BENEFITING FROM THE DIGITAL ECONOMY Cambodia Policy Note © 2018 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 18 17 16 15 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Examples of components can include, but are not limited to, tables, figures, or images. All queries on rights and licenses should be addressed to the Publishing and Knowledge Division, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Cover design: Florencia Micheltorena, Buenos Aires, Argentina. Interior photo: iThink Asia, Phnom Penh, Cambodia. Used with the permission of iThink Asia. Further permission required for reuse. BENEFITING FROM THE DIGITAL ECONOMY Cambodia Policy Note July 2018 Cambodia Policy Note | 4 Foreword Thanks to rapid and sustained growth, Cambodia has become one of the world’s leaders in poverty reduction and shared prosperity. Cambodia’s success so far has ridden on openness to trade and investment, preferential trade treatment, and an abundance of low-skilled, low-cost labor. This facilitated the establishment of an export-oriented and foreign-owned garment sector, which—together with tourism, agriculture, and construction—has been driving growth over the past two decades. Several factors suggest that Cambodia will not be able to rely on its current drivers of growth going forward. With the country becoming more prosperous, it is receiving less generous donor financing, and preferential trade treatment is expected to phase out eventually. At the same time, rising wages are making it increasingly difficult for Cambodia to keep exporting unprocessed rice and low-end garments. Meanwhile, around the globe, automation is displacing jobs, and digital technologies are transforming certain sectors. Coinciding with the possibility of diminished economic prospects are the rising expectations of Cambodian citizens, fueled by the rapid spread of information through mobile phones, the internet, and social media. In light of these factors, Cambodia’s current drivers of growth need to be diversified. While the country’s economic outlook remains positive, Cambodia could begin to explore new drivers of growth that will create jobs and boost prosperity over the next 20 years. The country’s next economic transformation will rest on its ability to empower domestic entrepreneurs and citizens with capabilities and tools for the modern economy of tomorrow. Drawing from the knowledge gaps identified in the Cambodia Systematic Country Diagnostic, the Cambodia Policy Notes assess four relatively under-analyzed policy areas: Entrepreneurship and Innovation, Digital Economy, Microfinance and Household Welfare, and Social Assistance. These topics are interrelated and will be crucial for catalyzing or complementing reforms in traditional sectors. For example, digital platforms are expected to play a key role in enabling local entrepreneurs to participate in global value chains more effectively. Financial technology (fintech) can provide expanded access to finance for both enterprises and individuals as well as facilitate the growth of e-commerce. Social assistance could help mitigate shocks for households and contribute to building a stronger human capital base to take advantage of new opportunities and safeguard the impressive economic gains of the last two decades. Ellen Goldstein Country Director for Cambodia, Lao PDR, and Myanmar World Bank Group Digital Economy | 5 Acknowledgements This policy note has been prepared by a World Bank Group team led by Natasha Beschorne and James Neumann, with contributions from Miguel Eduardo Sánchez Martín and Bradley Larson. It benefits from guidance provided by Ellen A. Goldstein, Inguna Dobraja, Deepak Mishra, Jane Treadwell, Shabih Ali Mohib, Mark Austin, and Lars Sondergaard. Minna Hahn Tong and Maria Dumpert helped editing the note. The team is grateful to Cambodian government institutions for the support provided during the preparation of this Policy Note. In particular, to H.E. Vongsey Vissoth (Secretary of State, MEF), H.E. Kan Channmeta (Secretary of State, MPTC), H.E. Dr Ieang Sunly (Under Secretary of State, MEF), Mr. Chhy Sokha (Deputy Director General for ICT, MPTC), Mr. Meas Kosal (Deputy Director General for ICT, MPTC), Mr. Ung Luyna (Deputy Director General for the Budget, MEF), Mr. Mok Khemara (Director of E-government, MPTC), Mr. Putheary San (Director of Broadcasting Department, MOI), Dr. Sopheap Seng (President, NIPTICT), and H.E. Moa Charkrya (Chairman of the Telecommunications Regulator of Cambodia). Further contributions were kindly provided by representatives of Telecom Operators, including Mr. Laszlo (Chief Corporate Affairs Officer, CamGSM) and Mr. Yusos Sary, (Officer, Smart). The team is also grateful to Da Lin for her support during team missions and stakeholder consultations. Cambodia Policy Note | 6 Digital Economy