Cambodia, dubbed in 2002 as one of the poorest developing countries in the world, has taken major strides in restoring and improving its foundations for good governance. In early 2001, two complementary landmark laws were passed, setting the initial step toward decentralizing the state. These two laws were: the Law on the Election of Commune/Sangkat Councils (NS/RKM/0301/04) and the Law on the Administration and Management of Commune/Sangkat (Royal Kram 0301/05). Complementary capacity building and support systems at the national, provincial and commune levels are required to make decentralization fully functional. The medium and long term challenges involve strengthening the process, formulating a nationally-owned vision, and adopting a coherent strategy for decentralization reform implementation. There is a need to clarify the Royal Government of Cambodia's deconcentration strategy to take into account the role of provinces and districts on the one hand, and the relationship of the deconcentrated units with the communes on the other. Moreover, issues concerning urban governance and the viability of the present size distribution of communes as local government units need to be addressed.
