In 2018, the total number of registered Small and Medium Enterprises (SMEs) was 155,745. More than 90 percent of registered firms in Cambodia are SMEs. However, despite being vital to the socio-economy, 95 percent are not registered yet. By 2025, 80% and 95% of small and medium enterprises are expected to register with the government, while 50% and 70% of small and medium enterprises should have accurate accounting records and balance sheets. The figure below illustrates a share of officially registered businesses with proper balance sheets in 2010 and future projections.
Table 1: Registered SMEs and SMEs with balance sheets
|Size/type of enterprise||Officially registered (%)||Enterprise with balance sheet (%)|
This information toolkit is developed to aid entrepreneurs in Cambodia access open data – data collected for public use and serve public interest. Within this information toolkit, there are:
- General information where readers can find useful information about startups and SMEs in general, such as legal definition, the importance for socio-economy, tax incentives and other regulations, prioritized sectors, challenges, and government responses;
- Related contents on Open Development Cambodia’s website such as relevant daily news update, public announcements, legal documents related to startups and SMEs, industry and sector-specific information, an interactive map that aid the informed decision of startups and SMEs, and other profile pages covering related various information;
- Registration process that provides comprehensive information, particularly targeting the new registration method; and
- Other actors and resources available for further research to gather resourceful information from both local and international sources.
- Open data: Open data is based on the simple premise that data collected for public use and serving the public interest should be made publicly available without restrictions. Open data is very important to allow enterprises, especially startups and SMEs, to have well-informed business decisions with low possible risk. Learn more: How open data develops business opportunities in Cambodia.
- Startup: A startup refers to an emerging company or enterprise founded by a single or a group of entrepreneurs and is in the first stage of its operation. A startup offers a service or product that is believed to be in high demand. A startup is generally in the first stage before upgrading into a micro or small enterprise. Learn more at Investopedia.
Table 2: Sectoral based MSMEs classification in Cambodia
|Manufacturing||FTE Workforce Count||1-2||3-49||50-499|
|Assets (excluding land)||$50,000 and below||$50,000 – $500,000||$500,000 – $1,000,000|
|Agriculture, Forestry and Fishing||FTE Workforce Count||1-2||3-49||50-199|
|Assets||$50,000 and below||$50,000 – $500,000||$500,000 – $1,000,000|
|Wholesale and Retail Trade||FTE Workforce Count||1-2||3-49||50-199|
|Assets (excluding land and buildings)||$50,000 and below||$50,000 – $500,000||$500,000 – $1,000,000|
|Other services||FTE Workforce Count||1-4||5-49||50-99|
|Assets (excluding land)||$50,000 and below||$50,000 – $500,000||$500,000 – $1,000,000|
|Other activities||FTE Workforce Count||1-9||10-49||50-199|
|Assets||$50,000 and below||$50,000 – $500,000||$500,000 – $1,000,000|
FTE = Full-time equivalent
Source: Asian Development Bank’s Asia SME Monitor 2021 Database
Importance of startups and SMEs
Many developing economies have long considered startups and SMEs the essential drivers for economic growth. In Cambodia, too, SMEs are a crucial part contributing to both economic and social development. An apparent government effort to promote SMEs in the Kingdom is adopting and implementing the SME Development Framework by the SME Sub-Committee of the Private Sector Steering Committee, approved by the Council of Ministers in 2005, and launched in 2006. More efforts are as follows:
- Sub-decree No. 50 on custom incentives for SMEs
- Sub-decree No. 17 on tax incentives for voluntarily registered SMEs
- Sub-decree No. 124 on tax incentives for SMEs in prioritized sectors
- Prakas No. 159 on the implementation guidelines of sub-decree on tax incentives for SMEs in prioritized sectors
- Prakas No. 009 on the classification of taxpayers according to the self-declaration regime
- Prakas No. 025 on the adjustment of taxpayers classification according to the self-declaration regime
- Prakas No. 496 on tax registration
- Prakas No. 319 on tax measures to reduce the impact of challenges on the textile industry
Table 3: Socioeconomic contribution of SMEs (2018 data)
|Employment||Number of company||GDP|
Source: Annual report of Ministry of Industry and Handicraft 2018
Tax incentives and prioritized sectors
Under Sub-decree No. 124 adopted by the Office of the Council of Ministers in 2018 supported by Prakas No. 159 on the implementation of the said sub-decree stated the six prioritized sectors to be entitled to receiving special tax incentives as follows:
- Agricultural and agro-industrial products
- Food production and processing
- Manufacturing of local consumer goods, waste recycling, and production of goods for tourism
- Manufacturing of final products, parts, or components to supply other manufacturing industries
- Information Technology (IT), Research and Development (R&D), including the provision of innovative IT management services
- Enterprises located in the SME Cluster and enterprises that develop the area
SMEs operating in any of the aforementioned prioritized sectors will receive:
- Up to three years of profit tax exemption from registering for newly registered enterprises or from the date of tax update for already registered enterprises or
- Up to five years profit tax exemption from the date of registering for a newly registered enterprise or from the date of tax update for already registered enterprises under any of the given conditions:
- Use up to 60% of local raw materials or
- An increase of at least 20% of employee or
- Be located in SME Cluster.