Key Messages • While mobile penetration in Cambodia has surged in recent years, internet subscriptions remain low. Fixed-broadband subscriptions, at 0.6 per 100 inhabitants in 2016, were well below regional and global averages, and most mobile broadband subscriptions operate in 2G and 3G services since 4G coverage remains limited. • Digital adoption at the firm level also remains low. Fewer than one-quarter of businesses had a web presence in 2017, well below the world median of 46 percent. Cambodia also has a very low number of secure servers per million people. In addition, the limited uptake of digital financial services, lack of IT skills, and incomplete legal framework are likely to constrain the development of Cambodia’s digital economy. • Digital government is incipient, and efforts are siloed and fragmented. In a global comparison, Cambodia falls in the second quintile for online provision of government services. Several institutions are involved in digital government development, with no clear leadership. Despite the recent establishment of a Government Data Center, Cambodia does not have a guiding framework and lacks security standards for websites and cloud services. • For Cambodia to benefit from the digital economy, it needs not only to invest in infrastructure but also to develop complementary regulations, skills, and institutions. Priority areas to facilitate digital development include: (i) closing the digital gap by enhancing spectrum reallocation and mandating passive infrastructure sharing among telecom operators; (ii) elaborating a Digital Skills Readiness Strategy; (iii) adopting laws in e-commerce, cybersecurity, and data protection and privacy; and (iv) aligning efforts toward implementation of the Digital Government Strategy. Digital Economy | 7 Introduction Following two decades of stellar growth and and decisions, in particular through social media; poverty reduction, Cambodia’s next wave of growth and increase government efficiency by establishing is expected to come from increasing value added basic foundations for digital government (e.g., cloud, as well as nurturing new sectors such as the digital enterprise architecture, intensive staff capacity building) economy. Over the past two decades, facilitated by and a government portal on which ministries can host preferential trade treatment and strong foreign direct their services. investment inflows, growth and job creation have taken place in activities with relatively limited value added, Numerous institutions across the Government such as garment manufacturing, rice cropping, and are tasked with implementing these policies construction. Now as a lower-middle income economy and strategies. These agencies include: Ministry and in the context of rapidly increasing wages against of Economy and Finance (MEF), Ministry of Post and stagnant productivity and rising external competition, Telecommunications (MPTC), Ministry of Commerce Cambodia will need to develop new sources of growth. (MOC), Ministry of Information (MOI), and Council for the In particular, technological adoption by economic actors Development of Cambodia (CDC). A working committee could play a critical role in boosting productivity and on Digital Economy has also been established. While diversifying the economy. digital development is identified as a Government priority, an important next step would be a systematic In recent years, the Cambodian authorities have assessment of potential economic and social benefits, issued several policy documents related to digital review of the status of the measures proposed in these development. Overall, the objectives and high-level plans, and evaluation of any impacts they may have had program goals are generally consistent with international to date. good practice and envisage partnerships between the Government and private sector at multiple levels. The This policy note responds to a request from the Rectangular Strategy Phase III 2013-2018 highlights the Royal Government of Cambodia for the World need to further develop e-Government and encourage Bank to assess the current state of Cambodia’s the private sector to invest in technology. This was digital economy and identify policies to develop it followed in 2014 by the approval of the Cambodia ICT further. Firms and individuals need to prepare to face Master Plan 2020—which aims to improve ICT industry technological disruptions such as robotization, which and human resources development, internet connectivity, are likely to affect the nature of production processes cybersecurity, and government e-services—and in and jobs, even as they open new opportunities 2016 by the Telecoms and ICT Policy—which outlines and markets. This policy note applies the analytical policy measures and associated targets to expand framework presented