SMEs go DigitalTax, Incentives, Support

LOOKING TO A NEW FUTURE FOR THE SME IN CAMBODIA

CHARLES ESTERHOY, CEO WORLDBRIDGE HOMES CO. LTD.

Introduction

➢ CEO of Worldbridge Homes Co. Ltd.

- Project Director - SME Cluster Development Project

- Project Director - WBH Affordable Housing Project

➢ COO of Kerry Worldbridge Special Economic Zone

➢ Chairman of the American Chamber of Commerce Cambodia.- SME & Startup Committee, ICT Committee & Work Force Development

Committee “involvement”

➢ Chairman of the EuroCham Transport & Logistics Committee

➢ Member of the Logistics Advisory Board to the Ministry of Public

Works & Transport

Concerns that most

foreign investors have about Cambodia:

➢ Basic Incentives for FDI (QIP)

➢ High cost of electricity

➢ Presence of informal or “unofficial” practices

➢ Labor disputes & low productivity issues

➢ Lack of skilled labor and professional services

➢ Poor infrastructure and business environment for manufacturing

➢ Difficulties in business set up and unclear government policies

➢ Lack of a modern and reliable local Supply Chain

Looking for a new future

➢ Cheap Labor and low value outputs are not sustainable

➢ Tax incentives for FDI are not the future for emerging countries

➢ Higher Value capabilities, capacities and outputs are what is

important for the next level of growth

➢ With Industry 4.0 based technology, Global Value Chains are

now borderless

➢ Linking SMEs and technology is of utmost importance now

➢ “..the adoption of technology by SMEs will boost local tech

startups..”

SMEs + “Incentives”

➢ Existing SMEs will be hesitant or not willing to making the leap

to hi-tech or using technology

➢ Existing business environment for SMEs is not conducive to hi-

tech growth. The current environment is “functional” and

change is not felt to be important.

➢ Financial Incentives for SMEs alone are not the answer

➢ Skills development and training alone is not the answer

➢ A defined “end game”, ease of doing business, having a

sustainable business, unbiased access to markets and being

able to work in an environment of fair competition are the

true incentives for SMEs.

SMEs & True Incentives ➢ I.e the barriers SMEs face must come down

➢ True incentives will be a structural shift in policy purpose and

enforcement which is responsive

➢ True incentives will be in the complete elimination of informal

competitors and practices and enforcement of IPR laws.

➢ True incentives will be in the adoption of international

standards and true certification by recognized agencies

➢ True incentives will be in the “made in Cambodia” labelhaving meaning domestically.

➢ True incentives will have SME business sustainability built into

them.

Opportunity

To create opportunity, the Public and Private Sectors must work

closely together and not be afraid to “think outside the box”

Cambodia’s future growth and competitiveness will depend on

completing progressive policy and doing it with a specific Industry

4.0 and SME “end game” in mind.

Private Sector Business Strategy + Effective Development Policy

Our core objective is a to move into a modern cyber physical

manufacturing environment and integration of the local SME into

global value chains.

Development of SME Cluster Project by Worldbridge with support

from MIH.

SME Cluster Site

Developer

Prep SME

Central Supply Depot

DistributionWarehouse

SME

Project

Developer

SME Project Offices

Professional Sevices,

Training & Industry 4.0

Services

SME Project Logistics & Block Chain Services • Supply Mgmt.• Transport /

Logistics• Procurement

Process SME

Process SME

Packaging

SME

SupplierSupplier

(Farmer)

Production

Material A

LCD

HUB

Production

Material B

Supplier

(Farmer)

LCD

HUB

Local

Market

Local

Market

Local

Market

Local

Buyer

SME Park

Center • Biz Services

• Facilities Mgmt• Tech Services• Amenities

Overseas

Markets or

Manufacturers

Exporter

RGCSME Park Project

Support &

Promotion

RGC“Made in Cambodia”

product promotion &

SME Promotion

Suggested Support & Incentives➢ PPS Think tank. Product R&D at Clusters using local agro inputs

(bone implants can be made from cassavas, Sacha Inchi is a “superfood” .

➢ Investment Gap Financing for SME Cluster Developers ( i.e. FDI Investors)

➢ Block Chain. Allow for development and licensing for use in KH

➢ Entrepreneur support funds for promotion, skills and investment. Including

returning skilled tech workers

➢ SME Clusters are automatically granted SEZ and QIP status

➢ One Window Service improvements are made incl. SME Investment Board

➢ Management Information Systems and online access for SMEs started

➢ QSIP Incentives program for SMEs and Startup. Loan or credit guarantees

Suggested Support & Incentives

➢ Amnesty. SME business compliance must be assisted and without penalty for

those SMEs identified to participate in the Cluster.

➢ Incentives or exemptions which have meaning for the next generation SME

such as tuition assistance, education loans, training cost exemptions

➢ Incentives, subsidies or exemptions for SMEs providing worker amenities with

positive social benefits. (housing, transportation, meals, healthcare etc.)

➢ Eliminate informal competition and parallel imports. Enforce IPR Laws

➢ Concrete, aggressive activities to promote the “made in KH” label. Including

product testing and certification to international standards.

➢ Implement a meaningful SME Development Policy, SME Law and SME Board

➢ Build Environment of Trust and purpose with action and no more talk.

Thank You