THE 1 st ASEAN COMPITITION CONFERENCE Bali, Indonesia November 2011 Presented by Mr. Sok Somontha Cambodia Chamber of Commerce

Key indicators Small and Medium Enterprise (SME)

Country name : of Cambodia Country name : Kingdom of Cambodia Location : Southeastern Asia, bordering the Gulf of Thailand, between Thailand, Vietnam and Laos of Thailand, between Thailand, Vietnam and Laos Area : Area : 181,035 sq km. Population : Population : 14,144,000 Population growth Rates : Population growth Rates : 2.8 % (2010) GDP growth rate : 9.1% (2010) GDP per capita : 510 USD (2010) 55% are under 20 years old Only 15% live in urban centers 73 inhabitants/km 2 200,000 young people reach employment age each year, mainly in rural areas. Exchange Rate : Exchange Rate : US$1 = Riels 4,070 Capital : Capital : Phnom Penh Government type : -Multiparty democracy under a constitutional -Monarchy established in September Administrative divisions: 20 provinces and 4 municipalities.

GDP Structure 2011

A.Competition and SME in Cambodia We note that the world has a strong interesting on Small and Medium Enterprise (SME). Especially, the Royal Government of Cambodia Recognizes small enterprise development as a key strategy for poverty reduction and economic growth. Small enterprise create jobs for large numbers of women and men, they support the national economy and they meet a broad range of consumer demands. The Royal Government supports Small and Medium Enterprise and drafted a decree to encourage small entrepreneurs to establish associations. We note that the world has a strong interesting on Small and Medium Enterprise (SME). Especially, the Royal Government of Cambodia Recognizes small enterprise development as a key strategy for poverty reduction and economic growth. Small enterprise create jobs for large numbers of women and men, they support the national economy and they meet a broad range of consumer demands. The Royal Government supports Small and Medium Enterprise and drafted a decree to encourage small entrepreneurs to establish associations.

A. Competition and SME in Cambodia (Cont.) Small business associations can potentially contribute a lot to the development of the small enterprise sector. A small business association is a voluntary alliance between small enterprises. It acts on behalf of its member businesses, Protecting their interests and offering much-needed business development services. Business Associations can help their members to increase their competitiveness and to grasp opportunities in the market place. Small business associations are an indispensable means for developing a market economy. Small business associations can potentially contribute a lot to the development of the small enterprise sector. A small business association is a voluntary alliance between small enterprises. It acts on behalf of its member businesses, Protecting their interests and offering much-needed business development services. Business Associations can help their members to increase their competitiveness and to grasp opportunities in the market place. Small business associations are an indispensable means for developing a market economy.

B. Status of SME 1. Government Policies and Legal Framework In July 2004, at the first cabinet meeting of the new Government’s third term in office, the ‘new rectangular’ Strategy for growth, employment, equity and efficiency was announced: 1- Strengthening the private sector and attracting investment; 2- Creating jobs and improved working conditions; 3- Promoting SMEs; and 4- Ensuring social safety nets

B. Status of SME Government Policies and Legal Framework The component of promoting SMEs is further delineated into thirteen ‘policies’. These are as follows: 1 - Encourage the development of SMEs, especially through the provision of medium and long-term finance. 2 - Suppress smuggling. 3 - Reduce registration procedures and start-up processes for companies. 4 - Facilitate import-export activities by simplifying procedures such as licensing and other letters of permission. ( cont.)

B. Status of SME (cont.) Government Policies and Legal Framework 5 - Support for newly established industries for an appropriate period. 6 - Promote linkages between SMEs & large enterprises. 7 - Establish a national center for productivity to assist SMEs enhanced their productivity and reduce production costs. 8 - Establish a national standards institution to help ensure the quality of domestic products to meet regional and international standards. 9 - Establish national laboratories for physics, chemistry, micro-biology, mechanics and test for quality and criteria of products.

B. Status of SME (cont.) Government Policies and Legal Framework 10 - Strengthen mechanism for the protection of industrial intellectual property rights, to prevent illegal copying, recreation and illegal use of new techniques and technology Promote vocational/skills training, both domestic and overseas Expand and accelerate the “one village, one product” program Strengthen the legal framework by creating laws on concerns such as : factories, industrial zones, patents and inventions, measurements and industrial safety.

C. Definition for SMEs. STATISTICAL Micro Less than 10 employees Small Between employees Medium Between employees Large over100 employees FINANCIAL Determined by Assets, excluding land Micro Less than US$ 50,000 Small Between US$ ,000 MediumBetween US$ ,000 Large Over US$ 500,000 For statistical purposes and policy development and implementation, the definition is based on equivalent full-time employees. For other purposes, where the number of employees is not suitable, an alternative financial definition should be used, based on total Assets.

D. Current State of SME Number Small Industrial Establishments by Sector Year 2011 Sectors Number 2009 Number 2010 Manufacture of food, beverages and tobacco 19,14725,455 Textile and wearing apparel 3961,689 Wood and wood Products 814- Paper and paper products 2333 Chemicals, rubber and plastic products Non-metallic mineral products Manufacture basic metals-- Fabricated metal products 1,6472,380 Other manufacturing industries 1, Total 24,22731,149 Growth ( compare to year 2008 )28.6 %

E. Problems Faced by SME High Regulatory Compliance Costs Lack of Clear, Market-Oriented Framework for SME Development Limited Access to Finance and Smuggling. Poor market access infrastructure & information. Policy supporting unclear Low status production Low status quality Lack of capacity-building programs and inadequate provision of vocational training Lack of investment capital

F. SME Development Programs The Government recognizes that SMEs play a significant role in promoting economic development and creating sustainable employment and incomes. Consequently Government developed a SME Development Framework to improve and coordinate the Government’s efforts in promoting SME activity in a market economy. The SME Development Framework is intended to serve the Government as a road map for the development of the SME sector.

F. SME Development Programs (cont.) In order to implement the Government’s ‘Rectangular Strategy’ and achieve a conducive business environment, the SME Development Framework focuses on three key areas. a. Regulatory and legal framework b. Access to finance c. SME support activities

F. SME Development Programs (cont.) a. Regulatory and legal framework 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. Develop basic legal infrastructure needed for businesses and strengthen the rule of law. Improve trade facilitation to make it low cost, efficient and transparent.

F. SME Development Programs (cont.) b. Access to finance Establish secure titling to improve collateral. base, and effective mechanism of enforcement of the land law. Create an enabling framework for banks to provide finance leasing. Establishment a Credit Information Sharing System. Simplified Accounting and Taxation Systems for SMEs.

F. SME Development Programs (cont.) C. SME support activities Business Development Services Access to Markets Technology and Human Resources Upgrading Linkages Under the Private Sector Steering Committee, along with 2 other Sub Sub-Committees, creation of the SME Sub Sub-Committee chaired by the Minister of Industry, Mine and Energy in August 2004.

G. Key Challenges Solving the Power Crisis; Reduce Transport Bottlenecks Increased private sector investment and improve Access to Finance. Skills development and improving vocational training Creating a dynamic SME sector Export Diversification – New Sectors and Markets. Opportunities from Greater Regional Integration.

Conclusion To make General provisions and regulations. To get finance possibility for short and long term. Supporting services for SME. Policy coordinating. The SME sector appears likely to remain very important in most developed and developing countries, judging in part by recent trends in both these groups of countries. Competition policy is in need and can make things change positively (for all businesses). Competition policy is in need and can make things change positively (for all businesses). Strong political will. Strong political will.

Thank You for your kind attention !!!