SUPPORT FOR SME
SUPPORT FOR SME

SMEs are serving as the backbone of the national economy. To support and push for the continuous growth and expansion of SME’s, policy incentives are given, mostly in the form of tax reductions and exemptions, but also in the form of concessional loans with longer grace periods and specific support programs financed by relevant line ministries or international organizations. In this section, KhmerSME provides an overview of the relevant existing incentives and support programs that could be of interest to your business. Please click on each sub-page for more detailed information.

Support Programs

Support Programs

There are various support programs for Cambodian Micro, Small, Medium and Enterprises (MSMEs) available, either on an on-going basis or for a limited period of time. Support to MSMEs can be given in the form of fiscal incentives or through various programs managed at the national or regional level, such as the recent SME Co-Financing Scheme of the SME Bank of Cambodia. MSMEs can also benefit from non-financial assistance in the form of programs and business support services. KhmerSME intends to stay up to date with MSME support programs available and will write up a brief introduction to new and upcoming programs including respective links. Check-in here regularly to stay informed of current and upcoming programs which can catalyse your business. Accessing Finance SME Bank of Cambodia The government-owned SME Bank has launched with an initial budget of USD100 Million to support the development of Cambodian agro-businesses and SMEs that are linked to foreign direct investments, the tourism sector, and tech start-ups. The SME Bank makes it easier for small and medium-sized enterprises (SMEs) to access finance in all phases of their lifecycle – creation, expansion, or business transfer. As set out under the Cambodia Industrial Development Policy 2015-2025, the bank will provide better and more affordable access to financing for SMEs in key priority sectors, including food processing, the manufacturing of local consumer goods, waste recycling, the production of goods for the tourism sector, the production of finished products, spare parts, assembling parts to supply other manufacturing, research and development associated with information​technology (IT), or the supply of IT-based services and enterprises located in SME cluster zones and enterprises developing a cluster zone. The bank has a mission to provide financing and commercial banking services in an effective and sustainable manner to support local SMEs enterprises with an objective to increase economic diversification and expand export volume. This will be in line with the policies set out by the Cambodian government. The SME Bank of Cambodia endeavours to provide four main value-added benefits to the SME community: better and more affordable access to financing, technical assistance to SMEs to enhance their productivity and efficiency, downstream business advisory support and facilitating access to regional markets. Supporting Entrepreneurs Khmer Enterprise Khmer Enterprise (KE) is a new National SME Promotion and Development Center. The focus will be on business owners, scalable SMEs and entrepreneurial communities. KE will provide financial and non-financial support through different programs linked to the following priority sectors: tech start-ups, tourism, agro-processing, and manufacturing (import substitution), as well as industrial clusters. TECHO Startup Center TECHO is a start-up center under the innovation arm of the Ministry of Economy and Finance (MEF) which aims to build viable early stage emerging tech start-ups by igniting innovation and technology. TECHO will work with young talents to co-create startups. Empowering Human Resources Skills Development Fund (SDF) The Fund focuses on providing upskilling and reskilling opportunities for existing workers to address skills gaps and skills shortage in the industrial sector through work-based learning programs. The SDF finances training proposals, to be supported by the Fund in 5 priority sectors: construction, manufacturing, information and communications technology (ICT), Electronics and Hospitality. SME Scheme SME Tax Incentives Scheme (Sub-Decree 124) This scheme provides a tax exemption from the tax on income for 3 to 5 years and provides additional incentives for deductible expenditures for 6 priority sectors including agro-industry, food manufacturing, and processing, manufacturing for the tourism sector, manufacturing for supplying other local manufacturers, Research and Development (R&D) associated with IT, and MSMEs located in SME clusters zones.

Service Providers

Service Providers

As a business owner, you can make use of a broad network of business service providers. If, for example, your organization does not have IT staff, it may be possible to contract a service provider to supervise your IT infrastructure for you. In this section, you can find a list of service providers that can assist you in developing your company. The Information listed here includes a summary profile, a concise description of the type of service and contact details. In addition, this page also provides access to information, capacity development, legal and tax support services, access to finance, Micro Small and Medium Enterprise (MSME) cluster park, franchising, standards, packaging and finally trade, logistics and customs. The database is provided based on business categories, including the scope of work to facilitate your decision-making. Moreover, a function for sending a direct email to the service providers is included to assist you in contacting your service providers of choice. Criteria allowing register as Service Provider on KhmerSME Service Provider should be: A company that has already registered with relevant ministriesA business that has service and expertise that can help MSMEs or foreign SMEs to enter the local marketThe service provider should have services such as Distribution, Business Matchmaking, Human Resources, Market Research, Intellectual Property, Laws & Regulations, Taxation & Accounting, Export consultancy, Transportation & Logistics, and / or Business Training.

