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.