- Exempt from installing profitable and minimum taxes during the profit tax break period.
- Incentives for deductible expenses are as follows:
- 200% expense deduction on the use of accounting records through the information technology system
- 200% expense deduction on training, accounting, or technical skills training for employees
- 150% expense deduction on the cost of investing in innovative machines, or technological equipment to serve and increase production productivity.
Challenges and government responses
Access to finance: One of the most challenging problems that SMEs face is access to finance and long-term investment. To tackle this problem, the government of Cambodia responded by creating a state-owned financial institution called SME Bank to allocate funds to SMEs for their development and growth. In early 2022, through the Ministry of Economy and Finance, the government allocated more funds to SME Bank for another 50 million USD to continue the so-called SME Co-financing Scheme (SMECFS) Phase 2 after the successful implementation in Phase 1. SMECFS is a program led by SME Bank with other private Participating Financial Institutions (PFIs). This move is an effort to continue supporting SMEs to boost this sector after the Covid-19 pandemic.
Technical knowledge and skill: The lack of human resources, skilled labor force, technicians, and engineers discourage the Kingdom from absorbing potential SMEs that utilize modern technology for industrial development. In response to this challenge, the government has established institutions to support entrepreneurs and build human resources namely the Khmer Enterprise and Techo Startup Center to equip Cambodians with entrepreneurship – a skill needed to operate an enterprise, and Skill Development Fund – a program to focuses on building human resources needed for the development of this sector.
- Regional competition: Another challenge that affects Cambodian SMEs is regional competition. Some other ASEAN countries have more competitive advantages in terms of labor cost, electricity price, human resources readiness, and the needed skill sets. In response, the government of Cambodia, through the Ministry of Industry, Science, Technology and Innovation (MISTI), integrated an open-data website for Cambodian entrepreneurs and enterprises to access wider information on SMEs at the regional level. This integration and joint information sharing of SMEs-related data are crucial for ASEAN’s SMEs to mitigate the gap caused by unfair competition due to the lack of information and information sharing platforms. Entrepreneurs can seek the necessary information from inside the ASEAN with ASEAN Access.
Open Development Cambodia (ODC) is an ‘open data’ website, an independent online hub, and a ‘one-stop shop’ that provides the public with up-to-date and accurate information about Cambodia and its socio-economic development. Following an ‘open data’ approach, all materials and information found in ODC are freely usable and downloadable to reuse and republish as the users wish. ODC is a neutral and unbiased organization; therefore, ODC does not promote any particular perspective or agenda other than to provide objective information about Cambodia and its development. Learn more: How ODC helps business.
All information and data that exist on this information toolkit are informative and objective for startups and SMEs to navigate the necessary steps to open and register a legal business with well-informed decisions and risk mitigation.
- News update
Under this section, ODC provides an up-to-date news summary from different local news sources such as Khmer Times, Phnom Penh Post, and other reputable local and international sources. For news related to startups, visit this link. For news related to SMEs, visit this link.
- Public announcements and legal documents
Other than summarizing news articles, ODC also publishes legal documents such as but not limited to announcements, Prakas, circulars, and Sub-decrees on various socioeconomic issues, including SMEs. To access the documents, visit this link.
Under industry topics, there are more topics such as manufacturing, agriculture, real estate, and tourism. There, users can find related information on those sectors. To read the topics, visit this link.
- Interactive maps
ODC digitizes data into an interactive map that displays the presented data and information in a more engaging and interactive way so that users will find it more effective and time efficient to navigate and download the needed information. Relevant interactive maps that ODC has digitized and published are such as but are not limited to, access to water, health facilities, public transport, etc. To navigate and download the interactive maps, visit this link.
Interactive map of local business and One Window Services Offices (OWSO) across the country
ODC provides various datasets on different issues that may correlate with starting a startup and opening SMEs. Those profile pages highlight important information and the location of economic land concessions, special economic zones, sub-national infrastructure project implementation, access to public service information, and social accountability.
Registering a new business is crucial because it allows the business owner to:
- Personalize the business’s identity,
- Avoid fines and business closure,
- Receive legal protection,
- Attract corporate customers and partners. After all, they most likely cooperate with registered businesses more than with unregistered ones since it is safe and legal,
- Ease access to a bank loan and investment,
- Get benefits for the employees from National Social Security Fund (NSSF),
- Fulfill obligations as a legal citizen under Cambodian laws and regulations,
- Contribute to national development through taxation.
