Public and private sector representatives have urged the Cambodian government to fast-track policies to foster a more “formalised”, compliant and productive small- to medium-size enterprise (SME) sector.
The country’s most senior economic minds, government officials and business owners converged at the Sofitel in Phnom Penh yesterday for the first annual two-day Global Alumni Convention, a meeting of Cambodian graduates who have studied overseas.
Chea Serey, director general at the National Bank of Cambodia said the high cost of regulatory compliance, a lack of comprehensive government SME policies, limited access to finance and low productivity and limited market information were just some of the lingering issues for SMEs.
“The issues of SMEs and SME development is really not new,” she said during a panel discussion on the challenges facing Cambodia’s SMEs.
“Most ministries still have their own policies on SME development, sometimes they’re redundant and other times they are just contradictory . . . Those issues need to be addressed, and soon, by the government if they want to have sustainable economic growth.”
Serey warned that without government action on SME policy, the Kingdom’s “mom-and-pop” businesses are in danger of being outpaced by the deluge of companies exporting goods to the Kingdom beyond ASEAN Economic Community (AEC) integration in December.
“If our SMEs have low productivities, do not have access to finance, do not have information about markets, for sure we will not be able to compete with the goods that will be flying in from other countries.”
There are some 560,000 SMEs operating in Cambodia, which employ 70 per cent of the population. However, of that figure, just 10 per cent have been granted formal financing from banking institutions, according to Dy Sovann, deputy director at the Ministry of Economy and Finance.
With many SMEs lacking tax or banking records, assets or sufficient collateral to firstly secure finance, Sok Piseth, president of the Young Entrepreneurs Association of Cambodia and CEO of electronic product supplier and retailer G Gear, called for alternative ways for banks to measure SME securities.
“We are in a state of challenge, why they do not have the policy to allow loans by assessing the stock of the business instead of traditional hard collateral forms,” he said.
“Currently the government is creating the first SME policy. It will have mechanisms to help support SMEs, but the question remains; how will they create policy to support the SME market that is not ‘legal’, and has no formal records.”