Cambodia’s Government and private sector are working together to address 13 key challenges affecting businesses across manufacturing, small and medium sized enterprises and services. The issues were discussed on August 6, 2026, during the fourth meeting of Working Group “C” under the Government Private Sector Forum in Phnom Penh, with the goal of turning business concerns into practical reforms that can improve the country’s business environment and competitiveness.

The meeting brought government officials and private sector representatives together to examine challenges ranging from access to finance and electricity costs to business licensing, skilled labour shortages, environmental regulations and product certification. Rather than simply identifying problems, the discussions focused on practical actions, including regulatory simplification, digital public services, stronger support for informal businesses and better coordination between government agencies.

Private Sector Highlights 13 Business Challenges

Private sector representatives presented 13 major issues affecting day to day business operations. These included concerns surrounding salt production and imports, access to finance, investment incentives and the cost of electricity, all of which can directly influence business costs and investment decisions.

Other challenges involved business licensing procedures, the implementation of environmental regulations, shortages of skilled workers and difficulties facing the cashew processing industry. The private sector also raised concerns about product certification, the development of enterprises operating in the informal economy and the need to strengthen compliance among online businesses to create fairer competition.

Government Seeks Solutions Beyond Policy

H.E. Hem Vanndy, Minister of Industry, Science, Technology & Innovation and Co Chair of Working Group “C”, stressed that the Government Private Sector Forum should deliver more than discussions and lists of unresolved issues. He said its real value comes from turning business challenges into practical actions that can be measured and implemented.

“The value of this Government-Private Sector Forum mechanism lies not in the number of issues raised, but in our ability to transform challenges into solutions that are clear, actionable and measurable,” he said.

The Minister also pointed out that business difficulties are not always caused by missing policies or regulations. In many cases, problems emerge when existing policies are not implemented effectively or do not fully reflect the realities businesses face on the ground.

“The challenges faced by the private sector do not always stem from the absence of policies or regulations. In many cases, they arise from the gap between policy, implementation and the practical realities experienced by businesses,” H.E. Minister added.

Discussions Focus on Implementation

The meeting was conducted through open and constructive discussions, allowing government officials and private sector representatives to examine the issues at both technical and policy levels. Proposals were reviewed within the Working Group with the aim of finding workable responses rather than leaving concerns at the discussion stage.

This approach is important for businesses that often face challenges not because a policy does not exist, but because procedures can be complicated, services can take time and implementation may vary across different institutions. Addressing these practical gaps could make it easier for businesses to operate, invest and expand.

Digital Services and Simpler Procedures on the Agenda

The meeting agreed on several follow up measures aimed at making the business environment more efficient. One key area is the continued simplification of regulatory and administrative procedures, which could reduce the time and effort businesses spend dealing with government requirements.

The government and private sector also agreed to accelerate the digitalisation of public services. For businesses, more accessible digital services could reduce administrative burdens and make interactions with government agencies faster and more transparent.

More Support for SMEs and Informal Businesses

Another priority is strengthening support for businesses operating in the informal economy. The initiative is intended to help enterprises move toward greater formalisation while improving their access to support and opportunities.

The agreed measures also include expanding industry driven skills development to address labour shortages. Technical, financial and market support for enterprises will also be strengthened, particularly to help businesses improve their capacity and competitiveness.

Stronger Coordination and Monitoring

Inter agency coordination was another important part of the follow up plan. Better cooperation among government institutions could help reduce duplication, resolve regulatory issues more efficiently and ensure that agreed reforms are implemented consistently.

The Working Group also plans to establish monitoring mechanisms to track whether the agreed measures are actually being implemented effectively. This reflects the broader goal of moving from identifying business problems to measuring the results of solutions.

What Does This Mean for Cambodia’s Business Environment?

For businesses, the significance of the meeting goes beyond the 13 challenges raised. The bigger message is that the Government and private sector are seeking a more direct way to identify problems, agree on solutions and monitor implementation.

