Cambodian Group Cambodian Group Presentation Presentation

Mekong Institute Mekong Institute Khon Kaen, ThailandKhon Kaen, Thailand06-10 September, 201006-10 September, 2010

Outline

•Country Profile and Background

•SME Situation

•Solution to Promote SME

Country Profile and Country Profile and BackgroundBackground

Location: Southeast Asia and bordering with Location: Southeast Asia and bordering with Thailand to the North and West, Lao PDR to Thailand to the North and West, Lao PDR to the Northeast, and Vietnam to the East and the Northeast, and Vietnam to the East and Southeast. Southeast.

Total land area: 181,035 square kilometerTotal land area: 181,035 square kilometer Total population: 14,494,293 (in 2008)Total population: 14,494,293 (in 2008) The Capital: Phnom Penh The Capital: Phnom Penh The language: KhmerThe language: Khmer Climate: Two seasons ( Rainy and Dry season Climate: Two seasons ( Rainy and Dry season

)) The temperature range from 21°to 35 °CThe temperature range from 21°to 35 °C

3

•Major Exports: Garments, Fisheries Products, Rubber

•Major Export Trading Countries: United States, Germany, UK, Singapore, Japan

•Major Imports: petroleum products, construction materials, vehicles and motorcycles, clothing

•Major Import Trading Countries: Thailand, Singapore, Hong Kong, China, South Korea

TourismTourism

55

GDP Shared by sectorsGDP Shared by sectors

GDP by Sectors

29% 30%

41%

0%

10%

20%

30%

40%

50%

Agriculture Industry Services

Economy ReformEconomy Reform The country has completed the transition from a centrally The country has completed the transition from a centrally

planned to a market economyplanned to a market economy The government has improved investment climate including The government has improved investment climate including

improvement of laws, regulations and administrative improvement of laws, regulations and administrative procedures. procedures.

Cambodia membership in Cambodia membership in ASEANASEAN, WTO, AFTA, Trade , WTO, AFTA, Trade Agreement with China, EU and the US as well as other Agreement with China, EU and the US as well as other development initiatives in the region have provided investors development initiatives in the region have provided investors with market accesses to most countries around the world.with market accesses to most countries around the world.

Fast garment industry growth,Fast garment industry growth,

In order to improve long term development, government try In order to improve long term development, government try to promote private sector in term of SME.to promote private sector in term of SME.

7

Definition of SMEDefinition of SME Micro:Micro:

Labor: less than 10 Labor: less than 10 Investment: Less than 50.000 USD Investment: Less than 50.000 USD

Small:Small: Labor: 10-50Labor: 10-50 Investment: 50.000-250.000 USD Investment: 50.000-250.000 USD

Medium:Medium: Labor: 51-100 Labor: 51-100 Investment: 250.000-500.000 USD Investment: 250.000-500.000 USD

Large:Large: Labor: more than 100Labor: more than 100 Investment: More than 500.000 USD Investment: More than 500.000 USD

StrengthsStrengths Good coordination between industry, university, Good coordination between industry, university,

research and development instituteresearch and development institute Adopt the globalization technology Adopt the globalization technology Develop Science and technology policyDevelop Science and technology policy Develop social science from R and DDevelop social science from R and D Innovation system and management with SME Innovation system and management with SME

orientedoriented Technology and entrepreneurship Technology and entrepreneurship Develop main industrial clusterDevelop main industrial cluster Develop strategic and expertise Develop strategic and expertise Develop business partnershipDevelop business partnership Integrate new technology to develop export Integrate new technology to develop export

market market

WeaknessesWeaknesses

Lack of knowledge, skills on entrepreneurship Lack of knowledge, skills on entrepreneurship Poor infrastructure due to lack of government’s Poor infrastructure due to lack of government’s

resource allocationresource allocation Lack of Standardization program for training Lack of Standardization program for training

institutionsinstitutions Lack of application oriented technology Lack of application oriented technology

development for SMEdevelopment for SME Unawareness of importance of innovation systemUnawareness of importance of innovation system Weak relationship between government and Weak relationship between government and

businessbusiness Unable to introduce R and D program due to no R Unable to introduce R and D program due to no R

and D Centersand D Centers Small scale of technical training institutions. Small scale of technical training institutions.

