#SmallBusinessAdvice

The future of startups & SMEs in cambodia for the next decade

January 31, 2024 4 Mins Read

Share on

SMEs play a significant role in Cambodia's economy, fuelling economic growth and reducing poverty rates. However, more can still be done to support SMEs in the future.

An overview of Cambodia’s economic landscape

Cambodia's economy, steadily growing by 7.7% annually from 1998-2019, encountered its first decline in two decades when the COVID-19 pandemic led to a 3.1% contraction in 2020. Despite the setback, the country's proactive response ensured a rapid recovery, illuminating the indispensable role of small and medium enterprises (SMEs) in Cambodia's economy.

As the pandemic shuttered many operations, the country's longstanding commitment to SMEs became even more vital. This commitment is clearly expressed through the ongoing SME Development Policy, a cornerstone of the broader Industrial Development Policy (IDP), designed to address the challenges encountered by SMEs and startup businesses in Cambodia, including access to finance, skill development, and global competition.

By 2022, a resurgence was evident, fueled by the revival of tourism, increased demand for goods and services, and foreign investments. In line with this resilience, the Asian Development Bank has outlined a promising trajectory for Cambodia's economic growth, projecting a rate of 5.5% in 2023, potentially increasing to 6% by 2024.

These initiatives forecast a future filled with unparalleled business opportunities and sustained economic strength in Cambodia over the next decade.

Key trends and their opportunities for SMEs in Cambodia

In bolstering Cambodia's economy, SMEs need to capitalise on beneficial trends that can influence their growth. Below are key trends that provide substantial opportunities for SMEs in Cambodia to maximise their potential:

1. Expand global reach with regional exportation

Cambodia's proactive pursuit of bilateral Free Trade Agreements (FTAs) holds tremendous promise for its SMEs. These agreements with nations like China and Korea offer enhanced market access, unlocking export potential for businesses in Cambodia. Additionally, as part of the US Generalised System of Preferences (GSP), SMEs in Cambodia can enjoy duty-free imports, resulting in significant cost savings of up to 40%. This advantageous position makes Cambodia an attractive market, creating a compelling value proposition for buyers.

Building upon these advantages, Cambodia's vibrant tourism sector further enhances the country's economic growth. By strategically marketing unique Cambodian souvenirs, handicrafts, and tourism services, SMEs can establish a distinct Cambodian brand globally, attracting foreign investment and fostering regional integration.

Moreover, the agro-industrial sector in Cambodia, undergoing rapid transformation and diversification towards more profitable crops, presents profitable ventures for not only SMEs, but also MSMEs, meaning micro, small, and medium enterprises (MSMEs).

These businesses can expand globally by transforming agricultural products into high-value goods and capitalising on favourable agro-industrial government policies. This, in turn, could significantly boost Cambodia's overall regional agricultural exports.

2. Harnessing digitalisation and e-commerce advancements

Digitalisation is revolutionising the way SMEs operate in Cambodia. Digital tools like mobile banking, e-wallets, and online payment systems are catalysing economic activity, streamlining transactions on both domestic and international fronts, thereby enhancing trade efficacy.

This transformative wave of digitalisation logically progresses to the adoption of e-commerce business models, which presents a significant opportunity for SMEs in Cambodia. By leveraging e-commerce platforms, these SMEs can extend their reach to global customers, streamline operations through automation, increase accuracy and efficiency, and drive business and growth with expanding import and export opportunities.

Given the 12.15% projected annual revenue growth rate (2023-2027) of the Cambodian e-commerce market, according to data reports by Statista, the strategic integration of e-commerce practices enables SMEs to harness this momentum. This fosters innovation and competitiveness in a rapidly evolving digital economy.

To support this shift in business operations, organisations like the U.S. Agency for International Development (USAID) have responded proactively by offering free digital skills training to SMEs. This enables them to adapt to an e-business landscape and manage digitisation challenges.

3. Empowering SMEs through infrastructural support

In a bid to create a more conducive business environment, substantial infrastructural support has been introduced in Cambodia to empower SMEs. This supportive framework is exemplified by initiatives like the Co-Financing Guarantee Scheme (CFGS) and the Business Recovery Guarantee Scheme (BRGS) launched by the Credit Guarantee Corporation of Cambodia (CGCC). These programmes extend loans to SMEs in Cambodia, covering up to 80% of the loan values, reducing the necessity for physical collateral.

Maybank, for example, is one of the financial institutions that partner with CGCC to offer SME loans with no collateral required. As of 2023, the CGCC has provided credit guarantees of US$127.06 million, supporting 1,465 guaranteed accounts.

On the other hand, Khmer Enterprise and UNDP are working together to fortify the digital infrastructure of Cambodia's SMEs. This endeavour offers tools, training, and grants to aid SMEs in expanding their online presence and tapping into international commerce. As per the 2023 projections from Statista, the user base of e-commerce in Cambodia is predicted to reach an approximate figure of 8.76 million by the conclusion of 2027. This alliance strategically encourages SMEs to leverage this growth, fostering expansion and profitability.

For SMEs seeking to navigate the promising landscape of Cambodia's economy, partnering with an experienced international logistics provider like DHL Express can help accelerate business success.

Whether your challenge lies in navigating local or international shipping processes, unlocking new market opportunities, or optimising your e-commerce operations, DHL Express' flexible courier delivery solutions offer a resolution. With seamless integration with e-commerce platforms and a global network that spans 220 countries, DHL Express works to effortlessly streamline all logistic processes, thus serving as a catalyst for SMEs' success.

Forge your path to global growth by opening a DHL Express business account today.

ENJOY SPECIAL CORPORATE SHIPPING RATE WITH US TODAY!