Working Group “C” provides a formal platform for addressing policy, regulatory and implementation issues affecting manufacturing, SMEs and services. By connecting private sector concerns with government decision making, the mechanism aims to turn real business challenges into practical reforms.

If the agreed measures are implemented effectively, businesses could benefit from simpler procedures, more accessible digital government services, stronger workforce development, better support and improved coordination between institutions. These changes could also help Cambodia strengthen its competitiveness and create a more supportive environment for private sector growth.

Conclusion

Cambodia’s latest Government Private Sector Forum meeting signals a stronger focus on solving business problems through practical action. The 13 challenges raised by the private sector cover some of the everyday issues that affect business costs, investment, compliance, productivity and growth.

The real test, however, will be implementation. As H.E. Hem Vanndy emphasised, the success of the mechanism should not be measured by how many problems are discussed, but by whether those problems are converted into clear, measurable and workable solutions. For Cambodia’s businesses, the follow through on these commitments could be just as important as the discussions themselves.

Strategic EU Cambodia Partnership Delivers Fresh Reform Funding

The European Union and Cambodia have reinforced their long standing strategic partnership through a high level bilateral dialogue that unlocked more than $22 million in new funding to advance critical reforms. The agreement signals strong confidence in Cambodia’s reform trajectory and focuses on strengthening institutions, improving public service delivery, and reinforcing long term economic resilience. The dialogue took place at the Ministry of Economy and Finance in Phnom Penh and confirmed that the new funding will support priority sectors including education, fisheries, and public financial management, aligning development assistance with Cambodia’s broader growth and governance objectives.

High Level Dialogue Reviews Economic Trends and Reform Progress

The bilateral dialogue was co chaired by Deputy Prime Minister and Minister of Economy and Finance Aun Pornmoniroth and EU Ambassador to Cambodia Igor Driesmans. Discussions covered recent macroeconomic and fiscal developments in both Cambodia and the European Union, while also examining growth prospects, emerging risks, and trends in bilateral trade and investment. Both sides acknowledged Cambodia’s continued progress under Stage IV of the Public Financial Management Reform Programme, recognizing it as a central pillar for safeguarding macroeconomic stability and fostering inclusive and sustainable economic growth across the public sector.

Public Financial Management Reforms Anchor Long Term Stability

Cambodia’s Public Financial Management Reform Programme was highlighted as a cornerstone of national development efforts, aimed at strengthening fiscal discipline, transparency, and accountability. The reform agenda seeks to ensure that public resources are managed efficiently and aligned with policy priorities, supporting economic growth and social equity. Deputy Prime Minister Aun Pornmoniroth reaffirmed the government’s commitment, stating, “The Royal Government of Cambodia is strongly committed to successfully implementing the PFMRP to achieve budget credibility, financial accountability, budget policy linkages and performance accountability,” emphasizing that these reforms are essential to sustaining macroeconomic stability and long term development.

Trade Growth Outpaces Investment Inflows

Trade relations between Cambodia and the European Union were described as positive and expanding, with bilateral trade continuing to grow in 2025. Cambodian exports to the EU increased by 17 percent year on year up to October 2025, demonstrating resilient demand despite ongoing global economic uncertainty. However, both parties acknowledged that EU investment inflows into Cambodia remain relatively modest, highlighting the importance of accelerating reforms to further improve the business environment, strengthen investor confidence, and unlock higher quality investment opportunities.

Global Gateway Strategy Expands Sector Cooperation

Under the EU Global Gateway investment strategy, which promotes sustainable and high quality investments worldwide, the European Union is scaling up cooperation with Cambodia in priority sectors such as energy, water, education, and skills development. Both sides reaffirmed their commitment to accelerating reforms and deepening cooperation in the years ahead, ensuring that investment and technical support contribute directly to sustainable and inclusive development outcomes that benefit businesses and communities alike.

