Hinn Chamroeun from Kampong Chhnang, with the study group at an orange plantation near Malang city, East Java.

A

group of Cambodian small-to-medium-sized-enterprise (SME) owners has returned from

a study tour of Indonesia, with a greater appreciation of the benefits of forming

business associations and cluster groups.

The tour for 10 people in May was sponsored by the Asia Foundation. The participants

represented businesses such as water distribution, construction, agriculture and

salt production, in Kampong Chhnang, Kampong Cham, Kampot and Phnom Penh.

Nancy Hopkins, the Asia Foundation representative in Cambodia, said there were 60

small business associations (called forda) serving 1,500 member businesses across

Indonesia.

Hopkins said among the many differences between Cambodia and Indonesia were the size

of the population, the level of economic development, the type of natural resources

available, the political situation, and the level of decentralization. Indonesia

was farther along with its decentralization process than Cambodia.

However, small businesses in both countries faced many of the same constraints, including

problems with access to credit, lack of infrastructure, heavy and complicated administrative

procedures and informal payments.

Hopkins said the trip to Indonesia provided an opportunity for Cambodian colleagues

from public and private sectors to learn from the Indonesian experience. It demonstrated

the benefits of forming small business associations that can engage with the public

sector on policy issues affecting SMEs and offered a chance to Cambodian participants

to be exposed 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.

"Increasing understanding of the important contributions that SMEs make to the

local economy will help Cambodia along its path toward economic liberalization,"

she said.

The Asia Foundation is holding workshops in Kampong Chhnang, Kampong Cham and Kampot

on association building with technical support from one of the foundation's colleagues

from Indonesia.

Suon Dy, head of the Department of Industry Mines and Energy (DIME) in Kampong Cham,

said Cambodian SMEs would ultimately produce more goods for export by collaboration

with related organizations.

Dy, who was on the tour, said: "In the future, we will be able to produce additional

product for export. Today we produce only for domestic demand."

He said in his province today there were 329 SMEs and of these cashew nut, wine,

sugar, rice milling and wood-potato enterprises were the most important enterprises.

However they serviced only the domestic market because the businesses could not borrow

money at low interest, were short of human resources, their technology was often

obsolete and they lacked information and confidence to develop.

Dy said another difficulty was that Cambodian producers had to register their businesses

at two different departments: DIME and the Department of Commerce.

"It's very different from Indonesia. They have a one-stop service center which

handles all kinds of business and licensing transactions.

Dy said the Cambodian government had started experimenting with this concept in Battambang

and Siem Reap provinces, and eventually this would spread to other areas.