in the World Bank’s World ICT infrastructure and develop ICT human capacity. Development Report 2016: Digital Dividends to identify In addition, the Cambodia e-Government Master Plan challenges and suitable policy options, and it is intended 2017-2022 has been drafted, although not yet adopted. to inform the preparation of the upcoming Rectangular The draft outlines programs to provide quality information Strategy Phase IV (2018-2023).1 and digital services, in collaboration with prospective beneficiaries; connect with people on public policies 1  World Bank Group, 2016. Cambodia Policy Note | 8 Context and Main meet the demands of the digital economy. Most mobile broadband subscriptions operate in 2G and Challenges 3G services since 4G coverage remains limited. At 50 percent of the population, LTE/WiMAX coverage, Cambodia has made substantial bandwidth per internet user, and other indicators progress in delivery of basic digital remain below regional and global averages (Table 1). infrastructure, but provision of next- Low fixed-broadband adoption in Cambodia may generation services is limited be due to a combination of factors, including limited availability of optical fiber in rural areas, the low number Cambodians have embraced mobile technologies, of households with a computer, and the relatively low with a dramatic increase in subscriptions over the price of mobile-broadband internet compared to fixed- past decade. With very little infrastructure remaining broadband internet. after the civil conflict, Cambodia bypassed rebuilding the fixed-line market and quickly launched into alternative Despite significant progress in recent years, technologies, jumpstarting its telecommunications Cambodia still has a long way to go in digital adoption infrastructure with mobile phones. Mobile cellular and technological readiness. The nature, pace, and subscriptions in Cambodia increased from less than 10 extent of digital development will be determined by a per 100 inhabitants in 2005 to 125 as of 2016, above the combination of technical and non-technical factors, ASEAN average (Figure 1, left panel), although less than such as regulations, skills, and institutions (the so-called half of the subscriptions are estimated to be currently “analogue complements”). According to the World active. In contrast, fixed-broadband subscriptions, at Bank´s Digital Adoption Index which measures the 0.6 per 100 inhabitants in 2016, were well below the global spread of technology among people, businesses, regional and global averages (Figure 1, right panel). and governments, Cambodia is currently at the lower end of the regional scale in the East Asia and Pacific Although basic digital infrastructure is in place, its (EAP) region, particularly with regard to adoption by speed, quality, and capacity must be increased to businesses and government (Figure 2). Figure 1. Mobile access is high, and mobile broadband has improved, but fixed broadband remains low Mobile access Mobile broadband Fixed broadband 150 50 ASEAN 10 Vietnam Vietnam Vietnam Subscriptions per 100 inhabitants Subscriotions per 100 inhabitants Cambodia 120 ASEAN 40 8 Percent of population ASEAN Myanmar Cambodia 90 30 6 Myanmar Lao PDR 60 Lao PDR 20 4 30 10 2 Cambodia Lao PDR 0 0 0 Myanmar 1995 2005 2015 1995 2005 2015 1995 2005 2015 Source: ITU, 2017. Digital Economy | 9 Table 1. Cambodia underperforms on several measures of digital development compared to regional and global averages Performance Cambodia Asia & Pacific World Above average Mobile-cellular subscriptions (per 100 124.9 98.9 101.5 inhabitants) Mobile-broadband prices 500 MB (% of 1.1 2.7 3.7 GNI per capita) Mobile-broadband prices 1 GB (% of GNI 2.2 5.4 6.8 per capita) Average Active mobile-broadband subscriptions 50.2 47.4 52.2 (per 100 inhab.) 3G coverage (% of population) 80.0 87.6 85.0 Fixed-broadband prices (% of GNI per 13.5 14.5 13.9 capita) Below average Fixed-broadband subscriptions (per 100 0.6 11.3 12.4 inhab.) LTE/WiMAX coverage (% of population) 50.0 73.6 66.5 Mobile-cellular prices (% of GNI per capita) 7.7 3.2 5.2 Households with computer (%) 10.5 37.8 46.6 Households with internet access (%) 26.0 45.5 51.5 International internet bandwidth per 23.6 48.0 74.5 internet user (kbit/s) Source: ITU, 2017. Figure 2. Digital adoption in Cambodia remains low, especially for businesses and government Digital Adoption Index (and sub-indexes), relative to global average 2 1.5 Standard deviation difference 1 0.5 0 -0.5 -1.5 -1.5 -2 Myanmar Lao PDR Cambodia Indonesia Philippines Vietnam Thailand Brunei Malaysia Singapore Digital Adoption Index Business sub-index People sub-index Government sub-index Source: World Bank, 2018. Cambodia Policy Note | 10 While digital adoption by people has surged in Figure 3. Digital adoption by firms remains recent years, internet