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Logo of Phnom Penh Post newspaper Phnom Penh Post - Small businesses worry about WTO

Small businesses worry about WTO

Small-to-medium businesses (SMEs) are worried that they could be put at risk of failure

by the trade practice rules of the World Trade Organisation when Cambodia becomes

a full member, according to participants in an SME study tour to Bangalore, India.

Before Cambodia joins the WTO, small and medium entrepreneurs would like the government

to request the committee of the WTO to set rules to allow those businesses to compete

fairly in the domestic markets of other member countries.

In India many small and medium enterprises such as rice milling, brick and tile makers,

and spare parts producers went bankrupt because the Indian government did not have

this market access specified before joining WTO.

India became a member of the WTO in 1994.

Cambodian participants in the SME study trip to Bangalore, Karnataka state, India

from July 24 to August 2, were concerned that their products would not meet international

standards.

Sreng Va, Kampong Cham rice miller and exporter, said: "We are very worried

about our products when Cambodia becomes a member of WTO because we do not have modern

milling machines."

Va said rice milling in his province was increasingly not so active as previously,

due to thousands of tons of unhusked rice being exported to Vietnam.

"Vietnam has modern rice machines that can rejoin broken rice grains. Broken

grains affect the value of the rice. We cannot afford to buy these machines,"

he said.

The Bangalore visit was organised by the Asia Foundation and sponsored by USAID.

Veronique Salze Lozach, economic program manager for the Asia Foundation, said it

was to give an opportunity to some small-scale entrepreneurs to meet with their counterparts

in Bangalore.

They were able to exchange common issues and potential solutions, meet with multi-sector

and sector business associations experienced in providing practical services to their

members, get involved in policy advocacy, and meet representatives of the public

sector and organizations aimed at promoting investments, developing industrial zones

and providing facilitated and transparent administrative procedures, through, for

example, the implementation of "one window services" for registration,

business operation and export.

Lozach said Bangalore was obviously a success story in developing products and services

that were exported all over the world.

She said Bangalore was known as the Silicon Valley of India and some software industries

based there, like Infosis, were among the most recognized in the world.

An economist from the Institute for Social and Economic Change in Bangalore said,

however, it remained important to distinguish between some very successful innovators

and other more traditional businesses, which were struggling to improve their competitiveness

in both domestic and export markets.

Today there are 300,000 registered small industries and 1,300 infotech companies

in Karnataka state, where Bangalore is.

The Asia Foundation chose this city as the destination for a group of small-scale

businesses from Kampot, Kampong Cham and Kampong Chhnang, because Bangalore is known

for its particularly successful efforts, both public and private, to seize economic

opportunities offered by trade liberalization and attract international investors

as well as stimulate domestic ones.

Lozach said Bangalore was a striking example of how political will, technological

innovation and skilled human resources could rapidly turn an under-developed region

into a successful export-oriented economy.

She said both the public and the private sector had a role to play in creating an

environment favorable to the development of a competitive and sustainable private

sector.

Va, who was on the tour, said the Cambodian government today helped motivate only

big enterprises; but not the small and medium enterprises.

The Indian government is upgrading its SMEs, by helping to pay half of the interest

rate of an entrepreneur's bank loan. The Indian government also helps to find markets

for SME products.

R S Deshpande, from the Institute of Economic and Social Change, said the keys to

success were a deregulated and more transparent business environment; the availability

of skilled and cheap human resources; and above all a strong political will to develop

infrastructures, universities and training centers, and to facilitate investment,

technological upgrading and innovation.

The Karnataka Association of Small Scale Industries (KASSIA) and the Women's Business

Association explained to the Cambodian delegation how they respond to the needs of

their members by engaging in constant interaction with local and national government.

Improved competitiveness and quality control were also mentioned as objectives.

"It was a good opportunity for us to participate with the group to Bangalore

to take some experiences to upgrade our careers," Va said. " We now know

more about advantages and how to protect ourselves from the disadvantages of joining

the WTO."

Va said his province has just set up a rice milling association. "It gives us

more credibility with our customers, negotiating strength, and the resources to solve

problems faster."

Ty Sokurn, Kampong Chhnang local electrical wiring contractor, said the Cambodian

government should advise SMEs what they need to do to meet international standards

to compete with outside products and find marketplaces both inside and outside the

country for them.

Sokurn said the Indian government was more open to motivate internal and external

investors to invest in their country.

Besides the trip to Bangalore, the Asia Foundation organized trips to Indonesia,

Thailand and Vietnam.

This was a chance for Cambodian local authority representatives from three provinces

to gain exposure to the concept of "one stop shops" for registration and

licensing and to learn new ways to develop a more business-friendly environment at

the local level, for Cambodian stakeholders to be directly exposed to an acting Commercial

Court, to see examples of how intellectual property regulations create opportunities

for the private sector and meet their counterparts; and to be directly exposed to

examples of how trade liberalization and access to new markets can create opportunities

for the private sector.

Participants invited to join the trips represented rice millers, ice makers, brick

and tiles manufacturers, fish sauce, salt, fish exporters, cashew growers, generator

sales, engine spare parts repair, clean water suppliers, and rural electricity providers.

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