Te Taingpor, the president of the Federation of Association for Small and Medium Enterprises of Cambodia (Fasmec), sits down with The Post’s Cheng Sokhorng to discuss recent positive developments and remaining challenges for small and medium enterprises (SMEs) in Cambodia.
What is the situation like for SMEs in Cambodia?
If we look at the economic growth of Cambodia, the GDP has grown 7 percent annually. That means our economy is growing and stable, which also means healthier small and medium enterprises. I have noticed that our domestic market has presented domestic products better this past year, much better than before, when they were rarely seen in our domestic market. Looking at the registration of SMEs, there was a growth in registrations because the government and relevant ministries are trying to transform the commerce and improve it. The Ministry of Industry and Handicrafts enhanced the one-window service and decentralised the system to the provinces, and also there is online registration through the Ministry of Commerce.
What are the potential markets for SMEs?
There are a lot of opportunities for SMEs to enter the market. If we look at only the domestic market, there are 15 million people [in Cambodia], which SMEs could use to generate the thousands of dollars in revenue each year from them. If we look at the Asean market, around 600 million people are demanding daily products and food.
At the same time, we have the tax-exempt status from European countries. Those are all potential markets, and good opportunities for us to catch up, but the question is: When we will able to supply that demand, and how will we be able to export?
How many SMEs export to the international market?
According to the export data of Cambodia, our exporting is mainly dependent on the shoe and garment sectors, which account for 70 percent of the total exports of Cambodia. Except those two, there is only rice, sugar and rubber, which account for 20 percent. The SMEs cannot even reach 10 percent of the export market.
What can be done to promote SMEs competitiveness?
In order to promote the SMEs for competing in the local market, which is flooded with imported products from other countries, we have to build the capacity of SMEs in regards to production efficiency, focus on the standard of products, and reduce the cost of production while also increasing the scale of production. That will help SMEs better meet domestic demand. We hope that the government will open the SMEs bank this year, which will have the investment size of $100 million, in order to fulfil the financial needs of SMEs.
The government should also work on how to protect or limit the imported products by controlling the import tariffs, quality, and standards in order to give a chance to SMEs to compete in local markets. Additionally, the government should consider exempting any tax payment, such as value-added tax, as well as supporting the techniques and skills to remove technical barriers that block our domestic products from reaching the international market, especially the Chinese market.
This interview has been edited for length and clarity.