penetration remains low. As significantly below the median for the world mentioned above, the expansion of fixed-line internet Digital Adoption Index - firm subcomponents services in Cambodia has been largely overshadowed by the strong focus on mobile services. Cambodia 60 currently has one of the lowest fixed internet broadband penetration rates in the region. While the number of 40 internet users has increased in recent years to reach approximately one-quarter of the population, digital 20 literacy remains low. Anecdotal evidence suggests that many users navigate exclusively through Facebook and 0 Secure internet servers % firms with website are unlikely to fully exploit the potential of the World per million or homepage Wide Web. KH 2015 KH 2017 Median Note: The global median refers to both 2015 and 2017. Digital adoption by firms is Source: World Bank, 2018. constrained by challenges in accessing financial services as well as by lack of skilled staff and an The limited uptake of digital financial services in adequate legal framework Cambodia is likely to constrain the development of the digital economy. In 2016, only 1 percent of Little quantitative information is available on adults in Cambodia used a mobile phone or the internet the actual size and scope of Cambodia’s digital to access an account at a financial institution—the economy today. The extent and composition of lowest rate in the world, according to the World Bank´s Cambodia’s digital economy has not yet been mapped. Global Findex (Figure 4, left panel). Around 16 percent E-commerce platforms are available, including Alibaba, of Cambodians made a digital payment in 2016 using and locally based services for food delivery and ride- payment platforms like PiPay, which is still well below hailing apps like PassAPP are increasingly popular. the EAP average of 58 percent. Cambodia´s lack of Social media influencers and new payment platforms are a guiding framework for developing digital financial also emerging in Cambodia, particularly in Phnom Penh. services and digital payment services is a root cause for However, no systematic information is available on the the low uptake. While some financial institutions have size of these emerging sectors and the employment introduced mobile services, authorization is granted on generated. a case-by-case basis due to the lack of transparent guidelines, which will likely delay the introduction of Digital adoption at the firm level appears to be digital financial services by other operators. In addition, lagging other countries. Fewer than one-quarter of Cambodia does not have a National Payment System, businesses had a web presence in 2017, well below which limits exchange among domestic operators.2 the world median of 46 percent. Cambodia also has a very low number of secure servers per million people Another challenge is the lack of a workforce with (Figure 3). sufficient IT skills. According to Digital Rain, two-thirds of businesses in the IT sector reported being unable 2  Some of these aspects are discussed in more detail in a companion Policy Note on Microfinance and Household Welfare. Access to finance, particularly for tech entrepreneurs, is also a significant challenge and is discussed in greater detail in a companion Policy Note on Entrepreneurship and Innovation. The Government has flagged this area as a priority and has established a Capacity Building and Research Fund (USD 8-10 million per year, sourced from a one percent tax on gross revenues of telecom services providers), but issues include governance, eligibility, monitoring and evaluation of firms, and how to meet the demand for technical assistance for participating firms. Digital Economy | 11 Figure 4. Cambodia has been lagging in the use of digital payments Used a mobile phone or the internet to access a financial % of adults who made or received institution account in the past year (% age 15+) digital payments in the past year 100% 80% 60% Namibia 32,7% 50% 40% India 5,0% Cambodia 20% 1,0% 0% 0% an ar R a s sia P ia d a ne di in an EA PD ys nm m ne Ch bo Denmark China Peru pi ail ala et ng ya do o ilip m Th Vi 83,0% 39,8% 4,2% La M M pi Ca In Ph lo ve De Source: World Bank Global Findex, 2017; Mastercard e-wallet survey, 2016. Table 2. Cambodia does not have a supportive legal framework for the digital economy Status of the legal framework related to the digital economy, by topic e-transactions and data protection consumer cybercrime e-signature and privacy protection prevention Brunei D. Yes No Yes Yes Cambodia Draft No Draft Draft Indonesia Yes Yes Yes Yes Lao PDR Yes No No Yes Malaysia Yes Yes Yes Yes Myanmar Yes No Yes Yes Philippines Yes Yes Yes Yes Singapore Yes Yes Yes Yes Thailand Yes Yes Yes Yes Vietnam Yes Yes Yes Yes Source: World Bank staff elaboration in discussion with authorities. to hire staff with adequate IT skills.3 The short supply to hire individuals with soft skills and provide training in IT of qualified employees at the senior and managerial skills, which is not feasible for startups that do not have level results in very high remuneration packages, which the resources to provide extensive training. Instead, jeopardizes the potential to promote Cambodia as a they rely on the few experienced programmers who can new international outsourcing location for IT services. work independently. This problem is compounded by Moreover, most large firms in the sector reportedly prefer low employee retention rates in the sector. 