Increasing the capacity, diversity, and productivity of the services sector is essential for Cambodia’s development. It is also necessary for strengthening the labor market and keeping pace with the increasing number of tertiary graduates.
The Royal Government of Cambodia has put in place a number of sound policies that can help improve the services sector. For example, the Pentagon Strategy, the Industrial Development Policy, the Digital Government Policy, the National Employment Policy, supporting SMEs, and decentralization reforms. Although these policies are not yet complete, they clearly indicate that improving the services sector is an important means and a desire to achieve various key development goals outlined in existing policies.
However, to improve the services sector and sustain its growth, reforms are necessary. According to the World Bank’s Unbound Services report, reforms include creating more opportunities and incentives for the private sector to align with labor practices and enhance human resource capacity, limiting monopolies in both the private and public sectors, and reducing barriers to entry for firms.
Evidence also shows that service reforms are associated with improved productivity, increased employment, and increased access to services. However, to mitigate the risks and maximize the benefits of trade liberalization, national firms must be competitive. Similarly, labor market changes resulting from service reforms can exacerbate existing inclusion challenges.
At the same time, rural and low-income segments of society have not yet benefited equally from expanded access to services.
The path to prosperity is a balanced approach. Liberalization removes market barriers, but without proper regulation, problems such as monopolization, cybersecurity risks (including data privacy violations), and resource mismanagement (including inefficiency and corruption) can increase. A regulatory environment is essential for fair competition and opportunities for innovation.
Policymakers need to strengthen their knowledge to create a supportive and enabling environment. Educators should update teaching methods and expand curricula to meet the job demands of the growing service economy. This involves improving pedagogy for technical skills, vocational training, and soft skills in secondary, higher, and vocational education institutions. It also means bridging the gap between education and market needs to better serve evolving market needs.
The education system needs to be improved. First, this involves increasing current efforts to hold senior officials accountable for misuse of state resources, which will foster better oversight and discipline among lower-level officials. At the same time, public campaigns should be used to raise awareness of the importance of education, access to opportunities, and how misuse of funds affects service recipients. Ultimately, national development depends on achieving competitive educational outcomes compared to other countries.
Second, educational practices should be adjusted. Vocational training should begin to be integrated into the curriculum from primary school, with a focus on active STEAM learning. More investment is needed in rural areas to increase access to technology to support online learning and computer-based training. Additional resources are needed for educational institutions that prepare students for service jobs. In addition, the quality of teaching should be improved, and the gap between curricula and labor market needs must be reduced.
For tradability to work effectively, there needs to be clear and mutually beneficial regulations. Service exchange is also key to increasing markets, encouraging innovation, and fostering public-private partnerships. Policymakers, educators, and companies are providers who play a role in developing the workforce capabilities needed to increase the scope and productivity of the service sector. Policy development and implementation, knowledge base building, and capacity building and product innovation will be most successful through coordination. An emphasis on tradability supports this collaboration.
Both service delivery (services as ‘products’) and educational outcomes (learning as ‘practices’) should emphasize modularity, repeatability, and scalability. In terms of education, curricula and classroom activities should include teaching the skills needed to create and deliver tradable services.
Graduates entering the service sector must be able to produce and deliver services that adhere to the rules of modularity so that their activities can be divided into well-defined units that allow for consistent delivery, measurement, and pricing. For example, consulting firms may offer standardized consulting packages, law firms may offer contract templates or fixed-price structures, and software developers may focus on API-driven microservices.
Service education should also be guided by the principle of repeatability, teaching how ‘products’ can be delivered to different market sectors. Examples include business processes derived from different sources with customer service connections, automated systems for updating applications using SaaS (software as a service) technology, and creating services that provide predictive analytics for users.
Finally, a focus on scalability helps reduce incremental costs when scaling up. AI can be used to deliver customer services across languages, national sectors, and international markets. Streaming allows content to be delivered at virtually no additional cost. Online education platforms can handle increased enrollment without requiring additional resources.
Policymakers, educators, and companies are specific service providers. At the same time, they all contribute to a more competitive and productive service sector by ensuring the development of human resource capabilities. Students and employees need opportunities to acquire skills to perform existing services and create new, transferable services if the service sector is to thrive.
(The author is Dean of Social Sciences and International Relations at Pannasastra University.)
