3/4/2015

Opportunities and Challenges

for Cambodias SME Post AEC 2015
by H.E. Heng Sokkung
Secretary of State, Ministry of Industry and Handicraft
National Conference
on Mechanism for Private Sector Development
Synergy, Growth and ASEAN Economic Community
03 March 2015
Cambodiana Hotel, Phnom Penh
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Content
I- Understanding of SMEs situation in Cambodia
II- What is the AEC?
III- Where are we now?
IV- Understanding of SMEs situation in ASEAN
V- Opportunities and Challenges for Cambodia
VI- Conclusion

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I-

Understanding of SMEs situation in

Cambodia

In 2013, its share to GDP started to rise

again to an estimated level of 24%. In
term off growth,
h during
d i
the
h last
l
15
years (1998-2013) the industrial sector
grew at average 12.4% per annum
and in 2014 SMEs growth was 9,7%
compared to 2.6%
2 6% for agriculture and
7.5% for service sector, thus making it
the fastest growing sector.
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10

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II-What is AEC 2015?

ASEAN ECONOMIC COMMUNITY
STRATEGIC SCHEDULE OF THE AEC BLUEPRINT (2008-2015)
Pillar 1
Single Market
& Production Base
Free flow of goods
Free flow of
services
Free flow of
investment
Freer flow of
capital
Free flow of skilled
labor
Priority
Integration
Sectors
Food, agriculture
and forestry

Pillar 2
Competitive
Economic Region
Competition
policy
Consumer
protection
Intellectual
property rights
Infrastructure
development
Taxation
E-Commerce

HUMAN RESOURCE DEVELOPMENT

Pillar 3
Equitable
Economic
Development

Pillar 4
Integration into
the Global
Economy

SME
development
Initiative for
ASEAN
Integration

Coherent
approach
towards external
economic
relations
Enhanced
participation in
global supply
networks

RESEARCH AND DEVELOPMENT

III--Where are we now?

III

AEC Blueprint: Signed in 2007 Four Pillars of AEC

Defined: The AEC will establish
Single Market and Production Base
ASEAN as a single
g market and
Competitive Economic Region
production base with the goal of
Equitable Economic Development
making ASEAN more dynamic
Integration into the Global Economy
and competitive.

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IV- Understanding of SME Situation in ASEAN

ASEAN Action PLAN 2011-2015
BY ACTIVITIES

Source : SME Post 2015 Action Plan Study

13

ASEAN SME Strategic Action Plan (2016-2025)

2-1. SME Strategic Action Plan(SME SAP)

The structure and breakdowns
The SME SAP has a pyramid structure from Vision to
Monitoring. Each layer has connection with its both side of
ones.

SME SAP 2016-2025

Vision

What ASEAN wants

Mission Statement
Planning
& Collaboration

to be

Strategic Goals

What ASEAN must

achieve to get there

Desired Outcomes

How ASEAN will

Actions for Strategic Goals

Collaboration
& Monitoring

achieve goals
How ASEAN will

Implementation

Monitoring

implement strategy
What ASEAN performs

like
PwC

1
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SMEs in ASEAN

SMEs represent up to 99% of all enterprises in ASEAN

);
member states ((AMS);
SMEs generate 56% to 97% of domestic employment
including youth and women;
SMEs contribute 30% - 60% to GDP; and
SMEs contribute 19% - 31% to exports
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More than

52

million SMEs in ASEAN Member States can be considered as

one of the most powerful sources to boost the economy in the region
effectively Moreover,
Moreover promoting equitable development by
efficiently and effectively.
promoting SMEs is one of the main pillars for reaching our goal of ASEAN
Economic Community (AEC),

(Ref. ASEAN data)

SMEs development zone (Google)

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PRIVATESECTOR PRIORITIES
INFORMATION
CAMPAIGN

Aggressive campaign for

SMEs

FINANCE

Improvements through
financial sector reform,
requirement for banks to
provide financing

TRADE
FACILITATION

Rules of Origin, Green

Lane, Product Standards

WOMEN/YOUTH
ENTREPRENEURS

Focus on Women and

Youth Entrepreneurs

ABAC2014ReporttoLeaders

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POST2015ASEANLANDSCAPE

INTEGRATEDAND
COHESIVE

SECTORAL
INTEGRATION

COMPETITIVE
INNOVATIVE
DYNAMIC

RESILIENT
INCLUSIVE
PEOPLECENTERED

GLOBALASEAN

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Post2015 Focuson5StrategicGoals

Promote
Productivity,
Technologyand
Innovation

9 policies
4

Increase
Accessto
Finance

EnhanceMarket
Access/
Internationalisation

5 policies

EnhancePolicy
andRegulatory
Framework

7 policies

Promote
Entrepreneurship
andHRD

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GOALSANDOUTCOMES
Strategic Goals

