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close this bookPoverty Alleviation Trough Micro and Small Enterprise Development in Cambodia - ILO/UNDP Project CMB/97/021 - Final Report (ILO - UNDP, 2000, 126 p.)
close this folderPart B: Situation Review 1997 (“stand alone” report)
View the document(introduction...)
View the documentList of acronyms
View the document1. Introduction and background
View the document2. Macro-economic framework for micro and small enterprise development in Cambodia
View the document3. Government priorities and plans
View the document4. Legislative, regulatory and incentive framework
View the document5. Brief description of stakeholders in MSE development in Cambodia
View the document6. Main externally assisted programmes for MSE development
View the document7. Constraints and opportunities at the enterprise level
View the document8. Conclusions and issues to be elaborated further
View the documentANNEX 1: Documents
View the documentANNEX 2: List of key persons met

5. Brief description of stakeholders in MSE development in Cambodia

There are a number of stakeholders in MSE development in the public as well as private (for-profit and non-profit) sectors. The following brief descriptions should be read in conjunction with those of donors in the next chapter. There are naturally overlaps because the donor-assisted projects and programmes often work with Cambodian counterpart organizations. The mission was able to visit most of the following stakeholders. Additional information, particularly of those that the mission could not meet, was obtained from indirect sources6.

6 See Annex 2 for the list of persons met by the mission.

a) Ministry of Industry, Mines and Energy (MIME)

MIME consists of six Departments (Administration, Energy, Technical, Planning, Mining and Inspection) in Phnom Penh. In addition, each province has a Department of Industry, Mines and Energy (DIME) reporting to MIME. Apart from manufacturing and handicrafts, MIME/DIME is responsible for power generation, oil exploration and water resources. The most relevant Departments for MSEs are: the Planning Department in which some 13 staff are working in the SME Unit, Technical Department (quality control, testing, industrial zone development, environmental questions) and the Enterprise Divisions of each DIME. The total staff of MIME/DIME is 2,000. Each DIME has officers both at the provincial capital and in each district of the province.

MIME is formally responsible for formulating development plans and establishing an appropriate legal framework to promote private sector industrial activities, including small scale. MIME is required to promote the development of small-scale industries, while encouraging domestic and foreign investment, primarily in selected geographical areas. MIME is also in charge of the monitoring and testing the quality of products from manufacturing enterprises. Currently the technical capacity concentrates mostly on food and food products. MIME is also the focal point in Cambodia for the International Standards Organization (ISO). In the provinces, DIME monitors the activities of not only manufacturing enterprises but also repair shops and other service enterprises, except trading. MIME/DIME also has an important role in protecting lables and products from imitations and pirating.

MIME staff is heavily constrained in its capacity to assess the performance, potential and constraints of the industry sector, and it lacks a coherent policy for the promotion of the sector. In particular, as identified by the Asian Development Bank (ADB), there is a need for developing skills in policy analysis and formulation in senior and middle-class officials and for developing basic skills such as computer operations and knowledge in economics.

There is currently no capacity to provide consultancy services to MSEs at MIME or other ministries or institutions in Cambodia. Enterprises and ACLEDA approach MIME/DIME on an ad hoc basis with questions related to procurement of machinery, generators, raw materials, quality improvement and marketing. In February 1996, MIME prepared a basic project concept for the establishment of an Industrial Promotion Centre for Cambodia (for possible funding by Japan) with the Directorate General of Industry as the implementing agency. Pending approval and funding, the Centre is planned to provide education and training (metalworking, electric/electronic technology, foodstuffs, textile and garments, vehicle repair, and woodwork) and practical firm management and other services such as industrial pollution control, quality control, production control, market research and product development using indigenous materials, and promotion of local products by holding exhibitions and fairs.

b) Ministry of Commerce (MOC)

MOC is in charge of developing a long-term policy for the trade sector in Cambodia, drafting commercial laws, and developing regulatory and administrative systems for domestic commercial activities and international trade. MOC is faced with the urgent task of preparing the economy and the trade and industry sectors for the country’s integration into the regional and global economy through participation in ASEAN later in 1997, and possibly later in the WTO. The total staff of MOC is 2,000.

