To encourage more young people to become entrepreneurs, the government must prioritise improving the process of starting and registering a business, reducing capital requirements, and expanding access to finance, experts said last week.
Speaking at the Central Bank’s ‘Macroeconomic Conference on Broadening Sources of Cambodia’s Growth’, held Friday at the Cambodia-Japan Cooperation Center in Phnom Penh, Ly Sodeth, World Bank senior country economist in Cambodia, said the key areas the government must focus on are business registration, supporting entrepreneurship, and facilitating access to finance.
Addressing these areas properly will encourage more young would-be entrepreneurs to start their own business, while also increasing the number of small and medium-sized enterprises (SMEs) that choose to register with the Ministry of Commerce and the tax department.
Mr Sodeth said the process of registering a business in the Kingdom is still cumbersome and expensive, particularly when compared to neighbours Thailand and Vietnam. He pointed out that Cambodia slipped this year in the World Bank’s ease of doing business index, going from the 131st position to the 138th spot.
“I think a reform is needed to encourage more business to register, support entrepreneurship, and promote domestic investment, innovation and institutional improvement,” Mr Sodeth said.
“The most important aspect is business registration. Cambodia ranked the worst in the ‘business registration’ category, which requires physical presence. If we eliminate the need to come to the ministry to register, a lot more businesses will join the fold. However, even registering a business online is often quite burdensome in Cambodia,” he added
“Also very helpful for businesses would be to eliminate fees demanded when registering a business. Likewise, eliminating the need for assets and collateral for young entrepreneurs who want to take out a loan will encourage a lot of people to start their own business.”
Yong Sarah Zhou, resident representative of the IMF in Cambodia, said entrepreneurship is key to economic diversification in Cambodia, adding that the government must focus on reducing the cost of starting a business, supporting entrepreneurs, developing infrastructure and maintaining macroeconomic stability.
“If Cambodia wants to move up the value chain, it needs to investment in infrastructure, remove barriers to entrepreneurship, lower business costs, develop its human capital and target the demands of the global market as needed,” Ms Zhou said.
“With the world changing so fast, skill is important. Technology and innovation are moving fast, so you need to keep upgrading your skills set,” she said, adding that, “It’s a lifelong process.”
Chea Serey, director general of the National Bank of Cambodia, said that despite growing at an average rate of 7.7 percent a year for last two decades, Cambodia still has a very narrow growth base. In order to make growth sustainable, diversification is needed, she said.
“What we can do now is to take advantage of the sectors that are driving the economy. For instance, we need to explore how to generate more income from tourism.
“We have to create more tourism products, such as tourism links to the agriculture industry to ensure that local products are reaching tourists and hotels.
“We need to consider the jobs of the future and what skills will be in demand, and we need to prepare our workforce accordingly through vocational training,” Ms Serey said.
The country needs a structural reform to boost the sectors that are driving the economy, she added.