SME Confidence Falls As Big Business Stands Firm: Report

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The sun rises on another day in Cambodia’s capital of Phnom Penh. Cambodia is still a country of contrasts where business confidence in small and medium enterprises seems to be dipping.

Cambodia’s business confidence index fell by seven percentage points from last year due to global competition, perceived political instability, and a bearish climate due to the upcoming commune elections, according to the latest ANZ Royal Business Confidence Index Survey report released yesterday.

The survey report indicated that small- and medium-sized enterprises showed a significant decline in confidence compared to large businesses, which remained stable.

The ANZ Royal Business Confidence Index, the first of its kind in Cambodia, gathers and analyses data from businesses in the agriculture, industry and services sectors.

“The decline of overall confidence could derive from the increasing competition in the market, perceived political instability and the uncertainty of the coming elections, deterring business from investments in the near term,” the report stated.

“Though the same concerns were raised among large-scale companies, their confidence persists. This could be due to positive performance and well-established plans, resulting in a strong base in the market,” it added.

However, David Van, managing director of consultancy firm Bower Asia (Cambodia), told Khmer Times that the upcoming June commune elections and the general elections next year “were not big issues” as the business community was getting more mature.

“I do not really see this as an issue as it is known since decades now that each time we come close to electoral periods, businesses tend to proceed with a slower pace as people just wait and see what may transcend from them,” said Van.

“This is especially so after the 2013 [general election] results where the public seemed more concerned of possible mass demonstrations that could disrupt daily business cycles,” he added.

Commenting on the fall in business confidence in SMEs, In Channy, president and group CEO of ACLEDA Bank, said his bank did not experience any fall in the demand for financial services from small businesses.

“Well, ACLEDA’s SME business seems to be growing,” he said.

David Marshall, a managing partner of Mekong Strategic Partners, said the ANZ Royal survey report did not take into account current reforms carried out by the government.

“The many reforms and improvements that the government have been working on are not well articulated.  We have to do better at marketing modern Cambodia which will improve investor and business confidence,” he said.

The survey also brought up the issue of corruption and stated that it remained the biggest barrier for business people.

“Similar to previous surveys, corruption is the most-frequently mentioned as the key barrier when doing business in Cambodia,” it stated.

“This results into an unlevelled playing field, highly inconvenient procedures for businesses seeking to operate in a transparent fashion, and additional informal and undocumented expenses.”

The ANZ Royal Business Confidence Index was first launched in 2014 to be a guide for investors and businesspeople.

This article was originally published in the Khmer Times.