Industry minister Hem Vanndy held a meeting with an official from the World Bank recently. misti
Minister of Industry, Science, Technology and Innovation Hem Vanndy has announced his ministry’s plans to push for more businesses to transition from the informal economy to the formal one.
He said the Cambodian economy currently consists of over 770,000 enterprises, only about 2.2 per cent of them formally registered.
He made the announcement during a March 24 press conference marking the second National Day of Science, Technology and Innovation.
Vanndy explained that the ministry is preparing policy measures to assist small and medium enterprises (SMEs) with the transition, as this will foster economic growth.
“The seventh-mandate government has prioritised the transformation of the informal economy into a formal one. Thus far, we have already begun offering social protection, such as access to the National Social Security Fund [NSSF],” he said.
He added that over 97 per cent of the Kingdom’s more than 770,000 enterprises are microenterprises, almost all of them in the informal economy.
“There are many reasons why businesses have not been formally registered, including varying markets, entrepreneurship, ability to comply, some factors related to tax conditions and limited business management skills,” he said.
He added that just like the previous government, the incumbent administration led by Prime Minister Hun Manet aims to strengthen small businesses and help them grow. Helping them transition from informal status to a formal one is crucial to attracting foreign direct investment (FDI), as the government looks to bring more investment into Cambodia.
Te Taing Por, president of the Federation of Associations for Small and Medium Enterprises of Cambodia (FASMEC), said on March 25 that as most businesses in Cambodia are SMEs, the sector plays an important role in the Kingdom’s socio-economic development and growth.
He added that his federation will continue to promote the sector, including small-scale manufacturing, an important backbone of the national economy and the livelihoods of many families.
To that end, the FASMEC will conduct training in digital markets, as well as in how to access finance and develop connections with its partner banks. It will also strengthen its branches and develop new markets, to help SMEs across the country enhance the quality of their products.
“I urge informal businesses to become formal, registered ones. If they do so, they will be able to access many benefits and receive [incentives] from the government. It will also be easier to manage them,” said Taing Por.
According to Vanndy, as of 2023, a total of 44,628 SMEs and handicraft manufacturers were registered. Between them, they employ 463,966 workers.