Access to Finance

Access to Finance

SMEs play an essential role in Cambodia’s economy. They represent 70% of employment, 99.8% of companies and contribute 58% towards the GDP. For this reason, tailor-made support to help SMEs grow and innovate is essential. At all stages of development, small businesses struggle more than large enterprises to get finance. To stay competitive, both start-ups and scale-ups rely on external finance for innovation, digitalization, internationalization, and upskilling. In Cambodia, financing programs are generally not provided as direct funding. The support is mostly channeled through national authorities or financial intermediaries such as banks and venture capital organizations that provide funding with financial instruments. The SME Co-Financing Scheme is a special loan initiated by the Royal Government of Cambodia to support small and medium-sized enterprises (SMEs) that need funds for working capital and capital expenditure with lower interest rates. Funds are channeled through Participating Financial Institutions (PFIs), comprising of all licensed banks and Micro Finance Institutions (MFIs) with a total of 33 participating PFIs. Please visit this link for detailed information on the purpose of financing, eligibility criteria, features of the scheme, pricing, collateral, list of banks and MFIs, etc. The Cambodia SME Scheme aims to assist viable SMEs impacted by the economic challenges during the Covid-19 period. With the Cambodia SME Scheme, it is envisaged that SMEs will have access to financing at reasonable cost. The Cambodia Women Entrepreneurs Scheme (CWES) aims to assist viable SMEs owned by women which have been impacted by the economic challenges during the COVID-19 period. CWES provides female SME entrepreneurs with better accessibility to financing at a reasonable cost. The Cambodia Digital & Automation Scheme (CDAS) is extended to young entrepreneurs and SMEs businesses engaging in the digital sphere and in automation. CDAS aims to assist viable SMEs affected by the economic challenges during the COVID-19 period for better accessibility to financing at reasonable cost. Please visit the SME Bank of Cambodia to find a list of Participating Financial Institutions (PFIs).

