Cambodian Group Presentation Mekong Institute Khon Kaen, Thailand September, 2010

Outline Country Profile and Background SME Situation Solution to Promote SME

Country Profile and Background Location: Southeast Asia and bordering with Thailand to the North and West, Lao PDR to the Northeast, and Vietnam to the East and Southeast. Location: Southeast Asia and bordering with Thailand to the North and West, Lao PDR to the Northeast, and Vietnam to the East and Southeast. Total land area: 181,035 square kilometer Total 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: Khmer The language: Khmer Climate: Two seasons ( Rainy and Dry season ) Climate: Two seasons ( Rainy and Dry season ) The temperature range from 21°to 35 °C The 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

Tourism 5

GDP Shared by sectors

Economy Reform The country has completed the transition from a centrally planned to a market economy The country has completed the transition from a centrally planned to a market economy The government has improved investment climate including improvement of laws, regulations and administrative procedures. The government has improved investment climate including improvement of laws, regulations and administrative procedures. Cambodia membership in ASEAN, WTO, AFTA, Trade Agreement with China, EU and the US as well as other development initiatives in the region have provided investors with market accesses to most countries around the world. Cambodia membership in ASEAN, WTO, AFTA, Trade Agreement with China, EU and the US as well as other development initiatives in the region have provided investors 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 to promote private sector in term of SME. In order to improve long term development, government try to promote private sector in term of SME. 7

Definition of SME Micro: Micro: Labor: less than 10 Labor: less than 10 Investment: Less than USD Investment: Less than USD Small: Small: Labor: Labor: Investment: USD Investment: USD Medium: Medium: Labor: Labor: Investment: USD Investment: USD Large: Large: Labor: more than 100 Labor: more than 100 Investment: More than USD Investment: More than USD

Strengths Good coordination between industry, university, research and development institute Good coordination between industry, university, research and development institute Adopt the globalization technology Adopt the globalization technology Develop Science and technology policy Develop Science and technology policy Develop social science from R and D Develop social science from R and D Innovation system and management with SME oriented Innovation system and management with SME oriented Technology and entrepreneurship Technology and entrepreneurship Develop main industrial cluster Develop main industrial cluster Develop strategic and expertise Develop strategic and expertise Develop business partnership Develop business partnership Integrate new technology to develop export market Integrate new technology to develop export market

Weaknesses Lack of knowledge, skills on entrepreneurship Lack of knowledge, skills on entrepreneurship Poor infrastructure due to lack of government’s resource allocation Poor infrastructure due to lack of government’s resource allocation Lack of Standardization program for training institutions Lack of Standardization program for training institutions Lack of application oriented technology development for SME Lack of application oriented technology development for SME Unawareness of importance of innovation system Unawareness of importance of innovation system Weak relationship between government and business Weak relationship between government and business Unable to introduce R and D program due to no R and D Centers Unable to introduce R and D program due to no R and D Centers Small scale of technical training institutions. Small scale of technical training institutions.

Opportunities Access to ASEAN Development Fund Access to ASEAN Development Fund Integrate/export product to the regional and international market Integrate/export product to the regional and international market Non-tariff for export and import (Asean countries) Non-tariff for export and import (Asean countries) Access to Most Favored Nation (MFN) Access to Most Favored Nation (MFN) Cooperate social responsibility Cooperate social responsibility Labor force Labor force

Threats High transaction cost High transaction cost Limited access to finance Limited access to finance Inadequate legal and regulation framework Inadequate legal and regulation framework Poor infrastructure Poor infrastructure High energy cost-high production cost High energy cost-high production cost

13 RECTANGULAR STRATEGY ENHANCEMENT OF AGRICULTURAL SECTOR Improving productivity And diversifying Agricultural sector Land Reform and mines clearance Fisheries reform Forestry reform 2 Further Rehabilitation & Construction of Infrastructure Further construction of Transport infrastructure Management of Water resources &irrigation Delopment of the energy sector & electricity network Development of information & communication technology 3 PRIVATE SECTOR DEVELOPMENT & EMPLOYMENT GENERATION Strengthening private sector & attracting investment Creating job & Ensuring improved work condition Promoting SMEs Ensuring social safety nets 4 CAPACITY BUILDING & HUMAN RESOURCE DEVELOPMENT Enhancing quality of education Improving health services Fostering gender equity Implementing Population policy Peace, political stability And social order Integration of Cambodia Into the region and the world Partnership in development Favorable macroeconomic and Financial environment GOOD GOVERNANCE Fighting corruption Legal and judicial reform Public Administrative reform Armed forces reform And demobilization

How to enhance SME Reduce the barriers and build the necessary system for effective registration Reduce the barriers and build the necessary system for effective registration Reduce regulatory compliance costs by enhancing governance and responsibilities of the relevant state agencies Reduce regulatory compliance costs by enhancing governance and responsibilities of the relevant state agencies Develop basic legal infrastructure needed for business and strengthen the rule of law Develop basic legal infrastructure needed for business and strengthen the rule of law Improve trade facilitation to make it low cost, efficient and transparent Improve trade facilitation to make it low cost, efficient and transparent

How to enhance SME (Cont.) Access to finance: Access to finance: Collateral and Land titling: Establish secure titling to improve collateral based, and effective mechanism of enforcement of the land law. Collateral and Land titling: Establish secure titling to improve collateral based, and effective mechanism of enforcement of the land law. Leasing: Create and enabling framework for banks to provide finance leasing Leasing: Create and enabling framework for banks to provide finance leasing Credit information sharing: reduce the risks associated with limited information on potential borrower Credit information sharing: reduce the risks associated with limited information on potential borrower Simplified accounting and taxation systems for SMEs: reduce the risks related to the lack of appropriate financial information Simplified accounting and taxation systems for SMEs: reduce the risks related to the lack of appropriate financial information

How to enhance SME (Cont.) SME Support SME Support Business development services: Create a dynamic market for BDS as private goods and offering a range of services development by SMEs Business development services: Create a dynamic market for BDS as private goods and offering a range of services development by SMEs Access to markets: improve SME access to domestic and export markets through better information, market research, product development and promotional activities. Access to markets: improve SME access to domestic and export markets through better information, market research, product development and promotional activities. Technology and human resources upgrading: improve availability and awareness among SMEs of technology and technical and managerial training. Technology and human resources upgrading: improve availability and awareness among SMEs of technology and technical and managerial training. Linkages: assist SMEs to work together and cooperate in integrated networks to improve their competitiveness and access to local and international markets. Linkages: assist SMEs to work together and cooperate in integrated networks to improve their competitiveness and access to local and international markets.

Thank you!