Logo of Phnom Penh Post newspaper Phnom Penh Post - E-payments to save MSMEs on costs: NBC

E-payments to save MSMEs on costs: NBC

Content image - Phnom Penh Post
National Bank of Cambodia (NBC) governor Chea Chanto speaks at the 9th Global SME Finance Forum, held in Phnom Penh last week. SUPPLIED

E-payments to save MSMEs on costs: NBC

Digitising payments could bring substantial cost savings for micro-, small-, and medium-sized enterprises (MSME), not only by simplifying cash management processes but also reducing potential opportunities for misappropriation or corruption, according to the central bank chief.

Speaking at the 9th Global SME Finance Forum in the capital last week, National Bank of Cambodia (NBC) governor Chea Chanto stressed that MSMEs play a crucial role in the world’s economies, particularly in developing countries.

He shared that in the Kingdom, MSMEs account for 99 per cent of enterprises nationwide, and contribute over 70 per cent to employment and 58 per cent to gross domestic product (GDP).

MSMEs are key drivers of “decent jobs”, entrepreneurship for women, and income generation for vulnerable populations, he said, adding that these smaller businesses contribute to inclusive economic growth, shared prosperity, sustainable production and consumption, and reductions in poverty and inequality.

“Despite their important roles and contributions to the economies, MSMEs continue to face many challenges, and one of the most critical issues is access to finance. Their challenges have been exacerbated by the impacts of the Covid-19 pandemic, especially in emerging and developing economies where MSMEs are mostly in the informal sector,” Chanto said.

Small businesses often have poor bookkeeping records and lack appropriate financial accounts and audited financial statements, leading many of them to be unserved or underserved by formal financial institutions, he added.

“The Covid-19 pandemic accelerated the digitalisation of payments. According to the latest Red Book Statistics from the Bank for International Settlement [BIS] Committee on Payments and Market Infrastructures, consumers have shifted from physical cash to digital and contactless payment instruments at a rate unprecedented since the start of the Red Book Statistics.

“Recognising the massive potential of digital payments, the [NBC] recently introduced Bakong, a national payment system based on Blockchain technology, which aims to offer low-cost, secured, fast, and convenient payment services to people and small businesses in Cambodia,” he said.

According to Chanto, the NBC has been building Project Bakong since 2017, seeking to avail a peer-to-peer fund transfer service to retail customers of local banks, financial institutions and payment service providers. After a pilot run that started in July 2019, the Bakong system was officially launched in October 2020, he added.

The project is named after a prominent 9th century Hindu monument dedicated to the god Shiva, built by King Indravarman I as his official state temple in the middle of the Khmer Empire’s then-capital city Hariharalaya, located about 13km east of Siem Reap town along National Road 6 in an area now called Roluos.

Ministry of Industry, Science, Technology and Innovation director for small and medium enterprises (SME) and handicraft Chhea Layhy told The Post on September 27 that fintech (financial technology) development has markedly increased MSME activities, especially against the backdrop of the Fourth Industrial Revolution (4IR).

He pointed out that fintech has substantially cut down on production costs and wasted time for MSMEs and other businesses, while by and large remaining consistent with government objectives. “Judging from the feedback I’ve gotten from MSMEs, they appear to be happy to integrate fintech into their business processes, like e-commerce for example,” he said.

Layhy affirmed that “our goal” is to transform family-owned SMEs into corporations, with larger labour forces as well as greater productivity, access to funds, and overall capabilities.

According to the International Finance Corporation’s 2017 MSME Finance Gap report, 40 per cent of formal MSMEs across various industries in emerging markets – or the equivalent of 65 million enterprises – require about $5.2 trillion to develop and support their businesses. Moreover, the informal sector remains woefully underserved with a roughly $2.9 trillion demand for finance.

MOST VIEWED

  • Ministry orders all schools, public and private, to close for SEA Games

    From April 20 to May 18, all public and private educational institutions will be closed to maintain order and support Cambodia's hosting of the 32nd SEA Games and 12th ASEAN Para Games, said a directive from the Ministry of Education, Youth and Sport. Cambodia will host the

  • Newest horror film showcases unique Khmer culture, identity

    At first glance, the trailer to new horror sensation The Ritual: Black Nun looks like a western-produced feature film. As the story reveals itself to the viewers, it becomes clearer that this is a Khmer film, with a strong Cambodian identity and close links to

  • Almost 9K tourists see equinox sunrise at Angkor Wat

    Nearly 9,000 visitors – including 2,226 international tourists – gathered at Angkor Wat on March 21 to view the spring equinox sunrise, according to a senior official of the Siem Reap provinical tourism department. Ngov Seng Kak, director of the department, said a total of 8,726 people visited Angkor Wat to

  • Angkor Beer strengthens national pride with golden new look and fresher taste

    Angkor Beer – the "Gold of Angkor" – has a new look, one that is more stylish and carries a premium appeal, as well as a fresher taste and smoother flavour, making it the perfect choice for any gathering. Angkor Beer recently launched its new design, one

  • Water supply authority assures public shortages over early ‘24

    The Phnom Penh Water Supply Authority (PPWSA) asked for understanding from Phnom Penh residents in some communes where water pressure is weak. They assured residents that all supply issues will be resolved by early 2024, but have suggested that residents use water sparingly in the meantime.

  • Khmer ballet documentary debuts April 1

    A new documentary, The Perfect Motion, or Tep Hattha in Khmer, will premiere to the public on April 1. The documentary film follows two intertwined storylines: the creation of a show called Metamorphosis by the late Princess Norodom Buppha Devi (her very last production) and the