H.E. Dr. Chea Serey, Assistant Governor and Director General of Central Banking of the National Bank of Cambodia

Distinguished speakers and guests,

Excellencies, ladies, and gentlemen.

Good morning!

It is a great honour for me to join you at the National Bank of Cambodia’s 8^th Annual Macroeconomic Conference on the “Challenges and Policy Options for SMEs Development in Cambodia”. I would like to acknowledge the significance of the Conference which does not only provide a platform for thought leadership and research, but it also encourages policy dialogue on Cambodia’s development model. I would like also to congratulate the NBC on the choice of the Conference theme at this juncture of time marked by the COVID-19 pandemic.

Small-and-medium enterprises (SMEs) play a significant role in the recovery, vitalization, and development of national economies because they create job opportunities, reduce inequality, encourage much of the creativity and innovation that fuels economic progress, promote competition and cooperation, and increase productive potential and value-addition.

Given their importance, UNDP has been supporting the development of SMEs in Cambodia through data and analytics, but also actual interventions. SMEs constitute more than 90% of all enterprises in the Kingdom. They are the economic backbone of Cambodia, contributing significantly to around 58% of GDP and 70% of employment, according to the 2018 report of the Ministry of Industry, Science, Technology, and Innovation. It is also a major contributor to reducing poverty.

Unfortunately, the COVID-19 pandemic subjected SMEs to many challenges. Borders closure and movement restriction had a dramatic impact on many productive sectors, namely, tourism and hospitality industries, and related value chains. Many had to permanently shut down because of financial losses incurred.

UNDP conducted four rounds of tracking surveys on the impacts of COVID-19 on formal and informal MSMEs from July 2020 to November 2021. The surveys provided important data and insights, but allow me to highlight 3 main findings:

First, 90% of MSMEs reported a decline in demand between 26% and 50% compared to the same pre-pandemic period. Notably, businesses in Siem Reap that rely heavily on tourism, are feeling the brunt. Profit and supply were reportedly severely low particularly in the survey round undertaken in October/November 2021, i.e., in the aftermath of the 20 February community outbreak. Nevertheless, many MSMEs were able to adaptable their strategies thanks to the urgent government support, in terms of partial/or total salaries subsidy, tax cut, and utility and rental subsidy.

Second, over the same period, while some formalized enterprises reported receiving government support, none of the informal enterprises did. The final tracking survey in October/November 2021, showed that formal MSMEs were in a better position than informal businesses as they could avoid negative coping strategies such as requesting additional loans, selling assets, negotiating rental deferral, or temporarily closing doors.

Third, informal MSMEs were hit hard not only because they received no support but because they cannot easily access loans, with women owned MSMEs disproportionately harmed.

With respect to actual interventions, I will prioritize talking about the following two. UNDP is implementing with UNCDF, the Ministry of Economy and Finance and the Credit Guarantee Corporation of Cambodia a Joint Programme on “Unlocking Cambodian Women’s Potential through Fiscal Space Creation”. The joint programme supports policy formulation, and the development and roll-out of a credit guarantee facility to provide low-cost and reliable financing to MSME. As of Quarter 4 of 2021, 53 businesses received loans with credit guarantee, 21% of which were women-owned businesses. It unlocked US$929,000 for women-owned businesses. Besides, the programme provides expert advice and econometric modeling on the positive ripple effect on the economy caused by investing in women owned MSMEs and the informal sector for informed decision making and supporting women entrepreneurs and building the resilience of informal sector MSMEs. Currently we are preparing a training programme targeting women entrepreneurs to improve their awareness and prospects of accessing finance, and skillsets for managing the impacts of the pandemic.

Another initiative on E-commerce Acceleration (Go4eCAM project) aims to empower MSMEs and small-holder farmers for adopting digital solutions and marketing their products online. In partnership with the Ministry of Commerce and the Enhanced Integrated Framework (EIF), we support e-commerce ecosystem development. This approach aiming to strengthen SMEs through digital transformation and a gender-sensitive lens is fully aligned with the national vision laid out in Cambodia’s Fourth Rectangular Strategy. It is worth noting that the Digital Skills Assessment Report, recently launched by UNDP and the Ministry of Posts and Telecommunications, showed that SMEs surveyed as part of the assessment were optimistic that their demand for ICT-related skills and occupations will increase by 30% per annum during the next two years. So, there is a huge demand for digital transformation among SMEs and opportunities for new ICT jobs and skills.

In conclusion, I hope that this event contributes to consolidating the necessary foundations for recovery and building back better in the Kingdom. Together we can make a change. So, let us put all our collective intelligence and diverse experience at the service of the country’s socio-economic recovery and achieving the 18 Cambodia Sustainable Development Goals. 

I wish you good continuation and a successful event.

Thank you.