Govt acts to improve SMEs as trade tariff reductions loom up

Photo by: Bejan Siavoshy
Silk scarves made in Cambodia adorn a display rack at Rajana, a Khmer gift store in Russian Market, Phnom Penh, on Monday.

via Khmer NZ News Media

Tuesday, 29 June 2010 15:01 May Kunmakara

Course geared towards local producers aims to bolster competitivenes

THE Ministry of Industry, Mines and Energy (MIME) has invited Cambodia’s small and medium enterprises (SMEs) to receive training to boost production and improve pricing, in preparation for increased foreign competition.

Officials said Monday that they plan to eventually charge for a service aimed at increasing productivity in the face of competition fostered by reduced trade tariffs set out by ASEAN Free Trade Agreement (FTA), which came into force in January.

MIME’s Industry Director General Meng Saktheara said that some enterprises possessed sufficient capital, but didn’t have the skills required to improve production. He said that the ministry’s experts could identify these deficiencies.

“How can we produce good-quality products at cheap prices? We face a lack of raw materials for production and high electricity prices,” he said, and added that only a few sectors, such as silks and textiles, are well-positioned to compete on both foreign and local markets.

Ministry of Commerce (MoC) officials also say it is important to strengthen industrial competitiveness as the Kingdom begins lowering the vast majority of tariffs, which under the FTA must be reduced to zero by 2015, but appeared to question the benefits of the MIME plan when contacted Monday.

“Normally, all SMEs are clearly aware of their competencies. They know they have to try their best in improving themselves to produce a good-quality product, to sell cheaply both in the domestic market and for export,” MoC Secretary of State Chan Nora said.

But MIME’s Meng Saktheara said that less than 10 percent of Cambodia’s 30,000 legally registered SMEs produce good-quality products with competitive pricing that could stand up to foreign competition.

“If we continue down the same path, it will be very hard to compete with imports,” he said. “We cannot waste our time any more.”

MIME plans to conduct training courses for each of the Kingdom’s SMEs to evaluate ways to improve production, initially targeting food processing plants and light manufacturing, but eventually extending the service to the tourism and service sectors. The cost of the courses has not been disclosed.

Enterprises are asked to complete forms to enable MIME to define their business plans and offer them training.

Phnom Penh SME Association President Heng Heang said he support the government’s initiative, but added that it is important that the government enlists the right experts to aid businesses.

“It is the right time for the government to help strengthen local production,” he said.