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Government solicits help in crafting policy for startups

People work at Impact Hub, a co-working space in Phnom Penh that is utilised by local startups, in 2015.
People work at Impact Hub, a co-working space in Phnom Penh that is utilised by local startups, in 2015. Charlotte Pert

Government solicits help in crafting policy for startups

The Ministry of Posts and Telecommunications (MPTC) will craft a new startup-specific policy to boost the growth of the Cambodian startup scene and requested insight from the sector’s stakeholders at a workshop yesterday.

The participants at the event, called the Startup Policy Hack, voted on the main challenges that startups currently face in the Kingdom deciding on five key areas: funding, tax incentives, tech-based educational programs, regulatory frameworks and incubator consultation for aspiring startups and their founders.

Kan Channmeta, a secretary of state at the MPTC, said that the government had begun crafting the new policy late last year and expected that it would be finalised before the national election in July. A draft of the policy was not made available yesterday.

“If we want to transform Cambodia into a digital economy, [we need to support] local startups,” he said. “[The new policy] will help startups and small- and medium- sized enterprises [SMEs], and will attract investors from abroad who will inject money into Cambodia’s SMEs and startups.”

Channmeta said the policy intended to address the lack of funding and the need for tax incentives for the Kingdom’s startups. The government intends to contribute between $6 million and $7 million to already-existing private sector funds, he said, which would go toward startup research, education and funding programs.

This governmental funding would be sourced from the telecommunications research and development fund, into which each telecom operator in Cambodia must contribute 1 percent of their gross annual revenue each year in order to support research and development, talented youths and infrastructure.

Rithy Thul, founder of co-working space Smallworld, said after the event that while he was hopeful the new policy would address some concerns for startups, he cautioned against too
much government assistance.

“We need government intervention to address these challenges, but [overall] I think less government intervention in terms of policy is better,” he said. “The government should focus . . . more on support [and] on the endorsement of ideas, and policymakers need to encourage research and experimentation before expecting development.”

Gordon Peters, a partner at Mekong Strategic Partners, said yesterday that Cambodia’s startups face many of the same problems as those in other countries, and the Kingdom could look to Singapore and Malaysia for examples of government policies that effectively support the startup scene.

“Government policy in Cambodia could encourage startups through making it easy to start and operate a new business, or offering tax and funding incentives to new startup owners,” he said. “I think a government matching fund that matches angel or private investments would encourage more entrepreneurs to start businesses.”

According to Thomas Hundt, CEO of Smart Axiata Telecommunications, the main element missing in the Cambodian startup scene has been funding, which Smart began offering last year in the form of its Smart Axiata Digital Innovation Fund, a $5 million venture capital fund.

While the event held yesterday was a positive start, he said, it was important for any eventual policy to effectively encourage innovation and protect local startups.

“In other countries, tech startups obtain certain incentives until they reach a certain scale, in order to compete with local international giants,” Hundt said. “That could be something Cambodia could explore, while at the same time strengthening its ICT human resources and its talent for future growth.”

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