3  Markova and Wray, 2016. Cambodia Policy Note | 12 Finally, digital adoption by firms is also constrained However, it is unclear whether MPTC has the capacity by the lack of a supportive legal framework for to provide large-scale data center services at a sufficient e-transactions, data protection and privacy, level. Other agencies are investing in their own data consumer protection for online purchases, and centers, and several use private cloud services for data cybercrime prevention. Cambodia´s incomplete legal storage. For example, the MEF is developing multiple and regulatory framework for e-transactions hurts data centers to support the Financial Management consumer trust in digital services. In January 2018, Information System as well as tax applications. the government issued a Decree on Digital Signatures, Cambodia does not have an overall government data but the draft e-commerce and cybersecurity laws have center or cloud services policy framework. not yet been adopted, and data protection and privacy issues have not been addressed (Table 2). Some online services are available to citizens and businesses. The most mature of these services is Digital government remains the business registration process on the Ministry of fragmented Commerce website. The process can be completed entirely online, including payment.4 Another end-to-end The current state of digital government is largely process available online is the issuance of single-entry siloed and fragmented. Two government-wide tourist visas. Visitors can apply for the visa online and e-government programs have been attempted in pay with a credit card. The approval letter is emailed to Cambodia, with mixed results. At present, Cambodia the recipient, who can then present the letter upon entry does not have a unified national government portal. into Cambodia. Instead, there are approximately 60 websites, all developed independently without reference to standards While tax registration and payment can be for user interface, look-and-feel, development approach, performed online to some degree, taxes cannot technical platform, or security. The result is a variety of be filed electronically. Registration can be partially user interface styles, many of which resemble earlier completed online, but the taxpayer still needs to visit the generations of website design. The typical government General Department of Taxation (GDT) to complete the website is simple and focused on providing information. process. An e-payment service is available but is limited Although most have at least partial dual-language to specific banks, and the service is only available to support for English, most of the content is in Khmer only. customers of specific ISPs: EZECOM and CellCard. There are also no standards for website security. The E-customs is transactional but not connected with other Ministry of Posts and Telecom (MPTC) is using part of the systems. Capacity Building and Research Fund (financed by a 1 percent levy on the net revenues of telecom companies) The absence of a centralized multilateral payments to develop a Lab that will focus on website development, platform linking all banks and billers is a key hosting, and standardization. Globally, Cambodia falls in constraint to more versatile online services delivery the second quintile for online provision of government by government and private companies. While power services according to UNDESA’s Online Service Index. bills in urban areas and water bills in Phnom Penh can be paid online, this service is only available through The MPTC has established a National Data Center, certain bank channels (e.g., ABA Bank) and third-party but it is unclear whether it will be able to reduce payment facilities (Wing). The government and private fragmentation among agencies. The National Data companies could provide many more services online if Center hosts the government email platform, a Content a centralized multi-lateral payments platform linking all Management System, and some agency websites. banks and billers could be developed. 