The RGC has made considerable progress during the last 15 years in rehabilitating Cambodia's core transport infrastructure which was practically destroyed during the civil strife. The ability to transport merchandise over long distances at a reasonable cost is indispensable for export competitiveness.

Public investment in infrastructure has significant externalities and a high social return. However depending only on the private sector to fund infrastructure investments is not an effective approach and will result in under investment in transport development. Private sector is guided by private returns which may not be attractive in transport sector compared with alternatives. Besides, indivisibilities in infrastructure necessitate large scale investments which private sector may be unable or unwilling to mobilize

However, it is possible for the government to increase the volume and efficiency of investments in basic services through recourse to the private sector, privatization, or subcontracting. Besides, in the provision of public services such as transportation and electricity, the State must exercise the role of a regulator to ensure that consumers are protected.

The following summarizes the key elements of infrastructure in Cambodia and their shortcomings:

1. • The Sihanoukville port, characterized by high cost of services.

2. • A road network, perceived as excessively costly to use (especially unofficial costs).

3. • A railway system, dilapidated and poorly performing.

4. • Electricity, but at a prohibitive cost.

Since 1992, the Cambodian government launched a program of transport development, which envisaged investments to restore, and to a lesser extent, expand the infrastructure capacity, focusing on the following main objectives:

1. • Reduction of transport costs.

2. • Strengthening management of the sector.

3. • Involvement of the private sector in carrying out construction and providing services in the sector.

4. • Restructuring public transport agencies (such as Royal Cambodian Railways).

The program made good headway in achieving many of these objectives but the objectives are far from having been completely achieved.