Cambodia’s Ministry of Industry and Handicraft has recently revealed that despite being a key factor to the Kingdom’s industrial sector growth, around 95 per cent of Cambodian SMEs have yet to be properly registered.

The ministry’s secretary of state, Heng Sokkong, added that SMEs play a pivotal role in achieving the government’s ambition of raising Cambodia to an upper-middle income nation by 2030 and high-income by 2050.

Speaking at the closing of event Enhancing Development of Small and Medium Enterprises, and Handicraft and Industrial Sectors, Sokkong said the industrial sector’s GDP share hit 32 per cent last year, higher than the government’s 2025 goal of 30 per cent.

Furthermore, out of the 510,000 registered firms in Cambodia, more than 90 per cent of them consisted of SMEs, added Sokkong. Other firms included at least 1,600 large manufacturers, while the remainder were wholesalers, retailers, and services.

“Given that SMEs absorb more labour, we need to keep studying ways to improve the sector,” he said, noting that Cambodia needs to modernise its SMEs to keep pace with Industry 4.0.

Ministry of Industry and Handicraft’s Department of SMEs director Chhea Layhy said that the government has been looking at ways to introduce more mechanisms and policies to boost SMEs. Some of these include tax incentives, procedure simplification, and power transfer to sub-national levels. However, he estimates that only 5 per cent of the nation’s SMEs have been properly registered.

“This is a big issue. When we only have a small number of SMEs that are officially registered, it’s difficult for us to learn about the challenges in the sector. Substandard products that the SMEs promote and consumers’ low confidence in them makes matters worse,” Layhy said.

Cambodian SMEs still require plenty of government support to thrive in the current economic climate, especially with respect to financing. Should subsidies are not yet available, the government is prepared to facilitate low-interest loans to SMEs.

Ly Visal, operations manager at the Federation of Associations for Small and Medium Enterprises of Cambodia (FASMEC), urged SMEs to register so that the government could address their concerns.

According to Sokkong, the SME Bank will start providing financing for SMEs at the end of this year.

In January, the government had allocated a USD$100 million budget to launch the SME Bank. This will be used to prioritise the development of Cambodian agro-businesses and SMEs that are linked to foreign direct investments, the tourism sector and tech start-ups.

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