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Logo of Phnom Penh Post newspaper Phnom Penh Post - Heat on SMEs as economic crisis grows

Heat on SMEs as economic crisis grows

The global economic crisis has had a significant negative impact on local small and medium enterprises (SMEs), with observers worried that the signs will become more visible later this year as job losses mount and incomes drop.

Te Taing Por, the co-chairman of the Manufacturing and SME Working Group, one of seven private sector groups that liaise with government, said the body would release a report on the impact later this month.

At a meeting in early July, members of the working group heard anecdotal evidence suggesting orders for handicraft exports to the United States had halved in the first quarter of 2009 compared to the same period last year, while restaurants targeting tourists and expatriates had seen sales decline 30 percent.

There was more bad news from other members, with sales of dried fruit and jams at supermarkets down 30 percent, and sales of agricultural equipment also lower as farmers put off buying tools in the face of financial uncertainty.

Participants were told that the key challenges faced by SMEs locally were a lack of access to finance and market information, limited technology capacity and low confidence in the tax system.

The working group said that by 2012 the Kingdom ought to establish a specialist SME bank to provide loans with improved conditions to SMEs.

Sok Sina, an independent economist, said all businesses in Cambodia fall into the SME category. He expects the economic situation will improve early next year.

Earlier this year, Cambodian delegates attended an international forum in Beijing that examined the challenges facing SMEs. They heard that SMEs typically suffered from uncertainties surrounding regulatory policies, lack trade finance, and were disadvantaged by opaque customs and trade regulations.

The forum also heard that poor logistics and weak transport infrastructure also hurt SMEs.

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