Gathering a select group of experts for yesterday’s panel discussion ‘Building Prosperous and Resilient SMEs in Emerging Economies’, the United Nations Development Programme (UNDP) sought to tackle the issue of growth in small and medium-sized enterprises (SMEs) and brought international case studies to the forefront to see what lessons can be applied to Cambodia.
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“Use what you have” became the mantra of the day courtesy of one Yuen Yuen Ang – an associate professor of political science and a China specialist at the University of Michigan, whose first book ‘How China Escaped the Poverty Trap’ analysed the twists and turns in China’s economic and social development.
“The poverty trap is best explained as the understanding that countries are poor because they’re weak and weak because they are poor,” said Ms Ang, adding that these are mutually reinforcing and create a vicious cycle that leaves governments and their developmental partners at odds over which issue to address first.
She noted that as recently as 1964, China was considerably poorer than Cambodia, but that through an unexpected approach to development, it was able to advance rapidly. This, she argues, was achieved by making good use of its strengths: an abundance of bureaucrats and the capacity for strong mass mobilisation.
“Local governments, particularly along the coastal regions, enlisted their civil servants – who had a limited amount of education – to recruit investors using personal relations and then in return would receive a cut of the investments made,” explained Ms Ang.
While this, she argues, is not a permanent strategy, it fostered economic growth that altered the resources available and changed the goals of development.
As such, this model of development may apply to Cambodia, who can use what it already has – talent, resources and cultural practices – to kick-start the economy. This, Ms Ang suggests, could see market growth that prompts institutional change and formalises the economy.
From there, it is up to modernised institutions to support and sustain the market, Ms Ang said, before adding that this model of development seen in China is not unique – many Western powers evolved similarly.
Ms Ang also ran through the evolution of Nigeria’s film industry – Nollywood – which, having started out from very little, has gone on to become the world’s third-largest film industry, valued at $7.2 billion and creating over 1 million jobs. The development pathway, she argues, could also be applied to Cambodia.
Following her presentation, Ms Ang was joined by Chheang Vanarith, deputy secretary-general of the Ministry of Economy and Finance’s Committee on Economic and Financial Policy, Alan Soon, co-founder of Splice Media, Pauline Tamesis, the United Nations Resident Coordinator, and Pong Limsan, founder of First Womentech Asia.
Aiming to see how the lessons of China and Nigeria would work within the context of Cambodian SMEs, Mr Vanarith praised the business society of Cambodia for their versatility and dynamism and claimed he wants to see a focus on developing a healthy ecosystem.
“We are addressing this through policies such as the Skills Development Fund, which will address the skills mismatch in public-private partnerships. We have enterprise development centres that aim to build the capacity of SMEs and start-ups – this will promote innovation and build a spirit of entrepreneurship and risk-taking,” said Mr Vanarith, who also pointed to next year’s launch of the SME Bank, which, he said, will provide better access to capital for the nation’s SMEs.
SMEs in Cambodia make up no less than 97 percent of all businesses.
Technology was also identified as a key driver of innovation and SME resilience by Mr Soon.
“This ability to create has never been seen before. Tech is a huge enabler in creating a multitude of media start-ups,” he said, arguing that barriers to entry have been substantially lowered through digital platforms and advances in technology.
While Mr Vanarith assured attendees that the Ministry of Economy and Finance is working to create an environment conducive to the growth of digital start-ups and SMEs in general, the panellists agreed that much more was needed from both Cambodia’s private sector and the government before the Kingdom could harness the power of its SMEs.