With sectors across the board taking huge hits and the borders closed, Cambodia’s small and medium-sized enterprises (SMEs) ramped up production to help ensure the Kingdom’s food security and their own survival.
While many businesses stood at a critical crossroads as the Covid-19 pandemic pummelled economies, local food processing SMEs capitalised on shrinking imports due to the crisis and increased output to meet the needs of the domestic market.
“The Covid-19 outbreak has had an impact on the tourism and textiles sectors, but it has not affected SMEs involved in food processing,” Federation of Association of Small and Medium Enterprises of Cambodia (FASMEC) president Oknha Te Taing Por told The Post on the sidelines of the “Cambodian Small and Medium Enterprises Championship Competition” jointly organised by FASMEC and PLMP Venture Capital in Phnom Penh recently.
“Domestic production and sales are much better than before. Previously, we only thought about importing food products, but during the Covid-19 outbreak, we put a focus on local sales. So locally produced food products are selling better now,” he added.
Small and medium-sized enterprises (SMEs) around the globe were hit hard by the crisis – forcing many to scale down their operations or abandon production entirely.
A slew of woes – sluggish demand for finished goods as borders were shut, a scarcity of raw materials and cross-border travel restrictions – dented the manufacturing sector in many economies.
And Cambodia was no exception. Several sectors such as tourism, entertainment, retail and manufacturing all suffered similar predicaments.
A wobbling manufacturing sector shuttered factories in the Kingdom and muted once noisy production lines this year.
The Ministry of Labour and Vocational Training in its July report said some 430 factories and tourism businesses ceased operations, which eventually led to around 150,000 workers losing their jobs across the Kingdom.
But food processing SMEs are telling a different story – their ledgers are in the black.
Many demonstrated determined resilience, skirting around the downturn on the back of soaring domestic demand for food items.
There were spikes in demand for products such as fish and soy sauce, noodles, hand sanitiser, dried fish, drinking water and face masks.
There are an estimated 530,000 SMEs across the country, employing nearly 1.2 million workers and contributing about 58 per cent to the Kingdom’s GDP.
According to Taing Por, around 40 per cent of SMEs in the Kingdom are involved in food production.
SMEs dominate almost all key sectors – from services, industries, agriculture and trade to manufacturing.
The jump in domestic consumption for food items not only helped the survival of many SMEs but also aided in slashing the Kingdom’s food import bills.
“When imports from neighbouring countries were reduced, Cambodia’s SMEs started to produce more food to supply the local market.
“Each year, we import some $5-6 billion worth of food products but with more local production, we managed to reduce the outflow of money [foreign exchange] and this has contributed to the national economy,” said Taing Por.