Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in Cambodia’s economy, with their contribution to both Cambodia’s economic and social development. Similar to other ASEAN member states, MSMEs in Cambodia play an important role in job creation and income generation for low-income people and the most vulnerable portions of the population.  Furthermore, MSMEs contribute in fostering economic growth, social stability, and developing a more dynamic private sector in Cambodia.

MSME economic activities accounted for more than 500,000[1] established businesses. According to the National Institute of Statistics (NIS), around 72 percent of Cambodian enterprises are family-run businesses with one to three employees (2009). Out of a total of 505,134 enterprises, only 3.5 percent were registered by the Ministry of Commerce in 2011. This means that the majority of MSMEs in Cambodia are in the informal sector, preventing them having access to finance provided by formal financial institutions like banks, which may impede them in growth. As a result, MSMEs rely on personal savings and informal sources of finance to start or expand their businesses.[2]

MSMEs in Cambodia, Moving Forward

This condition might be seen as challenging and will be hard to overcome in the short term. However, with the introduction of the Industrial Development Policy 2015-2025 (IDP), the Government of Cambodia has set its vision towards structurally transforming the Cambodian economy, from a low-skilled economy into a skill-based, technology, and knowledge-based economy. This policy also sets the tone for the government’s approach toward MSMEs as well. As one of its four main strategies to achieve the goals, it is clearly stated that the Government of Cambodia aims to develop and modernize its small and medium enterprises (SMEs) through support in expanding and strengthening MSMEs’ manufacturing base, modernizing Cambodia’s registration process for enterprises, and by ensuring technology transfer and industrial linkages among MSMEs and other key players.[3]

The General Department of SME and Handicraft (GDSMEH) under the Ministry of Industry and Handicraft, has been the agency which is mainly responsible in providing support for the development of MSMEs in Cambodia. With its  large number of missions to boost the business environment and investment in manufacturing SMEs; improve the competitiveness of MSMEs; promote the productivity and value added products for export markets and supporting industries; create conducive manufacturing MSMEs registration licensing environment in a simple and time saving manner; prepare or promote the cluster of MSMEs in various segments of production; assist MSMEs in access to finance, GDSMEH is the primary source for MSMEs’ development-related policy.

To do this, GSDMEH has recently held a number of programmes and produced a number of policies that aim to encourage MSMEs in further growth of their business through the use of innovative means, such as SMEs Go Digital Forum which was held in 2017 and early 2018. The agency is now also planning to establish an Entrepreneurship Promotion Center and a Skill Development Fund in the short term to support the development of MSMEs. The agency is also working hard to ensure access to Cambodia’s first SME Bank which will be established by 2019. To better support Cambodian MSMEs in accessing the market, GSDMEH also regularly held and facilitated MSMEs participation in various annual trade fairs, both locally and internationally.

Future Ready MSMEs

Codingate Co., Ltd.

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Founded in 2013 by a young talented entrepreneur Sopheakmonkol Sok, Codingate is a new business start-up that should be kept an eye on. Codingate is a company that provide services in web and mobile application development and consultancy, as well as digital marketing. Through their services, Codingate help companies to digitalise their business

After only 5 year since it was established, the company has gained recognition from more than 70 companies and has been trusted to handle more than 160 projects, not just in Cambodia but also overseas. The company’s success has made Sopheakmonkol’s name recognized as being one of the rising entrepreneurs in Asia, with he was listed as one of the Forbes 30 under 30 Asia in 2017 for the Tech Enterprise category.

The secret behind this is the team who is deeply passionate about information technology and has an innovation-driven mentality. This mentality has helped the company in maximising their business in the middle of the growing appetite for business digitalisation in Cambodia.

One example of this is when the company managed to identify the need for Cambodian entrepreneurs to streamline their businesses. Since many Cambodian entrepreneurs tend to have multiple businesses, the situation attracted Codingate attention to also expand their services from only digital marketing services to also include digital service development that helps a company to digitize its business. Even further, now Codingate has an eye on their next step toward making the company into a full-cycle digital solution provider for business.[4]

 

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[1] Cambodia Economic Census (2011)

[2] Cambodia’s Small Businesses Serve as Backbone of Sustainable Economy (2013) https://asiafoundation.org/2013/05/15/cambodias-small-businesses-serve-as-backbone-of-sustainable-economy/

[3] Cambodia Industrial Development Policy 2015-2025, Market Orientation and Enabling Environment for Industrial Development (2015), http://www.mih.gov.kh/File/UploadedFiles/12_9_2016_4_29_43.pdf

[4] https://www.phnompenhpost.com/business/business-insider-how-codingate-helping-businesses-adapt-digital-age