During a September 20 Cabinet meeting chaired by Prime Minister Hun Manet, the government resolved to develop a national strategy for informal economic development.

The strategy aims to bolster protection, enhance productivity and fortify the resilience of the informal economy.

It is believed that this approach will prove beneficial by supporting small entrepreneurs, without leaving any citizen behind.

This decision followed a review and discussion of the draft National Strategy for Informal Economic Development 2023-28, as outlined in a press release from the Council of Ministers.

“The strategy’s aims include strengthening protection, increasing productivity and enhancing the resilience of the informal economy. It also seeks to promote and expedite participation in the informal economy to drive business growth, trade, investment and commerce in Cambodia,” said the release.

“The government has decided to launch the strategy in response to the challenges and realities faced by individuals engaged in the informal economy. Additionally, it aims to prioritise the well-being of people and provide support to the business community operating within the informal economy, particularly in the aftermath of the Covid-19 crisis and other global challenges,” it added.

The government believes that that the national strategy will prove effective in addressing the intricacies of the informal economy.

It sees it as a catalyst for collaboration among the government, private sector and national and international organisations with a focus on sustainable development, inclusivity, and resilience, aligning with the ethos of ‘Leaving no Cambodian behind’.

The government underscores that this strategy has clear priorities, encompassing five key strategies.

First, it will establish and refine mechanisms to facilitate system access. Second, it will reduce compliance burdens. Third, it will provide protection to those integrated into the system. Fourth, it will contribute to capacity building. Finally, it will expand outreach programmes and increase awareness of the support that is available.

Hong Vanak, an economist at the Royal Academy of Cambodia’s Institute of International Relations, supported the strategy.

While precise figures remain unavailable, he substantiates his endorsement through empirical observations, suggesting that the strategy would protect the livelihoods of informal entrepreneurs and their contribution to the broader national economic landscape.

“As the informal economy expands, it has the potential to transition into a formal economy. Consequently, the state stands to gain tax revenue from these businesses, aligning with the government’s objectives,” he said.

He added that the government’s next course of action should entail the formulation of a plan to prioritise the occupations within the informal economy.

He believed that the strategy should encompass initiatives to motivate small businesses, including the allocation of technical assistance funds, judicious pricing strategies, optimal selection of sales and trading locations, and the provision of exceptional service.

He added that an efficient management system should be implemented to monitor and ensure the smooth functioning of these businesses.

It should be noted that on September 13, the government issued a resolution suspending certain administrative services provided by municipal, district, and commune administrations.

These services were related to the fulfilment of procedures outlined in a 2016 prakas.

This suspension was introduced for the benefit of small business owners operating within the informal economy.

The decision followed concerns voiced by citizens engaged in small businesses, who feared registration requirements and associated tax and financial burdens, given the challenging economic climate.