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Government hopes decentralisation boosts business registration

A motorcycle passes a row of small retail stores along Sothearos Boulevard in Phnom Penh.
A motorcycle passes a row of small retail stores along Sothearos Boulevard in Phnom Penh. Pha Lina

Government hopes decentralisation boosts business registration

To promote the registration of small- and medium-size enterprises (SMEs), the Ministry of Industry and Handicraft will begin early next year to decentralise the process by granting provincial government officials the authority to register businesses.

Oum Sotha, spokesman of Ministry Industry and Handicraft, said that this downstream initiative would help speed up the registration process as well as giving authorities the ability to quickly inspect business operations.

“The decentralisation initiative for SMEs will begin sometime next year,” he said. “We are doing this to help solve the challenges SMEs face and it can potentially lead to the establishment of new federations of businesses that operate in the same sector.”

“When you have individual business federations working together, it is easier for us to make sure that they are following the law and the criteria for quality standards,” he added.

He added that another reason for this initiative was because the ministry believed that many businesses were deliberately flying under the radar and avoiding registration.

“So far this year, there has been a slow amount of businesses registering and we believe that as many as 50 percent of new SMEs have not bothered to register,” he added.

According to ministry data, only 221 SMEs registered with the government by the end of November, bringing the total to 39,362. While Sotha could not provide data for a percentage growth of registration, he said the ministry believes there are approximately 100,000 SMEs operating in the Kingdom.

Te Taing Por, president of Federation of Association for Small- and Medium-Size Enterprises of Cambodia (Fasmec), said that while a decentralised system was good, the government has repeatedly fallen short of developing a dedicated SME policy for the whole sector.

“The ministry should put more importance in setting up a SME policy to ensure transparency and fair competition in the market,” he said. “But right now the government discourages registration because those that do register pay taxes, while those that do not continue to operate as normal.”

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