In Cambodia, the informal economy is defined as actions without official or solid legal status, regulation or protection by state institutions, or as actions that are identified with some of the following characteristics: No firm or postal address ; Employees are self-employed;  No data through census survey are available or the activities are not recognised; Labour-intensive nature of operations and quick turnover; Non-structured premises without regulations, licences, insurance, or taxes ,etc.

Even though Cambodian formal sectors are primarily located in the towns and cities, particularly in Phnom Penh, informality runs the city's economy. The informal economic activities - micro- and small enterprises, market sellers, non-permanent labour workers, moto-taxi drivers, and domestic helpers - have a major role in the economic performance of the capital city.

The informal economy is the most important employer for the poor inhabitants of Phnom Penh. Moreover, many children are involved in informal activities, working as shoe cleaners, rag pickers, sellers or beggars. The customary informal works in Phnom Penh are mototaxi- and cyclo-drivers, food, gasoline and vegetable sellers, construction workers, electricity and water sellers, motorcycle repairers, rubbish collectors, brick workers and house servants. There is an evident linkage between the work types in the informal sector, and the work types of the slum dwellers. Hence, relation between poverty and the informal economy, as a result of poor working conditions, and low income levels, is obvious.

There are three dominant sectors offering formal employment in Phnom Penh. They are public administration, garment industry and tourism. In some cases the formal sector is unable to provide enough income for its employees. Based on this mismatch majority of the Phnom Penh's citizens work informally, at least on a part-time basis.

The informal economy also tends to absorb most of the growing labour force related to rural-urban migration when the manufacturing industry and off-farm activities do not grow with the same rapidity. The sector also answers the needs of the seasonal migrants coming to the city to earn supplementary income particularly in the dry season. And it also attracts rural migrants to Phnom Penh to provide low-cost goods and services for those employed in the formal and informal economies.

Poor labour standards prevail in the informal economy. Informal workers are not recognised, not regulated and thus not entitled to legal protection. They are often subject to extortion, bribery, repression and harassment sometimes sexual by authorities. Informal workers are not covered by labour legislation because the labour code is based on relationship employers and employees. Business registration requirements are very     difficult; so many small businesses are forced to operate without a licence. Public authorities often confuse unregulated activities of informal enterprises with illegal activities.

To be able to guide the poor informal workers for better achievements and have a real impact in their level of livelihood, there is a great need for appropriate regulations, laws and policies. Regulating the activities of the informal sector, however, is an immense challenge. There is no one policy intervention that could address such a diverse entity.

Furthermore, very often the increasing fiscal and regulatory burden leads to the enlargement of the informal sector or puts more troubles on informal workers activities. To be able to legalize and regulate the sector, more information and dialogue with the informal sectors needed. The regulations need to be sensitive so as to be able to increase the productivity, quality, and working conditions of the informal sector. Only by understanding the needs and identifying the obstacles, that the informal sector is facing, proper and sustainable regulations can be established. Just putting extra pressure on the informal sector turns development in an unwanted direction. The regulations cannot be the same for poor informal workers and the informal companies that just want to avoid the extra burdens of registration.

Progress in the national development agenda is affected by deeply rooted hierarchical relationships that underlie governance processes, continued prevalence of traditional gender norms, low levels of trust and social cohesion resulting from decades of trauma and difficulties in the realisation of their economic, social, civil and political rights by all rights holders. It describes various local initiatives that we hope would be useful to local private and public agencies working in the informal economy. It aims to facilitate understanding of how organizations, at every level, can contribute to extend decent work in the informal economy.

To make the development sustainable in the long run, education, training schemes and support to workers' organizations are essential for the capacity building of the informal workers. To avoid extra burdens, the means of registration need to be clear, transparent and simple. Micro-credits and saving groups are also essential part of the improvement process, which also builds believe and strength among the poor citizens. The informal economy acts as a crucial part of the economy in Phnom Penh and it is extremely important for the city and its development, providing employment, income, and services for the majority of the citizens and the informal sector of the city has a lot of potential capabilities, good ideas, entrepreneurial skills, and education, which need to be exploited for Phnom Penh's development.

※ References
http://water.tkk.fi/English/wr/research/global/myth/10_Heinonen_Informal_Myths-of-Mekong.pdf
http://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/documents/ publication /wcms_bk_pb_124_en.pdf
http://www.un.org.kh/index.php?option=com_content&view=article&id=47&Itemid=66