MOC has no regional presence through departments in the provinces and its orientation is distinctly towards trade with the outside world. MOC is also in charge of CAMCONTROL which is the official control and certification body for exported and imported goods as well as goods at the market. MOC is also severely constrained in its capacity to develop coherent policies for the promotion of the trade sector and, as identified by the ADB, there is a need for developing skills in policy analysis and formulation.

c) Ministry of Labour, Social Welfare and Veteran Affairs (MOSALVA)

Poverty Alleviation through employment promotion is a priority of MOSALVA. The Department of Employment and Manpower is under the Directorate of Labour and Manpower. The Department has three Bureaus; Placement, Personnel Control and Statistics. Bureau of Placement provides placement services for job seekers in the country as well as facilitates Cambodian workers to be working overseas. They have received 1,566 new registration by job seekers in 1996. Bureau of Personnel Control issues labour books for Cambodian workers, labour permits and labour books for foreign workers. They are hoping to establish “Employment Promotion Centres” that would identify labour market needs, provide vocational training and job placement services and promote self-employment.

As an example of provincial activities, the Provincial Secretariat of Social Affairs, Labour and Veterans Affairs in Battambang has four divisions (called “offices”) and one of them is the Labour Office. None of the district offices under the Secretariat have functions related to labour matters. The Labour Office was started in 1993 and its (currently 9, including 3 women) staff received short training courses in MOSALVA. According to the Labour Law, all the factories employing more than 10 workers are required to inform the Secretariat but most of the enterprises had been established before the Law took effect. The main functions of the Labour Office are to issue labour books and to conduct inspections to enforce the government policies. They are planning to conduct 12 routine inspections per month. They have a system of registration for job placement but they have not had any successful placements.

d) Ministry of Education, Youth and Sport (MOEYS)

MOEYS has been designated as the coordinator of the technical and vocational education and training (TVET) system. Responsibility for the delivery of formal TVET has been increasingly concentrated under MOEYS but others run formal TVET institutions as well. Non-formal vocational education and training (VET) is delivered under the responsibilities of MOEYS, MOSALVA, Ministry of Rural Development (MRD) and Ministry of Women’s Affairs (MOWA) in collaboration with various donor-assisted projects and NGOs.

The TVET system in Cambodia has gone through a major change because of the shift to the market economy. The basic principles of the TVET in Cambodia are: (i) flexibility and responsiveness to changing needs and emerging market conditions, (ii) access to training for those with little or no education, with particular emphasis on access for girls/women and rural dwellers, (iii) holistic approach combining training with basic education and life skills, oriented towards practical occupations and with progression and quality, (iv) partnership with private sector and NGOs and (v) sharing responsibilities and costs.

e) Ministry of Agriculture, Forests and Fisheries (MAFF)

Major priorities of the Government concerning the agriculture, forestry and fishery sectors are (i) to achieve food security and rice exporting capacity, both of which by increasing rice production, (ii) developing commercial crop production such as rubber and other crops, (iii) expanding livestock production, mainly through improvement in animal health, (iv) achieving the sustainable development of fisheries subsector, (v) ensuring sustainable social benefit from forest resources. MAFF plans to further strengthen agricultural planning and policy-making capacities.

f) Ministry of Rural Development (MRD)

Ministry of Rural Development was established as a leading agency in promoting a system of decentralised, participatory rural development planning based on new structures of rural development administration and the newly-established village development committees, in which NGOs will continue in an important way.

They are responsible for setting up rural development committees at the provincial, district, commune and village levels as well as coordinating and/or implementing rural development activities such as rural roads7, primary health care, sanitation and water supply, education and training, commercial development, agriculture and rural credit (including for non-farm micro enterprises).

7 National (primary) and secondary roads fall under the responsibility of the Ministry of Public Works and Transport (MPWT).

g) Phnom Penh Chamber of Commerce

The Chamber was founded in 1995 and has had since a 24-person Board of Directors (active members, including 3 female members), elected by a membership of 600. Four sectors - commerce, industry and handicrafts, hotels and liberal professions, and agriculture - are represented on the Board. The functions of the Chamber include:

· Promoting Cambodia to foreign investors through the provision of information and other means;

· Providing services to members, such as information on export markets, international laws and regulations, and available technologies and products;

· Working together with the Ministry of Commerce in establishing good business practices, standards and, when appropriate, grading systems;

· Representing the interests of members in respect of their specific needs or in matters of public policy, such as the impositions of particular taxes or new regulations;

· Advising the government on establishing or consolidating business laws and working closely with the Royal Government through the Ministry of Commerce in matters related to the development of the business sector; and

· Arbitrating where necessary in disputes between business.