OpportunitiesOpportunities Access to ASEAN Development FundAccess to ASEAN Development Fund Integrate/export product to the Integrate/export product to the

regional and international market regional and international market Non-tariff for export and import Non-tariff for export and import

(Asean countries)(Asean countries) Access to Most Favored Nation (MFN)Access to Most Favored Nation (MFN) Cooperate social responsibilityCooperate social responsibility Labor forceLabor force

ThreatsThreats

High High transactiontransaction cost cost Limited access to financeLimited access to finance Inadequate legal and regulation Inadequate legal and regulation

frameworkframework Poor infrastructurePoor infrastructure High energy cost-high production High energy cost-high production

costcost

1313

RECTANGULAR STRATEGY 2004-2013

1

ENHANCEMENT OF AGRICULTURAL SECTOR

Improving productivity

And diversifyingAgricultural

sector

Land Reform and mines clearance

Fisheries reform

Forestry reform

2

Furt

her

Reh

abili

tati

on &

Con

stru

ctio

n o

f In

frast

ruct

ure

Furt

her

const

ruct

ion o

f Tra

nsp

ort

infr

ast

ruct

ureM

anagem

ent

of

Wate

r re

sourc

es

&ir

rigati

on

Delo

pm

ent

of

the

energ

y s

ect

or

&

ele

ctri

city

netw

ork

Develo

pm

ent

of

info

rmati

on &

co

mm

unic

ati

on

tech

nolo

gy

3

PR

IVA

TE S

EC

TO

R D

EV

ELO

PM

EN

T &

EM

PLO

YM

EN

T G

EN

ER

ATIO

N

Stre

ngth

enin

g p

rivate

se

ctor &

attra

cting

investm

ent

Cre

atin

g jo

b &

Ensu

ring im

pro

ved

work co

nditio

n

Pro

motin

gSM

Es

Ensu

ring so

cial

safe

ty n

ets

4

CAPACITY BUILDING & HUMAN RESOURCE DEVELOPMENT

Enhancing quality

of education

Improving health services

Fostering genderequity

Implementing Population

policy

Peace, political stabilityAnd social order

Inte

gra

tion o

f C

am

bodia

Into

the r

egio

n a

nd t

he

worl

d

Partn

ersh

ip in

develo

pm

ent

Favorable macroeconomic andFinancial environment

GOOD GOVERNANCE

Fightingcorruption

Legal and judicialreform

Public Administrative

reform

Armed forces reform

And demobilization

How to enhance SMEHow to enhance SME

Reduce the barriers and build the Reduce the barriers and build the necessary system for effective registrationnecessary system for effective registration

Reduce regulatory compliance costs by Reduce regulatory compliance costs by enhancing governance and responsibilities enhancing governance and responsibilities of the relevant state agenciesof the relevant state agencies

Develop basic legal infrastructure needed Develop basic legal infrastructure needed for business and strengthen the rule of for business and strengthen the rule of lawlaw

Improve trade facilitation to make it low Improve trade facilitation to make it low cost, efficient and transparent cost, efficient and transparent

How to enhance SME (Cont.)How to enhance SME (Cont.)

Access to finance: Access to finance: Collateral and Land titling: Establish secure Collateral and Land titling: Establish secure

titling to improve collateral based, and titling to improve collateral based, and effective mechanism of enforcement of the effective mechanism of enforcement of the land law. land law.

Leasing: Create and enabling framework for Leasing: Create and enabling framework for banks to provide finance leasingbanks to provide finance leasing

Credit information sharing: reduce the risks Credit information sharing: reduce the risks associated with limited information on associated with limited information on potential borrowerpotential borrower

Simplified accounting and taxation systems for Simplified accounting and taxation systems for SMEs: reduce the risks related to the lack of SMEs: reduce the risks related to the lack of appropriate financial informationappropriate financial information

How to enhance SME (Cont.)How to enhance SME (Cont.)

SME SupportSME Support Business development services: Create a dynamic Business development services: Create a dynamic

market for BDS as private goods and offering a range market for BDS as private goods and offering a range of services development by SMEsof services development by SMEs

Access to markets: improve SME access to domestic Access to markets: improve SME access to domestic and export markets through better information, and export markets through better information, market research, product development and market research, product development and promotional activities. promotional activities.

Technology and human resources upgrading: improve Technology and human resources upgrading: improve availability and awareness among SMEs of technology availability and awareness among SMEs of technology and technical and managerial training. and technical and managerial training.

Linkages: assist SMEs to work together and cooperate Linkages: assist SMEs to work together and cooperate in integrated networks to improve their in integrated networks to improve their competitiveness and access to local and international competitiveness and access to local and international markets. markets.

Thank you!Thank you!