Over the last 20 years, the Kingdom of Cambodia has made remarkable progress in creating an enabling environment for business and investment, making the country favourable for foreign direct investment (FDI) in the region and creating commercial and export opportunities for local businesses. With this favourable business environment, Cambodia achieved an average growth rate of 8% between 1998 and 2019, becoming the fastest growing economy in the region, due to a massive influx of FDI and a rapid growth of private sector development in various economic sectors.

Despite the impressive growth in recent decades, Cambodia continues to lag behind its neighbours in terms of market competitiveness as a variety of factors continue to hinder the country from developing a strong and dynamic enabling environment for businesses to grow. Furthermore, the economic stresses placed on the private sector by COVID-19 only exacerbate the need for a clear understanding of the support for and obstacles to firm growth in the country.

The Cambodian economy needs a complete picture of the business-enabling environment, the efficacy of firm growth strategies, and how these two factors have together affected firms’ resiliency to the COVID-19 economic downturn. Therefore, in contribution to the economic and business development of the country, the Cambodia Development Resource Institute (CDRI), in partnership with the Swedish International Development Agency, has conceptualised a research initiative titled “Strengthening Cambodia’s Post-Pandemic Development and Competitiveness Pathways” to investigate critical factors that help promote or hinder firm growth, examine how firms behave and respond to crises like COVID-19, and explore the specific mechanism and support for firm growth and competitiveness from the ground up.

This project will contribute to the current and future efforts for Cambodia's development. The research findings will provide valuable inputs for strategy and policy formulation to foster private sector development and resilience, particularly in strengthening innovation, competition and digital technology adoption. In the process, the research project also aims to encourage multistakeholder engagement by involving policymakers, the private sector, academia and other stakeholders to ensure that this research will greatly generate relevant knowledge for key actors shaping the future direction.

The purpose of this study is to understand and examine key internal and external factors that help promote firm growth in Cambodia, and the continued barriers to improved private sector performance. Specifically, the study aims to:

• Identify the key elements of the business environment that support and the key elements that hinder firm operations and growth;
• Examine the extent to which firm strategies, including innovation, skill development, and resiliency, catalyze firm growth in Cambodia;
• Examine the strategies firms employ to prepare for and respond to crises and changes in the labour force, technology, and the market; and
• Identify the policies and interventions most needed by firms to promote the growth of Cambodia’s businesses today and into the future.