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Logo of Phnom Penh Post newspaper Phnom Penh Post - Business registration drop on paper only: minister

Business registration drop on paper only: minister

Commerce minister Pan Sorasak yesterday dismissed figures published by his ministry that showed a sharp drop in new business registrations as a statistical anomaly, claiming the numbers did not reflect a real surge in new business activity.

The Ministry of Commerce report showed that the number of newly registered businesses declined by 26 percent this year, while registration of sole proprietorships plummeted by 40 percent. The data indicated that 2,937 new businesses registered since the start of the year compared with nearly 4,000 in 2015. Of these, only 786 sole proprietorships completed the registration process, down from about 1,300 in 2015.

The data included both new local businesses and foreign-owned branches registering with the government, but did not break down the figures.

Speaking at his ministry’s annual meeting yesterday, Sorasak insisted that the decline in registrations was not a sign of a slowdown in business activities, but was rather the result of statistical errors resulting from the adoption of an online registration system earlier this year. He said the online registration format was still new to many businesses, resulting in slower uptake, while a backlog of paperwork from applications filed in 2015 had skewed estimates of the amount of businesses that actually registered last year.

“The number for the businesses registering last year was calculated through paper applications,” he said, adding that it was an unclear manual process and difficult to validate figures. “But now our system is clearer and the [2016] number reflects the reality.”

He said it was impossible to draw accurate conclusions from last year’s registration figures, but looking ahead it would be possible to compare next year’s figures to those of 2016 as both would be calculated entirely from online registrations.

The Ministry of Commerce’s online business registration platform, launched in December of last year, was designed to make it easier for businesses to register and improve the Kingdom’s low ranking on the World Bank’s annual Doing Business report.

However, this year’s report, released in October, showed that online registration had made the process more lengthy and cumbersome. It noted that the average time to complete all the steps necessary to start a legal business had grown to 99 days on average, 12 more than needed a year ago.

The new online registration has had obvious teething pains, with the Ministry of Commerce extending the deadline for more than 50,000 existing businesses to re-register online three times on low compliance. The latest deadline for re-registry is set for December 31.

Te Taing Por, president of the Federation of Associations of Small and Medium Enterprises of Cambodia, claimed the complexity of the online system was the main cause for a drop in registered businesses.

“Our members have informed us that the new system has a lot of errors,” he said. “Online registration is easier said than done.”

Lim Heng, vice president of Cambodia Chamber of Commerce, said that businesses still need time to adapt to the new online system, adding once the kinks are worked out it will be better than the old paper-based registration format.

“But we still need some time to make businesses familiar with things that are new,” he said.

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