Promoting Changes in Cambodian Business and Governance Culture

This blog post was written by Curtis Hundley of DAI who recently presented at Breakfast Seminar #66, Tools for Mending Weak and Fractured Value Chains.

Cambodia MSME ProjectThe Cambodia MSME Project started in 2005 and will end September 2012.  

The success of the MSME Project is attributable to how well we facilitated interventions that promoted economic and political improvement. We followed a set of principles that included avoiding subsidies near points of transaction, and spent the bulk of our efforts rebuilding the confidence, trust, and business relationships that were fragmented and weakened after 30 years of civil war. All technical assistance was provided free by private firms, with costs recaptured through the products and services they sell. The MSME Project team facilitated the activities, but the results were owned by the private sector actors and government officials.

Our most basic tool came in the form of “interest groups.” These were groups of 30 people who told us they wanted to grow their businesses, but didn’t know how. In a group forum, we asked them to identify their business problems. In most cases, this was the first time most villagers had discussed business with others villagers and it was a revelation that everyone has similar problems.

The most pressing issues were the inability to obtain technical assistance, closely seconded by a lack of access to quality inputs. The only quality inputs were available in Phnom Penh, but the input suppliers there had never before performed business outreach. After extensive outreach to dealers in Phnom Penh, they agreed to provide free training to the project’s interest group and unsurprisingly, as a result, they soon sold the entire inventory from their quality suppliers. Moreover, this gave village producers first-time access to quality technical assistance. 

Once a critical mass of producers, local input suppliers, and traders started working together, we invited them on missions to meet more advanced firms around Phnom Penh. These visits allowed project participants a rare opportunity to network with experienced and successful people from across the supply chain, as well as government officials.  

Over the course of the project, as value chain actors started to generate market surpluses, they began to face business environment problems as well as technical issues. In response, we facilitated business forums and technical workshops where private and public sector stakeholders could share new ideas from the field trips and receive free training from input suppliers. 

To provide better examples of governance, we facilitated cost-shared international missions to Thailand, Vietnam, Malaysia, and even America.  Here everyone could observe how good government operates, as well as the value of cooperatives and associations.

Solving business issues was difficult because formal mechanisms didn’t exist and private firms lacked experience and confidence to address their government and propose solutions.  To assist, the project facilitated strategic communications workshops where private sector leaders and government leaders, separately, could practice presenting and responding.

The resulting  confidence that stakeholders gained and their renewed comfort in working with government official to problem-solve led to a virtuous cycle. The Project was able to facilitate more working groups, technical workshops, and business forums where the private and public sectors could resolve business issues. Everyone began to realize the value of cooperation.

During the past seven years, the Cambodia MSME Project has effectively changed the Cambodian governing culture from one of “do as we tell you” to a culture of partnership between the private sector and government to improve the business environment. Concurrently, the business culture has evolved from one of distrust to one of cooperation and growth through sharing.