Cambodia Investment Review

Cambodian MSMEs Embrace E-Commerce for International Market Expansion

Cambodian MSMEs Embrace E-Commerce for International Market Expansion

Vijian Paramasivam

In an ambitious push to transcend boundaries, Cambodia’s micro, small, and medium enterprises (MSMEs) are preparing to embrace the dynamic world of e-commerce. This move is set to place them in direct competition with their ASEAN counterparts, potentially sparking a new era of economic growth within the Kingdom.

A recent initiative, the “Policy Dialogue Workshop on Small Package Exports,” is at the forefront of these efforts. The workshop aims to bolster MSMEs’ involvement in international markets, providing them with the support and confidence needed to navigate the global e-commerce landscape.

Policy Dialogue Workshop on Small Package Exports at Hyatt Regency Phnom Penh on December 20th, 2023.

Chea Ratha, Secretary of State at the Ministry of Commerce (MOC), emphasized the significance of e-commerce in her address at the workshop. “E-commerce offers numerous benefits including cost reduction and increased efficiency. The government is focusing on expanding digital trade through the development of legal frameworks, strengthening logistics, and ICT infrastructure, and enhancing the capacity of small and medium enterprises,” she stated.

Cambodian MSMEs Have Lagged in Penetrating International Markets

Despite the potential, Cambodian MSMEs have lagged in penetrating international markets. Data from the Federation of Associations for Small and Medium Enterprises reveals that in 2020, MSME products contributed only 10 percent, valued at $1.6 billion, to the nation’s total exports. This figure pales in comparison to ASEAN neighbors like Thailand, the Philippines, and Malaysia, where MSME contributions to exports are significantly higher.

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Rajiv Pradhan, Country Director of Swisscontact, highlighted the opportunity for Cambodian MSMEs to boost exports to ASEAN countries, potentially adding about $3 billion to the export market. He underscored the dual role of the private sector in leading e-commerce development and the government in fostering a favorable e-commerce environment.

Policy Dialogue Workshop on Small Package Exports at Hyatt Regency Phnom Penh on December 20th, 2023.

The growing ASEAN e-commerce market, valued at $72 billion in gross merchandise in 2018 according to a Google and Temasek study, presents a lucrative opportunity. The region’s large population, burgeoning middle class, and increasing number of online shoppers make it an attractive market for Cambodian MSMEs.

To capitalize on these opportunities, two key initiatives have been launched. The Small Package Exporter Champions (SPEC) Program and the Improving Small Package E-Trade for SMEs (SeT4SME) project, both funded by the Global Alliance for Trade Facilitation, aim to enhance the capabilities of MSME operators for exporting to international markets. Additionally, the Go4eCAM project, managed by the MOC and supported by the Enhanced Integrated Framework, is working towards establishing a national B2B2C e-marketplace and upgrading the postal system for more efficient e-commerce delivery.

Ongoing Challenges Faces by Small Business Operators

Sok Kha, Team Leader of the SeT4SME project, shared insights with Cambodia Investment Review on the impact of these programs. “SPEC has been well received by the MOC, beneficiaries, and donors. We have been able to reach marginalized MSMEs for capacity building,” he said. However, Kha also acknowledged the challenges faced by small business operators, including issues with customs, courier charges, and logistic costs, as well as a digital divide that hinders their full participation in e-commerce.

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Policy Dialogue Workshop on Small Package Exports at Hyatt Regency Phnom Penh on December 20th, 2023.

The workshop also focused on sharing experiences to improve the trade environment and facilitate cross-border e-commerce. Co-organized by the MOC, General Department of Customs and Excise of Cambodia, Cambodia Post, Khmer Enterprise, Cambodia Women Entrepreneurs Association, and the Young Entrepreneurs Association of Cambodia, the event was sponsored by the SeT4SME Project.

This concerted effort signifies a major step for Cambodian MSMEs as they prepare to enter the international digital marketplace, underscoring Cambodia’s growing economic potential and its entrepreneurial dynamism. With these initiatives in place, the country’s MSMEs are not only readying to compete on a global stage but also to contribute significantly to Cambodia’s economic growth and stability.

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