SMEs seen as key to growth

Photo by: BLOOMBERG
Workers unload bananas at a small business in Siem Reap.

The Phnom Penh Post

Written by Kay Kimsong
Friday, 13 March 2009

Members of the government and private sector urge development of small and medium-size businesses to drive economy towards recovery.

CAMBODIAN economists and trade officials have urged the government to focus on small and medium-sized entreprises rather than foreign investment to boost the economy during the global downturn.

"Only small and medium-sized enterprises can be used as a tool to boost our growth," said Kang Chandararot, director of the Cambodia Institute for Development Study.

He said that the size of the small business sector meant it was also able to absorb thousands of the 20,000 garment workers who have been laid off this year.

"SMEs are a big part of the economy. They represent around 65 percent of GDP and employ 85 percent of the whole Cambodian job market," said Kang Chandararot.

"This is the perfect time for all relevant ministries to help local producers to be able to boost employment to strengthen the economy."

He said that SMEs mainly use domestic resources - raw materials and villagers who keep income circulating within the local economy.

Mao Thora, a secretary of state at the Ministry of Commerce, said the government is working with the United Nations Development Program to promote small businesses by seeking markets for processing factories, and evaluate agricultural products.

"[Small businesses] are hugely important for our economy in terms of employment and revenue-collecting," said Mao Thora.

He estimated that 90 percent of Cambodian businesses are SMEs, adding that the Ministry of Commerce had plans to send representatives to China in May to find buyers for cassava products and to seek out experts to train local producers on standard packaging.

Heng Heang, president of the Phnom Penh SME Association, told the Post on Wednesday that the global downturn was starting to affect small businesses, but not as severely as the real estate sector.

"We are able to survive. We don't see many people laid off yet, but growth is still fairly flat," he said.

"If the government and bankers are able to promote SMEs at this time, it will help generate better growth for the economy," he said, adding that because SME profits stay inside Cambodia, they can help strengthen and create other jobs.

"If a fish sauce factory keeps operating, it means fishermen and salt farmers have jobs, too," he said.

Nguon Meng Tech, director general of the Cambodia Chamber of Commerce (CCC), echoed the call to focus on SMEs, adding that such business owners are better paid than garment workers.

"If you work in a family business, you don't have to worry about food, medicine and accommodation, but as a garment worker you spend money on rent and other things," he said.

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This is the perfect time for all relevant ministries to help local producers.
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However, he blamed some officials at the Ministry of Commerce who usually discourage local entrepreneurs by asking them to pay a fee for opening businesses.

He also called on Cambodian tycoons to give US$2 million in loans to the CCC to lend to Cambodian entrepreneurs at a low interest rate.

Opposition lawmaker Son Chhay said between 600,000 and 700,000 Cambodians have left the country to seek jobs in Thailand and other countries, many of whom would usually have ended up opening SMEs in Cambodia had they not gone.

"Take action quickly.... I guess about 1 million jobs have been lost directly and indirectly so far," he said.

"Foreign investors aim to earn profits and go home. That type of business is not the kind of long-term investment Cambodia needs for sustainable growth," said Son Chhay.