4  Payment can be made offline, but the receipt must be physically submitted before registration can be completed. Digital Economy | 13 Several government institutions development. are involved The in Department digital of Policy Options E-government in MPTC’s General Department of To benefit from the digital economy, Cambodia ICT provides technical direction to implement the needs to establish several enabling factors. In government’s agenda by supporting the efforts of an addition to broader business climate reforms—including Inter-Ministry Technical Working Group—the platform business registration, financing, and related reforms—it for interagency technical collaboration that helped will be important for Cambodia to: (i) invest in connectivity develop the draft E-Government Master Plan.5 The infrastructure; (ii) develop digital skills; (iii) adopt a legal Ministry of Interior is responsible for policies and and regulatory framework for privacy, data protection, regulations related to identification, a central element e-commerce (including e-transactions), and the wider in both digital government and the digital economy in “e-enabling” environment; and (iv) build institutions general.6 A new identification card with a blank chip and leadership, as well as universal standards for has been introduced, but functionality has not been e-government platforms and applications. Policies are developed, and there is no e-signature. Finally, the detailed in Table 3 and discussed below. MEF serves as a gatekeeper for decisions on ICT investments across agencies. The financing and budget implications for each policy option must be analyzed, especially to Overall planning and budgeting for digital identify possible funding mechanisms and the government are not systematic. Cambodia has a potential for private sector private financing. Where decentralized Treasury Single Account. However, the public financing is mobilized because private sector Financial Management Information System does not engagement is not optimal or available (e.g., to catalyze have a budget planning and formulation module, and the rollout of connectivity infrastructure), the investment there is no e-procurement. In addition, each agency and economic rates of return must be calculated to makes its own decisions on solutions and infrastructure ensure value for money for the Government. Efforts investment and includes them as part of their budget to develop coordinated digital government platforms proposals. These decisions are not discussed by may trigger upfront capital costs, for example to build an inter-institutional Committee or subject to central e-government platforms and applications, but will scrutiny, although funding decisions are ultimately generate significant ongoing capital and operational processed by MEF. The absence of central review and cost savings. The wider net economic impacts from coordination has resulted in redundant infrastructure improved connectivity, widespread availability of efficient and data communication channels, duplication of digital government services, and an expanding digital efforts, and inefficient deployment of software and economy should also be calculated as part of the licensing, which undermines data compatibility and impact assessment for each Policy Area. In principle, system interoperability and makes re-engineering policy options related to the adoption of regulation, costlier. In addition, since ICT spending is spread across such as those for the short term under Policy Area (iii), the entire government and appears in different spending are expected to be broadly cost-neutral from a budget categories, expenditure tracking and comparison to perspective. global benchmarks are more difficult. 5  The Technical Working Group reports to a nominal Inter-Ministry Policy Working Group comprising Under Secretaries of State from all ministries and chaired by the Minister of MPTC. In principle, this committee is expected to ensure cross-ministry ICT policy coordination, but its activities and impact are limited. In practical terms, the Policy Working Group largely defers to the Technical Working Group on digital government matters. 6  The Minister of Interior chairs the National Steering Committee on CRVS and Identification (NSCI), and its General Department of Identification acts as the secretariat to the committee. In 2016, the NSCI put forward the National Strategic Plan of Identification (2017-2026), which proposed integrating and consolidating all current civil registration and identification schemes into a single structure, supported by a single ICT-based platform. However, funding to this has not yet been allocated. Cambodia Policy Note | 14 Table 3. Policy options to support digital development in Cambodia Objectives Short-term options (1-2 years) Medium- and long-term options (3+ years) i. Close the digital divide by • Enhance spectrum