In Slump, Officials Look to Small Businesses

http://www.voanews.com

By Chun Sakada, VOA Khmer
Original report from Phnom Penh
26 May 2009

With the global downturn slowing large-scale investment in Cambodia, commerce officials are hoping that small and medium enterprises can boost growth.

“SMEs play an important role in enhancing economic development and creating sustainable employment and income,” Commerce Minister Cham Prasidh told a seminar Tuesday. However, he said, about 80 percent of these enterprises never get loans from banks, he said.

Cambodia’s economy is expected to contract between half a percent and a full point, a drastic fall from the near double-digit growth it has experienced in recent years.

US and European demand for its exported garments has plummeted, while tourism numbers have dropped, but agriculture remains the top employer. Cambodia set up a new policy to help smaller businesses, especially in agriculture, pull the country along.

“This will include a new facility to provide loans to SMEs in agriculture and agribusiness to be launched tentatively in fall, 2009,” the government said in a joint statement with UNDP and the International Trade Center.

“Cambodian SMEs are suffering from a shortage of credit, coupled with relatively high interest rates applied by banks to small businesses, resulting in, often, a lack of sufficient working capital for the enterprises,” Cham Prasidh said. “Access to finance is one of the major impediments in Cambodia to producers and exporters of commodities.”

National Bank Director-General Tay Nay Im said local and international partners were giving training to smaller enterprises “by all means” to help produce “more reliable financial statements and applicable business plans” to help assess the risks of their businesses.

“This last task is very challenging and complicated and time consuming,” she said. “We need a lot of effort. By doing this, the obstacle to the small and medium enterprises in getting access to finance has been removed.”

The International Trade Center has negotiated with commercial banks to provide small loans, Roger Megelas, the center’s senior adviser for small and medium enterprises, told reporters Tuesday.

“We reached two commercial banks which will begin to provide loans in October 2009,” he said. “We will provide loans to 100 small and medium enterprises.”