With the government aiming to turn Cambodia into a predominantly digital economy by 2023, micro, small and medium-sized enterprises (MSMEs) must strive to digitalise processes and integrate the latest technologies into their day-to-day operations in order to remain competitive, business insiders say.
In its latest report, the World Trade Organisation (WTO) shed light on the importance of adopting advanced technologies to support SME productivity and growth.
Roberto Azevedo, WTO director general, says in the report that trade and technology are closely interlinked.
“We are living through an era of unprecedented technological change, and a series of innovations that leverage the internet could have a major impact.
“For example, the Internet of Things, artificial intelligence, 3D printing, and blockchain have the potential to profoundly transform the way we trade, who trades and what is traded,” Mr Azevedo says in the report.
“These developments could unlock many opportunities for individuals, entrepreneurs and business around the world,” he said, adding, however, that this process is not automatic.
“Technological advances per se are not a guarantee of greater trade growth and economic integration.”
New technologies may decrease the relevance of distance, whether geographical, linguistic or regulatory. They also facilitate searches for products, help verifying quality and reputation, and help to match consumer preferences to products, according to the report.
The report says that many trade costs such as logistics and transaction costs or cumbersome customs procedures weigh more heavily on MSMEs and are much higher in developing countries.
At the same time, innovations in cross-border payment systems have had their largest impact in developing countries and in MSMEs, it adds.
“Hence, the potential of new technologies to facilitate trade for MSMEs and developing countries disproportionately can be large.”
The wide adoption of digital technologies is changing the composition of trade in different categories of services and goods, and is redefining intellectual property rights in trade.
“Digital technologies not only create new markets, new forms of trade and new products, but they also lower trade costs and change trade patterns. These changes offer new opportunities and trade gains, and governments may have a role to play in ensuring that firms can seize these opportunities,” the report says.
With digital technologies reshuffling comparative advantages – for instance by making it possible for firms in remote areas to sell digital products around the world – governments may need to support or accompany private efforts to develop and facilitate access to affordable digital infrastructure and digital infrastructure services, it adds.
Long Leakhena, co-founder of local startup Joonaak Delivery, a last-mile delivery service platform, thinks the report’s conclusions are particularly poignant in a developing nation like Cambodia.
“The time to move is now,” she says. “All the countries around the world have been digitalising for many years already.
“At Joonaak, we have started the process of becoming fully digital in all our operations,” Ms Leakhena said, adding that shedding paper-based systems and digitalising saves costs and time, improves productivity and enable firms to employ less staff.
However, since Cambodia is still lagging far behind other countries in this area, the support of the government and all economic actors is necessary to make the transition a smooth one, she added.
Tuy Sokneng, food safety and quality assurance manager at Leang Leng enterprise, a fish sauce producer, said they are digitalising processes one step at a time.
He says much effort is now going into integrating cutting edge technology into the production chain, adding that to be recognised regionally and globally in today’s economy, firms must utilise the latest technology available.
“We are now investing in technology and modern machinery in the production chain as well as to prepare our products for export,” he said, explaining that the investment is improving product quality as well as their competitiveness.
“Going digital allow us to reduce the staff on the payroll, and the new tech we are using is making production more sustainable,” Mr Sokneng said.
Joonaak’s Ms Leakhena pointed out that e-commerce is booming in the country, encouraging more and more suppliers and shop owners to transform their brick-and-mortar stores into web-based shops.
Simultaneously, the use of smart phone devices is growing sharply due to their increasingly affordable price tags, faster internet speeds and wider network coverage.
Ms Leakhena said Cambodians are embracing social media, particularly Facebook and Instagram, which has led to explosive growth in the e-commerce sector as more and more of them are using these sites to search for their next buy.
Cambodia now has 12.5 million internet users, compared to 10.8 million last year, an increase that follows mobile operators’ service expansion in rural areas, according to the Telecommunication Regulator of Cambodia.
Facebook users now number 7 million, up from 4.8 million last year. The number of mobile connections, meanwhile, has reached 19.16 million, a figure that is higher than the country’s total population of 16 million, according to the Ministry of Posts and Telecommunications.
Im Vutha, spokesman for the Telecommunication Regulator of Cambodia, said the government is prioritising supporting MSMEs in their journey to fully adapt to the digital economy, adding that a lot of the infrastructure needed has already been laid out.
“When it comes to digital infrastructure, we are ready, not just for MSMEs and the private sector, but also for other government agencies,” he said.
He added, however, that it is not just a question of infrastructure. Creating the legal framework, strengthening institutions and developing the country’s human capital must, likewise, be a part of the mix.
“The broadband policy, the e-commerce and the cybercrime law, e-transactions, e-signatures, data protection and privacy, consumer protection, as well as e-enabling and e-signatures are key aspects of the digital economy and we must work hard to understand and implement them.
“At the same time, we must work on strengthening our human resources with skills that are relevant in the digital economy, while building institutional capacity and leadership,” Mr Vutha added.
By 2023, the Cambodian government aims to transform the country into a digital economy in which most citizens are adept at using digital tools and are able to use advanced technology to enhance their personal and professional lives, according to Kan Channmeta, Secretary of State of the Ministry of Posts and Telecommunications.
“The government wants to complete the transition into a digital economy in the next five years to keep up with fellow Asean member countries. However, to achieve its goal, Cambodia needs to up its citizens’ prowess in information and communication technology,” he said.
Mr Channmeta said the government is now laying down the foundation needed for a digital economy, including the legal framework, the infrastructure, as well as preparing the country’s human capital.
“In the next five years, we are preparing to use technology to diversify our economy in order to ensure higher incomes for the people and more jobs,” he said, adding that by 2020 all villages in the country will have access to the Internet.