Aid agencies, private investors, and government officials agree that a lack of strong institutions of governance is a fundamental constraint to sustainable economic development in Cambodia. The long period of conflict left Cambodia dominated by powerful groups that often operate outside the law with impunity. The justice system is susceptible to political influence and does not in practice afford citizens equal access to the law. Elite groups often receive differential access to public services, national resources, and business opportunities. Public servants are generally poorly paid and exhibit low productivity.
Public administration is inefficient.
Tax evasion is prevalent and domestic revenue collection is poor. Corruption is widespread in all branches of government. Thus, despite the existence of potentially large sources of revenue such as forest product royalties, public spending on social services is a pittance compared with expenditures on security. The Government is addressing these issues on many levels. Since the present government coalition was formed in late 1998, the Supreme Council of State Reform has been set up to supervise five councils charged with reforming the armed forces, public administration, economic and financial policies, and the law and justice system.