reallocation and • Introduce fees or licenses for coordinating investment management to support further mobile cloud service provision and in and use of connectivity broadband rollout in rural areas software development infrastructure • Promote or mandate passive infrastructure sharing among telecom operators, particularly for fixed broadband • Enable co-location of optical fiber during the planning and implementation of other infrastructure projects ii. Support the • Undertake a systematic assessment of • Promote continued professional development of digital the digital skills gap and develop a Digital development and support cost- skills Skills Readiness Strategy sharing and cooperation among firms iii. Complete the regulatory • Expedite the adoption of an up-to-date • Implement the national payment framework governing the E-commerce law and Cybercrime law system strategy digital economy, to boost • Prepare a Data Protection and Privacy law digital adoption by firms • Introduce a framework on the use of mobile banking and payments iv. Align efforts toward • Prepare a time-bound, costed • Integrate the national ID to the implementation of implementation plan for the Digital support digital authentication a Digital Government Government Strategy of identity and facilitate Strategy • Develop an integrated digital platform for e-transactions government services, a data center, and a • Streamline digital government- government cloud related investment decisions as • Consider establishing a Coordinating part of the Public Investment Agency for Digital Development Management discussions • Introduce a core set of technical and functional standards for ICT investments In the first policy area, new investments are needed things), including sensor networks, transport systems, in the infrastructure that serves as the foundation and security and logistics systems. for the digital economy. Cambodia has achieved widespread basic mobile connectivity but needs to Spectrum reallocation and improved management meet rapidly rising demand for higher-capacity and are required to support further mobile broadband faster internet services. Key challenges to be addressed rollout in rural areas. This involves reassigning the 700 include increasing mobile broadband provision for rural Mhz band, which is currently used for broadcasting, and remote areas and ensuring consistent quality of and managing the reallocation of already assigned service; investing in fixed broadband in urban areas to spectrum on a technology-neutral basis. In addition, meet the rapidly growing demand for high-bandwidth the Government should mandate passive infrastructure applications, including video streaming, large data sharing among operators, particularly for fixed processing, and e-government applications; and laying broadband. Passive infrastructure accounts for up to the groundwork for connected devices (internet of 80 percent of investment costs for infrastructure rollout. Digital Economy | 15 New infrastructure investments could also be better strong leadership, a high degree of coordination to coordinated across sectors as part of project planning provide the supporting infrastructure, and a combination and implementation for transport or energy networks, of app development and business process changes to enable co-location of optical fiber and facilitate rights to deliver services to people. The Government needs of way. Finally, authorities should carefully consider the to prepare a time-bound, costed implementation plan need for multiple license requirements and new taxation. for the Digital Government Strategy, focusing first on e-government enablers such as digital ID, payment The second policy area focuses on developing platforms, and open data. This should be accompanied the digital skills necessary for the benefits of the by a monitoring framework to review progress and digital economy to be shared widely. Authorities are outcomes on a systematic basis. It could be beneficial considering deploying resources from the Capacity- for the Government to establish a Coordinating Agency Building and Research Fund for Skills Development. In for Digital Development—similar to those established partnership with business community representatives, in the United Kingdom, Singapore, Malaysia, and the Government should also undertake a systematic Thailand—to drive the preparation of the framework assessment of the skills gap and develop a Digital and its implementation. Finally, investment decisions Skills Readiness Strategy to address current and future related to e-government should be streamlined and workforce needs. The assessment should include discussed within the public investment management an assessment of the availability of IT skills in non-IT process while considering alternative models for sectors to