By Heng Dyna
Yes, institutions matter. Prosperity depends less on culture or geography or rulers’ expertise but much more on “institutions”, i.e. property rights, economic freedom, equality before the law, and trusted enforcement of contracts. Markets cannot function well without institutions. And countries need institutions for long-term stability and effective policies.
But, in the case of Cambodia, most of the discussions so far end with “Cambodia needs to build effective institutions”. There has been no much discussion beyond that, i.e. how should Cambodia build its effective institutions? Which institutions first in the sequence? Given the demographic trend and generational transition in Cambodia’s leadership, Cambodia will need to find ways and then build effective institutions as soon and much as possible.
It may sound paradoxical, but this article argues that to graduate from individual-based system, we need start with competent individuals building institutions. Therefore, Cambodia needs to identify, connect, support, and empower those individuals to build their own institutions and create the momentum of institutional building process at national level.
A country needs effective institutions because it wants to promote justice, rule of law, sustainable growth and development, continuity and smooth transition, all of which are difficult to achieve when the country depends largely on certain individuals. But how do we graduate from there? In an attempt to find out how, I ask two questions: a. how have the other countries built their institutions?, and b. Has Cambodia ever built a good institution so far? What are the lessons?
For the second question, I ask further: Which institutions and at what level? Who has tried to do what? Have he/she failed or succeeded? Can we learn from our past? The questions led me to a Cambodian individual who has been successful in building an institution in a complex political environment. That is Mr. Ek Sonn Chan, the former Director General of Phnom Penh Water Supply Authority (PPWSA). This article attempts to draw attention to his example and provoke the discussions on why and how his success can be multiplied and his strategies in addressing incentives and management issues can be applied in other institutions. And if not, why not.
The success story of Ek Sonn Chan can serve as a good example of how a competent individual can contribute to institution building, at least at local level. Even with resistance to institutional reforms and with gun pointing at his head by military generals in some occasions, he has proved that institution building can be made by leveraging his capability, courage, and external support. His practical approach and success are highlighted in Princeton University’s “Innovation for successful Society”
After the UN-organized election in 1993, PPWSA was one of the very difficult and corrupt public institutions. PPWSA faced many challenges ranging from the bill-collection problem, which was related to the performance of the collector, the fact that powerful people refused to pay their water bills, and the inefficiency of the water supply system. Despite constraints and resistance of vested interest groups, Mr. Chan was able to implement several reforms to provide the clean and safe water supply in Phnom Penh, leveraging financial assistance and expertise from the international community to create incentives and effective rules. Today, PPWSA is one of the most efficient operating water authorities in the world. It is well respected and valued by the people, the governments, and the donor community for its achievement. This story is a vivid illustration of how an individual (local talent) build an effective institution. It is this story that shapes my thought that Cambodia needs to identify, connect, and support these individuals. Together, these individual can create the national momentum to build institutions. Although it will take time and the speed of institutional building will also depend on the political support, it is possible.
Within the complexity of political system and incentives issue, it may be hard to think of ways to build institutions. However, Mr. Chan’s case should give us some confidence and hints on how we should move forward in our institutional building process. In that regards, our discussion needs to dig deeper on how to address the incentives and capable individual problem, and limited quality of institutions. Indeed, these issues should be viewed as circular or intertwined.
It is a big loss for Cambodia if we (Government, private sector, and Cambodian people) do not find, connect, and support these competent individuals. It is one of the reasons why CEA has been building platform to connect people across institutions and generations. If we can connect and support competent individuals to succeed, we can expect not only formal institution building, but also a more informal institutional building such as expanded social network building and other cultural and social transformation.
Again, please read this interview and share your thought. For technical discussion on building institutions, see the World Development Report 2002 “Building Institutions for Markets: Innovate, Connect, and Compete”.