Over $22 Million Confirmed for Key Sector Reforms

Ambassador Igor Driesmans confirmed that in 2025 the European Union transferred €19.5 million, equivalent to more than $22 million, to the Royal Government of Cambodia to support reforms in education, fisheries, and public financial management. The funding is designed to strengthen institutions, enhance service delivery, and build long term economic resilience. Looking ahead, the dialogue also discussed plans for a new EU Cambodia cooperation initiative with France and Finland, focusing on tax reforms and public financial management to further enhance fiscal governance. Ambassador Driesmans noted, “By promoting transparency and sound public finance, including effective tax systems, we help build a predictable business environment that supports investment and long term economic growth.”

Conclusion

The EU Cambodia bilateral dialogue underscores the depth of their strategic partnership and the shared commitment to reform driven development. With more than $22 million in new funding, expanding trade ties, and a renewed focus on institutional strengthening under the Global Gateway strategy, both sides have signaled a clear intention to deepen economic cooperation. As Cambodia advances its reform agenda, continued engagement with the European Union is expected to play a vital role in enhancing fiscal governance, attracting investment, and supporting sustainable and inclusive growth in the years ahead.

Updated Policy to Reinforce Financial Stability

The National Bank of Cambodia has introduced an updated framework for emergency liquidity assistance, commonly known as the lender of last resort protocol, in a move designed to strengthen the resilience of Cambodia’s banking sector. This newly issued regulation replaces the earlier framework established in March 2015 and reflects a more modern and structured approach to managing financial risks. By refining how emergency support is provided to financial institutions, the central bank is reinforcing its commitment to maintaining stability across the financial system while preparing for potential economic uncertainties.

Clear Mechanism for Emergency Support

At the core of the updated framework is a clear and structured mechanism that allows deposit taking banking and financial institutions to access emergency liquidity when facing short term financial pressure. The NBC explained the purpose of the policy, stating, “The purpose of this Prakas is to establish a framework for providing emergency liquidity assistance as a sound option for deposit-taking banking and financial institutions, which will serve as an effective mechanism to mitigate risks and maintain financial stability,” the NBC said. This system ensures that institutions experiencing temporary liquidity shortages have a reliable safety net, helping to prevent disruptions that could spread across the broader financial sector.

Preventing Systemic Risks in the Banking Sector

The revised protocol is designed not only to support individual institutions but also to safeguard the entire banking system from systemic risks. Under this approach, banks facing liquidity challenges can request assistance as a last resort, ensuring that financial stress does not escalate into a wider crisis. By providing this controlled access to emergency funds, the NBC aims to maintain confidence in the financial system while protecting depositors and investors. This proactive stance highlights the importance of strong regulatory oversight in preserving economic stability.

Modernising Cambodia Financial Infrastructure

The transition from the 2015 framework to the updated 2026 version signals a broader effort to modernise Cambodia’s financial infrastructure. As the economy continues to evolve, the NBC is adapting its policies to align with international standards and best practices. The central bank will continue to act as a supervisory authority, ensuring that any emergency liquidity support is delivered responsibly, with strict conditions and effective risk management principles in place. This modernised approach enhances transparency and accountability within the financial system.

Banking Sector Shows Steady Growth

Recent data indicates that Cambodia’s banking sector remains stable and continues to grow, providing a strong foundation for these regulatory improvements. In 2025, outstanding loans increased by 4.1 percent year on year, reaching 63 billion US dollars, while customer deposits rose significantly by 14.7 percent to 65.7 billion US dollars. These figures demonstrate growing confidence in the financial system and highlight the importance of having robust safeguards such as the updated lender of last resort framework in place.

Conclusion

The National Bank of Cambodia’s updated emergency liquidity framework marks a significant step forward in strengthening the country’s financial resilience. By providing a clear and structured safety mechanism for banks while maintaining strict oversight, the NBC is ensuring that the financial system remains stable and capable of withstanding future challenges. As Cambodia’s banking sector continues to expand, these reforms will play a crucial role in sustaining confidence and supporting long term economic growth.