Desired outcomes
A ) Productivity,
A-1)
P d
i i
Technology
T h l
and
d Innovation
I
i
will
ill be
b
enhanced
A-2) Cluster-based Strategy will be enhanced

A)
Promote Productivity,
Technology and Innovation

A-3) Innovation will be promoted as a Key Competitive

Advantage for SMEs
A-4) IPR Protection for Commercialization will be
enhanced

B-1) Regulatory Framework for Access to Finance will

be developed and enhanced
B)
Increase Access to Finance

B-2) Financial Inclusion and Literacy will be promoted

B-3) Alternative Financing will be promoted

ASEAN SME Strategic Action Plan (2016-2025)
PwC

20

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(contd)
C-1) High Value Information of the Market to SMEs
will be enhanced
C-2) Financial Facilities for SMEs to Export will be
developed

C)
Enhance Market Access and
Internationalization

C-3) Integration into the Global Supply Chain and

Market will be enhanced
C 4) Partnership with Large Enterprises will be
C-4)
promoted to Increase Market Access
Opportunities
D-1) Inter and Intra- Governmental Cooperation and
Coordination in Policies and Regulation will be
enhanced

D)
Enhance Policy and Regulatory
Environment

D-2) Cheaper and Faster Start-ups will be enhanced

D-3) Institutional Framework will be strengthened

E-1) Conducive Environment for Entrepreneurship will

be created
E)
Promote Entrepreneurship &
Human Capital Development

E-2) Entrepreneurship Education will be promoted

E-3) Capability Building Activities including Women
and Youth will be provided

ASEAN SME Strategic Action Plan (2016-2025)

PwC

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SMEIntegrationrequiresspecificfocuspost2015:
1
improvingthePolicy
Avoid
Environment
CROWDING
OUT
private sector

3
CrossSectoral
Collaboration
(AcrossSectorsand
WithBusiness)

TargetedSME
Programmes

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NEWPLANINITIATIVESSHOULD:

MOVE THE
NEEDLE

BENEFIT SMES AS
A GROUP

FOLLOWTHROUGH

BIG IMPACT
SHOW RESULTS
MAXIMISE RESOURCES
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V-

Opportunities and Challenges for Cambodia

WOULD YOU LIKE TO

FIGHT WITH ARNOLD?

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5OpportunitiesandChallenges
AOpportunities

Raise profile and prestige of Cambodia in the

region and International arena
Mutual support: International Organization
Integrated with ASEAN Market of more than 600
million people
Develop
p human resource through
g IAI ((Initiative ffor
ASEAN Integration)
Receive aid and assistance from Dialogue
Partners, ASEANs friends, and other ASEAN
Member States

BChallenges
HumanResource
Lackofskilllabour
SocioEconomicDevelopment
Connectivity

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Businessneeds
%
need partnership to help improving the business
10

10
1.0

more technical assistance with low cost9

2.6

no demand8

3.6

technical expertise to develop business plans/financial statements7

4.2

more qualified support staff6

6.2

more available sources of finance5

7.5

more productive workforce to make full production capacity4

14.3

more advanced
d
d technology
h l
to improve
i
productivity
d i i andd cut costs3
more information on new markets/technologies/laws2

16 9
16.9
17.9

more financial resources to expand the business1

21.8
0

10

20

30

27

Whatshouldthegovernmentdo!
Reduce electricity tariff
Reduce electricity connection fee
Reduce electricity penalty fee
Eliminate unofficial payments
Ensure fair competition among SMEs
Provide more information (i.e. new market, technology, laws, etc) to
SMEs
Provide grant and incentive to SMEs
Provide technical expertise (i.e. technology, marketing, finance, job
markets, etc)
Design more SMEs support policies
Reduce tax on import and export especially the import of raw material
Reduce migration rate
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VISION

29

Strategy

30

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31

32

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VICONCLUSION
Although the Cambodian economy has recorded decent
economic growth over the last decade, it is urgent for
the government to take necessary policy measures to
graduate to a middle income county and compete with
regional countries in attracting FDI through
infrastructure improvement, including affordable and
reliable electricity supply, expansion of transport
infrastructure, improvement to logistics system,
upgrading
of
technologies,
strengthening
of
coordination mechanism especially the upgrading of
the capacity of the executing agencies together with
the provision of appropriate incentives.

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The Industry and SME development is the key

policy and framework for promoting industrial
development through economic diversification,
diversification
export promotion and establishment of industrial
management
framework.
The
industrial
development policy, IDP, SME Promotion and
Development Policy will lay out measures that
cover various aspects to be implemented by
concerned ministries/institutions that are a good
management and preparation of Cambodia for
ASEAN 2015.

Thank You!

Please visit us @ www.mih.gov.kh

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