anticipate needs and prevent brain drain from infrastructure and service delivery, such as public- an already under-resourced IT industry. Firms in the IT private partnerships. sector would also benefit from increased cooperation and cost sharing for training and professional Successful implementation of the strategy also development courses (Table 4). requires reforms specific to e-government. The Government should develop an integrated digital Within the third policy area, completing the legal platform for government services, connecting all and regulatory framework for e-commerce, privacy, agencies. Population, business, and land registries must and data protection and cybercrime—together be current, secure, and interoperable. The government with other measures aimed at improving the could facilitate this by establishing a central data center business environment—would encourage digital or cloud service that features public and private access, adoption by businesses. The incomplete legal and depending on the data management requirements. regulatory framework for e-commerce, including for The Government also needs to integrate digital e-transactions, undermines trust in digital services. The authentication of identity with the national ID to facilitate adoption of laws related to e-commerce and cybercrime e-transactions, including the delivery of e-government should be expedited. The Government should also draft services. In addition, a manageable list of priority apps a law for data protection and privacy. In addition, the and public services to be offered online, including at the Government should introduce a framework for the use subnational level, should be identified. of mobile banking and payments and implement a national payment system. 7 In addition, to ensure effective returns as well as the interoperability needed to integrate government The fourth policy area supports successful data and deliver services, a set of technical and implementation of the Digital Government Strategy functional standards for ICT investments should be by aligning Government efforts and improving adopted. Virtually every government on a path toward interagency coordination. E-government requires successful digital transformation has established these 7  Vuorikari, et al., 2016. Cambodia Policy Note | 16 standards. For example, the United States and Australia and specific standards developed by Cambodia have standards based on an Enterprise Architecture need to be identified through further analysis, but the Reference Model, New Zealand and the United Kingdom following areas should be considered: architecture, have Interoperability Frameworks, and Vietnam’s technical, networking, security, information, ICT service eGovernment standard is based on the The Open management, data management and sharing, and data Group Architecture Framework. The policy framework center and cloud services. Table 4. Relevant skills for the digital economy Types Description Target Examples Basic digital/ICT Skills needed to use digital technologies All citizens and EU: Digital skills (e.g., send email, find work-related workers Competence information on the Internet, ability to use Framework for digital apps and non-specialized software, Citizens (DigComp)7 awareness and ability to stay safe in cyberspace) Digital/ICT Soft skills required to carry out work Middle-skill to high- USA: Partnership for complementary skills in a technology-rich environment and skill professionals 21st Century Skills to address the expanding number of opportunities for ICT-enabled collaborative USA: Agenda for work (e.g., communicate on social New Skills for Jobs networks, brand products on e-commerce platforms, or analyze data gathered from the web) Advanced and Skills required to drive innovation and Industry- and Skills for Information specialist skills to support digital infrastructure and the occupation-specific Age (SFIA) functioning of the digital ecosystem (e.g., Singapore’s program software, develop applications, manage networks, data analytics) Workforce Qualification scheme Source: Authors´ elaboration using different sources. Digital Economy | 17 References World Bank Group. World Development Report 2016: Digital Dividends. Washington, DC: World Bank, 2016. Vuorikari, Riina, Yves Punie, Stephanie Carretero, and Lieve Van den Brande. DigComp 2.0: The Digital Markova, Jitka, and Chris Wray. Cambodian IT industry: Competence Framework for Citizens. Update Phase skills for a digital economy. Phnom Penh: Digital Rain 1: The Conceptual Reference Model. Luxembourg: Agency, 2016. Publication Office of the European Union, 2016. Cambodia Country Office Exchange Square Building Floor 10th IBRD and 11th IFC Streets 51-61 and streets 102-106 Sangkat Wat Phnom, Khan Daun Penh Phnom Penh, Cambodia www.worldbank.org/cambodia