Starting a Business

Do you dream of being independent and running your own business? Maybe you want to become your own boss? Or do you have a great solution to a problem you see in the world? If yes, becoming an entrepreneur might be right for you. However, starting a business isn’t easy and you need to be prepared for a long period of struggle until your enterprise starts to turn a profit. This section guides you on what you need to start a business as well as giving you advice to help you through this journey. There are also professional Service Providers who can help you through some of the steps or even through the complete setup process. Before you start, check if you’re ready:Starting a business requires effort and commitment. It’s important to know what’s involved and whether you’re actually well suited to business and self-employment. We recommend you first take some time to critically evaluate yourself and learn about the challenges of owning a business. Are you really ready to own your own business?Whether you’re starting a new business or buying an established one, you’ll need to be prepared. Consider these key areas to make sure you are ready. 2. Refine your idea Once you are certain you’re cut out for running your business, it’s time to review and refine your business idea. A great way to do this without diving directly into a lengthy and detailed business plan is to use a tool such as the Business Model Canvas. This gives you a single page snapshot of the key elements of your business and how they work together. You can find a free download here. The Business Model Canvas ensures that you start thinking about your mission and value proposition from the very beginning. You will need to think about and make notes about the following key areas: Customer segments:Who are your customers? Value proposition:What are your products or services? What problems are you solving for your customers? Revenue streams:Where does your income come from? Channels: How do you communicate with your customers? How do you deliver your goods or services? Key Activities:What do you do every day to run your business? Key Resources: Who are the people, the skills, the tools and the finances you need to run your business? Key partners:Who are your key partners in running your business? Cost Structure:What are your main costs? More information about this tool can be found here: https://www.businessmodelsinc.com/about-bmi/tools/business-model-canvas/. Ngeay Ngeay also offers a free video course in Khmer to help you through the Business Model Canvas here. 3. Conduct research market To start and run a successful business you need to understand your customers and your target market. Market research can help you to understand and make informed decisions about the marketing of your products and services. There are different types of market research: primary and secondary. Primary research involves gathering information first-hand through surveys, interviews, and talking to (potential) customers and other businesses. Your research can be formal or informal. Secondary research uses information and data that has already been collected and analyzed by others. You can research your markets using information such as government statistics and trade publications. Evaluate your target audience A key purpose of market research is to get to know your target customers. You need to understand who is going to buy your product and why? What are their needs and pain points? How can you reach them? How do they make a decision to buy? Where will you find and how will you communicate with them? Research the competition and market saturation You need to know your competition, so you can beat them and prevent them from taking your customers. Remember competition is not always a bad thing; it means there is already a healthy market for your product or service and that customers are willing to pay. Learn as much as you can about how your competitors attract customers, what value they provide and anything they are missing. At the same time, check for market saturation. You may think that the coffee shop or the flower shop in your neighbourhood looks like a great business idea, because it seems to be flourishing, but you need to consider: are there enough customers for this type of business? Maybe the market is already saturated with numerous businesses offering similar products or services. If you want to enter an already crowded market, what will be your Unique Selling Proposition (USP)? How will you stand out and be different? Will you have a more specialized service? A lower price? Something that no one else can offer? Simply copying another business or business idea is not a winning approach. You need to understand the market size and the portion of this you can potentially captur Validate your idea It’s a good idea at this stage to field test your idea, product or service. Speak to potential customers and get their feedback on your proposed product or service and see how interested they are in it and whether they would be willing to pay for it. You can do through by sending out surveys, talking to people in person or on social media, running ads or attempting a pre-sale campaign to gauge interest. Ngeay Ngeay also offers a free video course in Khmer to help you prepare a marketing strategy for your business here. 4. Write a business plan A business plan is a must if you are thinking of getting outside financing through a loan or investment. However, even if you are starting small and starting with your own funds, a business plan will help you to plan: how much money you’ll need to get started, how to get profitable, what you need to do and what the longer-term future looks like. Think of a business plan as a road map for your business, a tool to help you manage your goals and track your progress. If you’ve already developed a simple overview of your business, using a tool like the Business Model Canvas, this will be a great starting point for you. How formal or structured your business plan will be, will depend on whether you plan to use to raise funds or use only as an internal document. What goes into a formal business plan? There are different ways to structure a business plan, but most contain at least the following elements: Executive SummaryYour teamCompany overviewIndustry and Market AnalysisMarketing PlanOperational PlanFinancial Strategy A great way to get support in writing a business plan, check the list of training opportunities here. [link to training opportunities page] You can also seek support from the list of service providers here. [link to service providers page] There are also numerous websites that can provide you templates, guidance and advice on writing business plans. 5. Make your business legal To start and operate a business in Cambodia, you will need to get registered. The first step will be to review the different types of business structures and to decide which one is the best for you. You will also need to decide on a name and check if it is available. To help you decide, you should research the structures and pros and cons of the above types of businesses and select the one that is most suitable for you and your business. A good place to start is here. This site contains a table comparing the different registration types along with the benefits and drawbacks of each. Registration Steps and Requirements in Cambodia In Cambodia, you can register your new busines through the One Portal system here. This User [insert pdf download here] Guide from the Ministry of Economy and Finance is very useful to help you get prepared for this process. It includes an overview of how to use the system and the documents you will need to prepare for submission. The main steps in registering your business, whether you use the One Portal system, or a service provider are: Name Search and confirmationBusiness registration with the MOCTax registration with GDTDeclaration of opening with MoLVTLicensing and other requirements based on operations and industry. Read more about licensing here. [link to content on licenses]You may need to secure additional licenses and permits in order to have approval to do certain activities based on your type of business and industry. You can find more information on licenses and permits in the Business License section of this website.You may also choose to register a trademark. Registering a trademark can protect your brand assets, such as your business name or logo. To learn how to register a trademark, see the links below.EN_ Official Video Explanation on Online Trademark Filing System in CambodiaOfficial Portal to Trademark Registration in Cambodia If you have staff members you will also need to apply for National Social Security Fund (NSSF). You can learn more about NSSF and how to apply here. 6. Financing your business Whether you’re starting a business from scratch or buying an existing business or franchise, some approaches you may consider for funding: Fund your business yourself through self-fundingSecure venture capital from investorsUse crowdfundingGet a small business loanSmall and Medium Enterprises investment programsIt’s important to remember that investors such as business angels and venture capitalists may expect some level of existing self-funding or existing equity in the business in order to invest.You may also require financing for other areas of your business such as property, vehicles, machinery and tools, or inventory. There are different types of financing that may be available for you such as:A bank or MFI loanA line of creditLeasingTrade credit from suppliersLoansInvestmentsFor guidance on deciding which methods are the best for your business, you can find counselling services through our resource partner network (see Service Providers). 7. Preparation for operations As a registered entity, you will need to submit monthly and annual tax declarations to the General Department of Tax (GDT). To help you to do this, you will need support, at least initially, from a bookkeeper or accountant who has experience in this area. You will need to set up a well-organized filing system, prepare numbered receipts and invoice books, making sure you keep very detailed and careful copies of every transaction. This is in addition to setting up and using a system such as QuickBooks to keep track of income and expenses and so that you can create monthly, quarterly and annual financial reports. These are not only needed for reporting but also help you analyse your business and make best decisions for operations and growth. Even if you are starting small, correct and accurate financial record keeping is a must. If you are not planning to engage a full-time accountant, you can hire a service provider to help you with monthly submissions. 8. Prepare for growth As you begin your business, you will experience successes and set-backs. You need to see these as learning opportunities. With your Business Model Canvas or business plan in hand, you can re-evaluate and re-assess your strategy and plan for future growth based on experience. You should review your progress each month, looking at the numbers from the monthly accounting reports and reviewing your strategy. Repeating this quarterly and annually will allow you to track your performance and make decisions based on results and data in hand. This helps you to prepare for all types of situations before they arise, making sure you are ready for the ebbs and flows of the business.

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