The $800 million to $2 billion COVID-19 stimulus package announced by Prime Minister Hun Sen last month will only be given to those businesses that are legally registered and are formally verified, the Ministry of Economy and Finance has said.
The statement was made in response to the question of how Cambodia’s estimated 95 percent of Small and Medium Enterprises (SMEs) that run as informal businesses – which are not officially registered – would benefit from the proposed stimulus package.
Speaking to Khmer Times, spokesperson for the Ministry of Economy and Finance, Meas Soksensan also said that the stimulus package could be used to further incentivise informal SME owners to formally register for both the benefit of their businesses and employees. He also said that the ministry will need to carefully analyse how each individual business is being affected.
“Not all companies will be affected equally, so we will take that into account,” he said, adding that the ministry may also use further tax policies to help struggling businesses for a certain period. This would follow measures already taken to aid the stricken tourist industry. In February, the premier announced that Siem Reap province’s badly hit hospitality businesses would be given a four-month tax exemption period..
Khmer Times has previously reported that The Ministry of Economy and Finance has encouraged SMEs to formally register and gain access to a $100 million dedicated SME Bank that is due to open in the second half of 2020. The bank will be owned by the Royal Government and operated by the Ministry of Economy and Finance and its main objective is to help SMEs to “flourish”. To do this, it will put extensive programmes in place to educate the operators of SMEs on banking banking and other financial matters.
Another part of the SME Bank’s function will be to promote the creation of new start-ups in the country in four main sectors: agriculture, manufacturing, tourism and digital start-ups for both domestic and export markets.
Oknha Te Taing Por, president of the Federation Association for Small and Medium Enterprises of Cambodia said that accessing funds with a low-interest rate is crucial to expanding businesses and production.
“Lack of financial support is a key issue prohibiting the development of SMEs in Cambodia. So, with the presence of the SME Bank, we will have greater options for business to access financial support outside the commercial financing sector,” he said.
According to the Ministry of Industry, Science, Technology and Innovation (previously known as the Ministry of Industry and Handicraft) in 2019, of the 510,000 firms that were registered in Cambodia, more than 90 per cent of them were SMEs. These businesses employed more than 1.2 million people and contribute to more than 32 percent of the Gross Domestic Product in the country.