Although their current capacity is limited, the Chamber is planning to provide services to their members. They are establishing a database which was supported by EU and are planning to provide training courses for hotel workers.

So far the Chamber does not have wide coverage of micro and small enterprises and its effective coverage does not reach to areas outside Phnom Penh. The Chamber has, however, an important role in policy, strategy and incentive scheme formulation for all private sector activities in Cambodia and will therefore contribute to the creation on an enabling environment for micro and small enterprises as well. There are no active regional or subsectoral clubs or associations that would represent the concerns and interests of the micro and small enterprises in Cambodia for the time being.

h) Association of Cambodian Local Economic Development Agencies (ACLEDA)

ACLEDA was established as a Cambodian NGO in 1993 by the national project staff of the UNDP/ILO Small Enterprise and Informal Sector Promotion Project. Initially ACLEDA provided an integrated services of business opportunity identification, small business training, credit and follow-up advisory services. After a series of strategic planning exercises and analysis of demand, ACLEDA decided that the best way to serve the people of Cambodia was to become a “Financial Institution for the Poor”.

They are currently the largest micro finance institution in Cambodia with 18 provincial branch offices and district offices around the country employing more than 180 professional staff. As of the end of 1996, their active loans outstanding amounted to US$2.65 million with the number of borrowers at 36,700. They provide collateralized loans to small business clients up to $4,000 and the “medium-scale” enterprises up to $30,000. The average collateralized loan size is about $500. They also provide non-collateralized loans to micro-business clients up to $150 with the average size of $100. About 85% of their clients are women and the overall recovery rate is 96%. All the collateralized loan clients receive 4 to 6 days of basic business training which results in development of business plans used for loan application. Micro-business clients receive a one day workshop which leads to group formation. They are developing saving services as well as agricultural credit.

The organizational structure of ACLEDA consists of General Assembly, Board, Executive Committee, technical staff for consultancy and training as well as branch offices and district offices.

i) Groupe de Recherche et d’Echanges Technologiques (GRET)

Apart from the government-sponsored lending facility that was established in 1985, GRET, a French NGO, is the pioneer in micro financing that started in late 1991. They have established a number of village banks in three provinces; Kandal, Kampong Speu and Prey with about 20,000 clients. Before any loans are provided, the villagers are trained to be able to manage their funds. They have established 229 village banks as of the end of 1996. Their outstanding loan amounted to $600,000 with 19,800 borrowers.

j) Khemara

Khemara is an NGO founded in 1991 by a woman activist returning from a refugee camp. The main objective of the NGO is the advancement of women in Cambodia through health, nutrition and day care, community-based rehabilitation, human rights training, family support programme and a special scheme for women in business which includes credit linked with skill training. The credit scheme operates in two communities (one in a suburb of Phnom Penh and another in Kampong Speu) has currently less that 20 women’s groups benefitting from it. There are no formal links with the government, but Khemara works closely with local authorities. All activities depend on donor funding and there is currently little scope for expansion. The handicrafts outlet in Phnom Penh has developed into an interesting venue for the display and retail of traditional textiles and other items. The new Executive Director plans to focus the business activities of Khemara more to improving quality and competitiveness rather than supporting the woman entrepreneurs through all steps of the production process. Despite its small size, Khemara through its wide experience in grassroots employment generation activities can well represent the views of a number of NGOs and issues related to the role of women in economic development in Cambodia.

