The lesson is not that Cambodia should copy Vietnam.
Every country has its own political context.
The lesson is that economic competitiveness increasingly depends upon governmental competitiveness.
Countries now compete not only through labour costs or tax incentives but through the speed and quality of public administration.
The Next Reform Agenda Is Institutional
Cambodia’s next generation of reforms should therefore focus less on writing additional policies and more on improving the machinery that delivers them.
That means:
- moving from ministry-centred planning to whole-of-government implementation;
- establishing measurable national outcome indicators rather than isolated institutional targets;
- integrating digital public services;
- eliminating overlapping mandates;
- reducing sequential approvals wherever possible;
- strengthening accountability for implementation rather than simply policy formulation.
These reforms may appear administrative.
In reality they are economic reforms.
Every day saved in approvals reduces business costs.
Every duplicated process eliminated increases productivity.
Every ministry that shares information improves investor confidence.
Every faster government decision strengthens national competitiveness.
The Human Side of Competitiveness
Behind every productivity statistic stands a business owner waiting for approval.
A young graduate searching for meaningful employment.
A manufacturer delaying expansion because regulations remain uncertain.
A logistics company navigating multiple agencies.
A foreign investor deciding between Phnom Penh and another ASEAN destination.
For them, productivity is not an abstract economic concept.
It is measured in days lost.
Meetings repeated.
Forms duplicated.
Opportunities postponed.
Competitiveness is experienced one administrative interaction at a time.
Conclusion: Cambodia Needs an Implementation Revolution
CDRI is right.
Good macroeconomic policy alone is no longer enough.
But the missing ingredient is not simply more technology or better management.
The missing ingredient is a public sector capable of delivering those ambitions consistently, quickly and collaboratively.
Cambodia has largely completed the first phase of development by building macroeconomic stability.
The second phase will depend on building institutional capability.
The country already knows what it wants to achieve.
The next challenge is ensuring government systems are organised to achieve it.
Because in the twenty-first century, nations compete not only through the quality of their economic policies but through the quality of their public institutions.
And no country can expect to build a twenty-first-century economy with twentieth-century systems of governance.
David VAN
11 July 2026
