A draft development policy for Small and Medium Enterprise (SME) and a new SME definition has been sent to the Ministry of Economy and Finance’s Economic and Financial Policy Committee (EFPC) for review and approval, according to a senior official.
“In major countries, SMEs are considered a crucial sector for the economy, with SMEs contributing between 50 to 60 percent towards the GDP for the three biggest economies in the world – the US, China and Japan,” said Heng Sokkung, secretary of state for the Ministry of Industry, Science, Technology and Innovation.
“Locally, SMEs employ approximately 70 percent of workers and are responsible for almost 60 percent of sales, however, they have no clear policy and definition,” he added.
Oknha Te Taing Por, president of the Federation Association for Small and Medium Enterprises of Cambodia told Khmer Times that the “SME Development Policy” will play a vital role to support manufacturing in the country, boost local food processing, reduce imported finished products from foreign countries and facilitate access to finance.
“When we have more food processing factories, we will not just sell the raw material to foreign countries and it will also reduce migrant workers to our neighbouring countries,” Oknha Te added.
“We have also called for the Ministry of Industry to facilitate SME registration while calling on the government to give a two-year tax break after registration or after building of a factory,” he added.
According to the Ministry of Industry, the Cambodian government has put more effort into the SME sector, with the ministry establishing the SME Bank of Cambodia to help the support access to working capital. The SME Bank of Cambodia has a registered capital of $100 million and will provide an interest rate of 7 percent per annum.
In addition, microfinance institution PRASAC has also participated in the SME Bank’s SME Co-Financing Scheme, an initiative by the Cambodian Government aimed at providing small and low-interest loans to also bolster and develop the sector.
This loan scheme will enable PRASAC to provide loans to small and medium enterprises with an investment capital up to 1.26 billion riels ($300,000) or with working capital up to 840 million riels ($200,000) for their businesses with a special interest rate of 7 percent per annum and a loan term of up to 4 years.
- Tags: SMEs