k) Small Business Training Programme

Small Business Training Programme in Battambang is a part of the USAID-funded Georgetown University Small Business Training Programme in Cambodia (GBTP). It is located in the premises of Regional Teacher’s Training Centre (Eab Khut School). The programme was started in September 1994. Since then 275 students (out of whom 121 women) graduated from their 4.5 month course which consists of 3 month classroom sessions and 1.5 month enterprise (or farm) internship. The course is divided into general management, managerial accounting, general accounting, marketing, “business consumer maths”, business English, credit, field visits to enterprises, guest speakers, internship and business plan research. They receive support from Faculty of Business in Phnom Penh which is also a part of the project. In Phnom Penh, the qualification to apply is to have graduated from high school (i.e. 12 years education) but in Battambang 8 years is acceptable, although they conduct entrance examinations. They also conduct a three-month evening course charging $100 per person. 19 people are enrolled in the evening course, most of whom come from NGOs. The Battambang programme has difficulty in identifying enterprises who are willing to accept internship. In Phnom Penh, MIME has been requested to assist in this respect.

l) Vocational Training Centre in Battambang

The Centre, established in 1989, is a part of the Provincial Department of Education, Youth and Sports. The Centre provides two-year courses for those with 8 years of education in five technical areas; i) agricultural machineries, ii) automobiles, iii) electricity, iv) concrete construction and v) carpentry. The last two courses were added in 1994. Each course has 18 to 25 trainees. 14 out of their 160 trainees are women who are mainly in electricity and construction courses. The Centre has 28 staff, who are all trainers, and 5 assistants. They have 5 German advisors and have been supported by Lutheran World Service (LWS) since 1992. The Centre prepares their own curriculum, following the policies of MOEYS, and sends it to the Ministry for approval. The Centre’s budget comes from the government as well as LWS. The running cost for one course is US$20,000. They invite local enterprise owners two to three times a year to identify skill demands. Until 1993 all the graduates had been placed in the government but since then finding jobs after graduation became difficult except for concrete construction and carpentry. Out of the 54 graduates last year, 11 found jobs in the skills they had learnt, 3 found different jobs, 2 opened their own businesses and 24 formed “shelter work groups” operating in the adjacent premise of the Centre.

m) UNDP/ILO-supported Provincial Training Centres

The mission visited the Battambang Provincial Training Centre which is one of the decentralized provincial training centres that are located in seven provinces; Kampot, Takeo, Kampong Cham, Pursat, Banteay Meanchey, Battambang and Siem Reap. All of the seven centres are managed by national counterpart staff, National Outreach Coordinators and their assistants, seconded from provincial departments of MOEYS. When the Battambang Centre started in 1993, it was first located with DIME but was transferred to the Department of Education, Youth and Sports in 1995. Since 1993, they have conducted 52 courses resulting in 960 trainees, out of whom 292 were women. Besides courses in the Centre, they also provide mobile training in rural communities. The courses are decided based on a training needs assessment. They try to avoid duplication with the training courses that NGOs provide. The courses are provided free of charge. Priorities are given to women, internally displaced persons and people with disability. A more detailed explanation about the project as a whole is given in Chapter 6.

n) JSRC Vocational Training Centre

The Centre is managed by an NGO, Japan Sotoshu Relief Committee (JSRC), and started as an effort to provide skills for the poor, the returnees (former refugees) and female-heads of household. They have provided training in ceramics, pottery and brick making. The purposes of the Centre are technology transfer and employment promotion. 20 people have graduated and currently they have 40 trainees. The Centre provides one-year training courses. Because their products are of high quality and targeted for tourists as customers, their current location in Battambang is not particularly suitable in terms of marketing. The raw material for ceramic comes from another province. However, the Centre is valuable as the (only) source of high level expertise in Cambodia for ceramics and pottery.

o) Cambodian Commercial Bank (CCB)

The CCB was the first commercial joint venture (the National Bank of Cambodia and the Siam Commercial Bank from Thailand) in the banking sector in Cambodia and has currently four branches. The CCB mostly provides services in savings and deposits (mostly in US$, some in Riel and Thai Baht) and in Phnom Penh also export-import credit facilities, etc. All branches provide commercial and agricultural loans at a fixed interest of 18%. One of the key problems for business credits is the very complicated and costly procedure to obtain land title documents necessary for collaterals.

p) Canadia Bank

Among the various commercial banks, Canadia Bank is said to be the only bank that is providing credit to small farm households. As much as 5% of their loan portfolio could be in the agricultural sector. They are currently reaching about 400 farm households and the loans are provided through village heads. So far they have achieved 100% repayment rate.