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Local SMEs Keen to Replace Thai, Vietnamese Imports

Sok Chan / Khmer Times Share:

Cambodian businesses are joining forces in an attempt to increase production and reduce the country’s dependence on imports. The Federation of Association for Small and Medium Enterprises of Cambodia, the Ministry of Industry and Handicraft, and the Cambodia Chamber of Commerce plan to encourage small and medium-sized enterprises (SMEs) to increase productivity, while also drawing more Chinese investment, federation president Te Taing Por said yesterday.

Mr. Por said Cambodia aims to reduce its imports of finished products from Thailand and Vietnam and other countries in ASEAN. He added that the Japan International Cooperation Agency (JICA) could help by providing technical and financial support to Cambodian SMEs. 

According to the federation report, Cambodia imports roughly $4 billion in finished goods every year from Vietnam and Thailand. Despite the high rate of imports, business in the country is booming, with 530,000 enterprises across the country, and about 30,000 enterprises registered with the Ministry of Industry and Handicraft. Mr. Por urged businesses to register, saying that the government and the federation can provide support to businesses once they are registered. 

“We want all SMEs in Cambodia to register their business with the Ministry of Industry,” he said, “so that we know how many SMEs are out there and to make it easier for the government, JICA and [the federation] to set policies to help them.” 

“If they [SMEs] don’t register their businesses, the government and the federation do not know how to help them,” Mr. Por said. The federation can help address small businesses’ lack of capital through its microfinance institution [MFI], which has already loaned about $2 million to its members and plan to inject about $3 to $5 million in loans this year. 

“Now they [SMEs] lack capital, so the federation has its MFI to support them financially,” Mr. Por said. “I will fly to China soon to promote local SMEs to Chinese counterparts, and will encourage them…to invest in Cambodia.”

New government policies could make Cambodia more favorable to foreign investors, he said. The government could encourage investment by waiving taxes on the import of raw materials for foreign investors operating here, as well as giving them three year tax holidays.” 

Nguon Meng Tech, director general of the Cambodia Chamber of Commerce (CCC), said that the CCC has also invested in local SMEs. “Our role is to provide them with training and seminars, and to invite foreign investors to meet and discuss with local SMEs to find a way to collaborate and partner with each other in operating business in Cambodia,” Mr. Meng Tech said. 

“The big goal of CCC is to promote local and international investment. We try to find the regional international investors to partner with local investment to boost the economic growth and to support to local SMEs,” Mr. Tech said. 

“Our local SMEs’ productivity and capital is low compared to the neighboring countries since we have just grown for the last few years. I hope that we will be better soon as we have experiences and have learned from countries in ASEAN and others in the region,” He said. 

Economist Srey Chanthy said that to compete with other nations in ASEAN and around the region, local SMEs should improve their productivity in high-tech production, human resources, and management and managerial skills. 

The government and the federation also need to facilitate access to cheaper and longer term financing and credit for SMEs to upgrade their technologies and facilities, widen access to innovations, upgrade human resources, improve managerial skills, and enhance marketing services.

He added that Cambodia should introduce new measures to curb or control imports of final products and to introduce technical and quality requirements that are in compliance with WTO and ASEAN rules and regulations and agreements.

Keo Mom, CEO of well-known Cambodian brand LY LY Food Industry, said that the SME sectors is still poor and lags behind the country’s neighbors in terms of productivity, technical skill, quality and hygiene. She said Cambodian SMEs have continued to fall short of international standards due to a lack of fund and human resources.

“I hope that government and CCC will cooperate with banks and MFIs to provide loans with a low interest rate to SMEs, so that they have capital to increase their business and hire a high-knowledge human resources to develop the products,” she said. “I hope that all banks will accept the business plan to get loan rather than having a real estate for collateral to get loan.” 

“We call for governments and NGOs to emphasize quality, technical skills, quality standards and hygiene in all SMEs, to increase productivity,” she added.  Keo Mom said that through CCC and federation, there will be more and more foreign investors coming to invest and partner with local SMEs as these two institutions gain credibility with foreign investors.

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