December 8, 2011

A path forward for Cambodia’s SMEs


Small and medium enterprises play an important role in growing the Cambodian economy, government officials and economists have said.

Phnom Penh Post reporter Sieam Bunthy sat down with Federation of Associations of Small & Medium Enterprises of Cambodia chairman Te Taing Por yesterday to discuss the hurdles these businesses face in the domestic marketplace.

How many SMEs are there in Cambodia, and in what sectors do they operate?

There are about 530,000 enterprises, including micro-enterprises, which typically have about 10 employees. They cover nearly all sectors, including garments, food processing and industrial work.

Can you describe the role SMEs play in the Kingdom’s economy?

SMEs provide jobs, as they employ a total of one million people at the moment. They  can also prevent money from leaving Cambodia by producing and selling products that see demand in the domestic market. But they also boost tax revenues through exports of products like garments, crafts, and even computer programs.

What are the obstacles SMEs face nowadays?

Limited access to capital and loans is a big problem, because the loans require collateral and are often issued at very high interest rates compared with other countries in the region.

Productivity can be an issue, too, because the technology and techniques used to make some products are out of date. Not to mention products that don’t meet international standards.

There’s also the problem that a lot of owners of small companies don’t want to register with the government because they can’t afford the tax experts and consultants needed to bring their companies into line with government regulations.

So what should these SMEs do to clear those hurdles?

SMEs should definitely try to come into line with government regulations and register to be fully recognised businesses, in addition to doing what they can to boost their skills training.

At the same time, we need banks to lower the interest rate on loans to eight per cent to allow SMEs enough profit to grow their production capacity. And banks should loosen the requirements on required collateral for lending.

SMEs also need to boost their product quality so they can keep in international markets.

What percentage of SMEs makes products that can compete with their foreign peers?

My best guess is that less than two per cent have received certification by the Ministry of Industry that their products are of international quality. But we don’t have the statistics needed to give an accurate number.

ASEAN is planning to open its economic borders in 2015. Are Cambodia’s SMEs ready?

It will be tough, but I think there’s a chance for Cambodia’s SMEs in that different count-ries have different strengths.

So SMEs might be able to make part of their products here, then ship to another ASEAN country to finish the manufacturing process. Or other countries might start their manufacturing here and  ship the product elsewhere to be finished.

In short, it will be difficult, but I think countries will find ways to complement one another.

What is your organisation and the Cambodian government doing to help SMEs get up to speed before ASEAN economic integration in 2015?

We are working closely with the government on a number of things, including offering training courses on how to increase productivity and service quality, as well as adding value to products so that they can compete in the region. We are also working with the government, and public-private forum working groups to push for policies that encourage SMEs that register and standardise their businesses and products.

What are the advantages of the Cambodia Securities Exchange for SMEs?

The stock market is good because it helps to grow the economy. And it will enable SMEs to raise capital and grow their businesses. But I think the reality right now is that few SMEs are ready to list.

They don’t have the transparency and accountability the Securities and Exchange Commission requires.

No comments:

Post a Comment