Small and medium enterprises account for about 99 percent of the total enterprises and accounted for nearly 60 percent of GDP and more than 70 percent of employment
The growing importance of small and medium enterprises (SMEs) have contributed significantly to supporting the national economic growth and helping the livelihood of people living in rural areas. Making these remarks at the 8th Annual Macroeconomic Conference on ‘Challenges and Policies for the Development of Small and Medium Enterprises in Cambodia’ organised by the National Bank of Cambodia on December 22, Chea Serey, Director General of the NBC, said that small and medium enterprises account for about 99 percent of the total enterprises and accounted for nearly 60 percent of GDP and more than 70 percent of employment.
She went on to add that SMEs have a significant contribution in supporting institutional environment, economic activities and promoting people’s livelihoods and reducing poverty, especially among rural residents.
“SME development will contribute to strengthening the economy by creating supply to meet domestic demand, reducing the import of some consumer goods from abroad and creating more domestic jobs. These factors will support the diversification of the national economy and promote the transformation of Cambodia into a high-middle-income country,” she said.
She also pointed out that previous studies have shown that SMEs in Cambodia faced many business challenges as obstacles to sustainable development. These include: Lack of management skills and skilled labour, lack of capital and access to official finance, lack of information on local and export markets, competition from large enterprises, and imports of goods and so on.
Regarding the challenges of the SME sector, Lim Oun, Director General of the Bank for Small and Medium Enterprises in Cambodia, presented three important conditions for small and medium enterprises to implement to facilitate access to finance from banking and microfinance institutions.
He said SMEs still find it difficult to apply for loans from microfinance institutions and banks to save their businesses, and most of the SMEs that do not receive this financing have not registered their businesses.
Oun said that in order for small and medium enterprises to receive financing from various institutions, SMEs must study the information properly, especially on the issue of repayment; be responsible for issues such as taxes or proper registrations and must go to register the business properly.
Registration is important because non-registration of SME business is a factor that impedes them from having access to funding from microfinance institutions and banks.
He said that some small and medium enterprises have the ability to expand their business, have the ability to repay, but the problem is they could not get a loan because of lack of collateral. They are encouraged to use the corporate credit guarantee facility (CGCC) that will assist them to tackle the issues related with collaterals.
He added that Credit Guarantee Corporation of Cambodia has been active in working with various commercial banks to provide services to customers who wished to borrow from partner banking institutions with the CDCC’s assistance.
Speaking about the SME sector, Dr. Taing Nguon Ly, Executive Director of the New Techo Business Center, said that during the outbreak of Covid-19, the SME sector was severely affected. To help SMEs during the Covid-19 crisis, digital technology was a key aspect which could help SMEs to survive.
“Technology is very important to help small and medium enterprises,” he said.
This article was first published in Khmer Times. All contents and images are copyright to their respective owners and sources.