SMEs play a significant role in Cambodia's economy, fuelling economic growth and reducing poverty rates. However, more can still be done to support SMEs in the future.
An overview of Cambodia’s economic landscape
Cambodia's economy, steadily growing by 7.7% annually from 1998-2019, encountered its first decline in two decades when the COVID-19 pandemic led to a 3.1% contraction in 2020. Despite the setback, the country's proactive response ensured a rapid recovery, illuminating the indispensable role of small and medium enterprises (SMEs) in Cambodia's economy.
As the pandemic shuttered many operations, the country's longstanding commitment to SMEs became even more vital. This commitment is clearly expressed through the ongoing SME Development Policy, a cornerstone of the broader Industrial Development Policy (IDP), designed to address the challenges encountered by SMEs and startup businesses in Cambodia, including access to finance, skill development, and global competition.
By 2022, a resurgence was evident, fueled by the revival of tourism, increased demand for goods and services, and foreign investments. In line with this resilience, the Asian Development Bank has outlined a promising trajectory for Cambodia's economic growth, projecting a rate of 5.5% in 2023, potentially increasing to 6% by 2024.
These initiatives forecast a future filled with unparalleled business opportunities and sustained economic strength in Cambodia over the next decade.
Key trends and their opportunities for SMEs in Cambodia
In bolstering Cambodia's economy, SMEs need to capitalise on beneficial trends that can influence their growth. Below are key trends that provide substantial opportunities for SMEs in Cambodia to maximise their potential:
1. Expand global reach with regional exportation
Cambodia's proactive pursuit of bilateral Free Trade Agreements (FTAs) holds tremendous promise for its SMEs. These agreements with nations like China and Korea offer enhanced market access, unlocking export potential for businesses in Cambodia. Additionally, as part of the US Generalised System of Preferences (GSP), SMEs in Cambodia can enjoy duty-free imports, resulting in significant cost savings of up to 40%. This advantageous position makes Cambodia an attractive market, creating a compelling value proposition for buyers.
Building upon these advantages, Cambodia's vibrant tourism sector further enhances the country's economic growth. By strategically marketing unique Cambodian souvenirs, handicrafts, and tourism services, SMEs can establish a distinct Cambodian brand globally, attracting foreign investment and fostering regional integration.
Moreover, the agro-industrial sector in Cambodia, undergoing rapid transformation and diversification towards more profitable crops, presents profitable ventures for not only SMEs, but also MSMEs, meaning micro, small, and medium enterprises (MSMEs).
These businesses can expand globally by transforming agricultural products into high-value goods and capitalising on favourable agro-industrial government policies. This, in turn, could significantly boost Cambodia's overall regional agricultural exports.
