Lack of Finance Holding Back Enterprises: Experts

MSE meeting (Photo: CEN)

Chun Sakada, VOA Khmer
Phnom Penh Wednesday, 10 November 2010

"A lack of long-term financing can hold businesses back for years."

Owners of small and medium enterprises in Cambodia face a lack of capital and low-interest credit, which is hurting their ability to expand their businesses, a group of experts said Wednesday.

More than 300 participants gathered Wednesday for a national forum sponsored by the International Finance Corporation, the private sector arm of the World Bank, to find ways to make smaller businesses prosper.

“The challenges facing small and medium enterprises in Cambodia are lack of capital for expanding business operations, lack of access to credit with low interest rates and long-term credit, limited collateral to pledge for credit, and loans are small and service fees are as high as those of large loans,” said Te Taingpor, a co-chairman of a private-sector SME working group.

Small and medium enterprises, which play a key role in economic growth, cover sectors from agriculture to handicrafts and constitute a labor force of 1.4 million people, he said.

But the enterprises are hampered in getting loans by a lack of collateral, said Matthew Gamser, an IFC adviser for East Asia and the Pacific. A lack of long-term financing can hold businesses back for years, he said.

That means “companies are not growing fast enough to provide the jobs critically needed for Cambodia’s rapidly expanding labor force,” Gamser said. “Each year, an estimated 250,000 young Cambodians reach working age, ready to join the labor force and most of them are in rural areas.”

Ouk Maly, deputy governor of the National Bank of Cambodia, said that challenge for SMEs is a lack of trust of banking and financial establishments, reflecting a lack of information available to them.

Cambodia seeks effective ways to spread key information to SMEs

September 13, 2007

Participants from Cambodian public and private sectors Thursday discussed effective strategies to spread information about key developments in the business environment to small and medium enterprises (SMEs).

The Cambodian government is currently undertaking significant reform measures to improve the business environment and in particular creating a more enabling environment for SMEs, which constitute well over 90 percent of all of Cambodia's business enterprises, a press release said.

Discussions focused on how to get information about new commercial laws, the streamlined business registration process, the decentralized business registration initiative in Battambang, the SME Subcommittee's new business licensing hotline, and the financial accounting template for SMEs, it said.

The participants noted the different strategies required to disseminate information to SMEs and local government officials, and they exchanged experiences on what works well in Cambodia and elsewhere, it added.

"There have been extensive improvements made by the government to facilitate the development of SMEs over the past two years, but we need to improve awareness of these reforms among the small business community and local government officials," said Keo Rottanak, Secretary of the SME Subcommittee.

"By getting more information about the reforms out to SMEs and local government officials, enterprises will be able to take advantage of the improved legal and regulatory framework for business," he added.

The meeting was hosted by the SME Secretariat and the Cambodian Ministry of Industry, Mines and Energy (MIME) through support of the Asian development Bank's technical assistance under the Cambodia SME Development Program, the press release said.

Source: Xinhua