Opinion: A Country Cannot Build a 21st-Century Economy With a 20th-Century Bureaucracy

David VANN

Vietnam’s Economic Transformation and the Next Challenge for Competitiveness in Cambodia: Why Structural Reform Now Matters More Than Ever

Cambodia and Vietnam: Two Neighbors‚ Two Reform Trajectories.

However‚ over the last decade‚ although Cambodia has maintained similar political stability‚ attracted foreign direct investment and pursued export-oriented economic growth policies in a similar manner with Vietnam‚ the two countries’ growth prospects seem to diverge․

Vietnam is one of Asia’s most competitive manufacturing economies‚ with GDP growth in the first half of 2026 exceeding 8 percent and an industrial base that now extends to electronics‚ semiconductors‚ machinery and advanced manufacturing․ Cambodia has also bounced back from COVID-19 with ambitious reforms supported by the Pentagonal Strategy and the Industrial Development Policy 2025-2035․ The question is whether such implementation is timely․

In many areas the difference between the two countries is not so much about ambition as about the coordination between institutions and the ability of government to deliver change quickly․

During its reform process‚ Vietnam has restructured its economy․

Vietnam’s growth has been attributed to a combination of strong manufacturing‚ competitiveness in exports‚ consistent foreign direct investment‚ and one other reform that has attracted much less international notice․ Anticipating that inefficiencies will erode Vietnam’s competitiveness‚ the Vietnamese central government has begun one of the largest public sector reforms in decades․ From 2024 to 2025‚ Vietnam reduced the number of its ministries and ministerial-level agencies from more than twenty agencies to fourteen ministries․ It also accelerated the digitization of its government while streamlining its administrative procedures and improving inter-ministerial cooperation․

The reform was driven by a simple but powerful principle:

“A country cannot build a 21st-century economy with a 20th-century bureaucracy․”

Vietnam has also increasingly viewed government as an engine of economic development rather than just the administrator of public affairs․

Cambodia’s Next Challenge Is Institutional‚ Not Strategic! There is no shortage of national strategies in Cambodia․

Adopted by the Royal Government in recent years:

•           Pentagonal Strategy – Phase I

•           Industrial Development Policy 2025-2035

•           Digital Economy and Society Policy

•           Logistics Master Plan

• The Science‚ Technology and Innovation Roadmap

Numerous sectoral development strategies exist and collectively‚ they create a strong policy base․ The greater challenge lies in translating these strategies into a coherent national implementation programme․

Comparing the Two Economies

Coordination is the critical difference․

The case of Vietnam illustrates:

No industrial policy can be useful if every ministry acts independently․

Manufacturing requires transport․

Transport requires logistics․

Logistics requires customs․

Customs requires digitalisation․

Digitalisation requires telecommunications․

Industry requires skilled labour․

Skills require education․

Investment requires predictable regulation․

Every reform depends on another․

Vietnam increasingly organizes its government around national economic priorities rather than institutional boundaries․

Cambodia has also created many inter-ministerial committees and coordination mechanisms․ A concern among business‚ investors and development partners is that overlapping mandates‚ the need for sequential approvals and challenges in inter-institutional cooperation continue to cause delays in implementation․ Fixing these issues would greatly increase both its speed and its effectiveness (e.g. overhauling the GPSF format)․

Administrative Size Compared to Performance: Governance does not always improve with a larger government․

As economies grow more complex‚ success increasingly depends on:

• clarity of institutional mandates;

•           speed of decision-making;

•           policy coordination;

•           accountability;

•           digital service delivery․

In response‚ Vietnam reduced the overlap between institutions and streamlined the central government․

In contrast‚ Cambodia has an excessively large number of advisors and advisory bodies at all tiers of government․ Advisors can help provide expertise․ Where roles are poorly defined‚ a multilayered advisory structure can lead to diffuse accountability‚ elongated decision-making chains and higher costs of administration․ The issue is not about how many advisers or ministries to have‚ but whether the existing institutional architecture can deliver better coordination and faster‚ more effective implementation․

Cambodia’s Greatest Risk Is Not Policy–It’s Fragmentation and silo modus operandi of the Royal Government of Cambodia. Cambodia’s development agenda increasingly requires whole-of-government delivery․ If institutions do not share common measurable goals‚ implementation will be fragmented․

Extending from Whole-of-Government to Whole-of-Economy

Vietnam is increasingly applying what many OECD countries have called a Whole-of-Government approach․ Increasingly‚ success has been measured‚ not in terms of each ministry’s activities but on national-level outcomes such as:

•           export growth;

•           FDI attraction;

•           logistics performance;

•           industrial productivity;

•           innovation;

•           digital transformation․

Cambodia could benefit from a similar results-oriented framework․ As such‚ all ministries concerned with industrial development could be assessed against national indicators‚ not just indicators specifically relevant to their ministry․

Strategic Recommendations:

The next set of reforms for Cambodia should focus less on strategy and more on implementation capacity that all policies fall short of.

Priority areas include:

1․ Strengthening Whole-of-Government Coordination

Establish mechanisms to oversee the delivery of priority economic reforms‚ linked to senior government leaders․

2․ Review Institutional Functions

Conduct a functional review of ministries and agencies to identify overlapping functions‚ areas that can be streamlined and better coordinated․

3․ Move to Outcome KPIs rather than Process KPIs

The success of trade policy is measured by national economic outcomes‚ such as investment‚ exports‚ logistics performance‚ productivity and job creation․

4․ Accelerate Digital Government

Reduce approval times with shared databases‚ interoperable public services and integrated digital platforms․

5․ Rationalize Advisory Structures

Advisory appointments should be for specific purposes‚ tied to outcomes and measurable policy goals‚ while specialist expertise can still be accessed․

The Vietnamese economic success over the past decade has shown that an economic reform includes institutional reform‚ as well․ Factories and infrastructure and foreign investment matter‚ but so‚ too‚ does government: the ability to make timely decisions‚ coordinate them across sectors and implement policies on the ground with discipline․

Cambodia already has an articulate framework for development represented in the Pentagonal Strategy‚ the Industrial Development Policy․ The next stage is less a matter of formulating new policies than of creating a capable public sector that can implement the existing policies quickly‚ coherently and accountably․

Thus‚ rather than presenting much-discussed competition between neighboring countries‚ this comparison illustrates the extent to which the modern world economy depends upon institutional quality as a determinant of national competitiveness․ Countries that improve their governance alongside their economic performance are likely to attract more investment‚ create more higher-value industries and achieve higher sustainable growth․

David VAN

6-7-2026

David Van is a veteran Cambodian business strategist and public policy advisor with over 45 years of multinational corporate, trade, and investment experience across Southeast Asia.  A pioneer in Public–Private Partnerships (PPP) and blended finance, he has helped shape Cambodia’s trade, transport, skills, and industrial development policies while advising governments, multilateral agencies, and global corporations.