To register a new enterprise in Cambodia; first, it is important to review different types of structures and decide which one is the most suitable. There are five types of business or enterprise structures and three types of limited liability companies. Second, an entrepreneur will have to look for a name and reserve it before the registration or register right away.
Table 4: Type of business registration
|Type of Business||Type of Limited Liability Company|
|A sole proprietorship||A single-member private limited company|
|A partnership||A private limited company|
|A branch office||A public limited company|
|A representative office|
|A limited liability company|
In Cambodia, there are two ways to register a new business. One is through relevant ministries or government institutions on their respective platforms. Another is via a newly launched government-owned “Single Portal” created by the Ministry of Economy and Finance using Cambodia Data Exchange (CamDX) system.
Registering a new business via an old method is systematically complicated, and the documentation process is duplicable, time-consuming, and costly. To understand the registration process for new businesses using the old way, please refer to the steps below:
- Step 1: Register at the Ministry of Commerce to obtain a certificate to begin a new business. Registering new business at the Ministry of Commerce, visit this link.
- Step 2: Register for tax certificates at the General Department of Taxation. Registering for a tax certificate at the General Department of Taxation, visit this link.
- Step 3: Register for an official letter of business opening at the Ministry of Labor and Vocational Training. Visit this link to register your business at the Ministry of Labor and Vocational Training as a new user, or log in via this link if you already have an account.
- Step 4: Register for a specialized license/certificate at the relevant line ministries by visiting their respective website, given the nature of the business.
The “Single Portal”
In 2021, led by the Ministry of Economy and Finance, the Royal Government of Cambodia introduced a newly created system called “Single Portal.” All four steps can now be done, paid, and certified at once with the new information technology platform. The single portal is a government online portal designed and operated to ease business registration in Cambodia through an online platform.
The new business registration platform is divided into 2 phases. The first phase consists of several government ministries and institutions: the Ministry of Commerce, the General Department of Taxation, the Ministry of Interior, the Council for the Development of Cambodia, and the Ministry of Economy and Finance. In the second phase, the Single Portal will incorporate more registering agencies aiming to register specialized licenses, certificates, permits, or Prakas to companies after already registered with the institutions mentioned above. The new government institutions to be incorporated in the second phase are the Ministry of Tourism, the Ministry of Industry, Science, Technology and Innovation, the Ministry of Post and Telecommunications, and the Real Estate Business and Pawnshop Regulator of the Non-Bank Financial Services Authority.
- To register your new business through “Single Portal,” visit this link.
- To learn more about registering a new business using “Single Portal,” visit this link to watch the introduction video.
Table 5: License type and ministry or institution in charge
|Type of License||Ministry/Institution|
|Ministry of Tourism|
|Ministry of Post and Telecommunications|
|Ministry of Industry, Science, Technology and Innovation|
|Real Estate Business and Pawnshop Regulator of Non-Bank Financial Services Authority|
While most enterprises and businesses are required to register at the three government institutions namely, the Ministry of Commerce, the General Department of Taxation, and the Ministry of Labor and Vocational Training, some other businesses may need to go through other ministries or government institutions in addition to the above-mentioned three to get their businesses legally registered and licensed. To understand what type of business or enterprise to register at which ministry, see the table below:
Table 6: Sectoral based SMEs and ministry in charge
|Ministry of Agriculture, Forestry, and Fishery|
|Ministry of Industry, Science, Technology and Innovation|
|Ministry of Tourism|
|Ministry of Public Works and Transport|
|Ministry of Health|
|Ministry of Mines and Energy|
|Ministry of Land Management, Urban Planning and Construction|
Source: Technical report 2007 by SME secretariat.
|Ministry of Industry, Science, Technology & Innovation (MISTI)||MISTI is the lead ministry overseeing SMEs registration and operation in Cambodia. MISTI provides open data on industry, science, tech, and innovation progress, development, and challenges.||Link|
|Ministry of Agriculture, Forestry, and Fishery (MAFF)||MAFF oversees and promotes agricultural, forestry, and fishery-related activities. MAFF provides public data on agricultural, forestry, and fishery-related progress and development. MAFF publishes guidelines on promoting and increasing the productivity of the abovementioned sectors.||Link|
|Small and Medium Enterprises (SMEs) Sub-Committee||The SMEs Sub-Committee was established in 2004 under a sub-decree as an inter-ministries committee mandated to organize SME development strategies and coordinate activities with donors. The SME sub-committee is chaired by MISTI and has 18 ministries as members.||N/A|
|Ministry of Commerce (MOC)||MOC offers commercial-related services such as certifying, licensing, listing, and registering large commercial enterprises serving the export market and registering a trademark and official branding. Besides commercial-related services, this ministry also bears other important roles to ensure market price stability and promote the export-oriented industry. Find an international market for local products and services, oversee international trade and intervene in the domestic market if necessary.||Link|
|Department of Business Registration||Under the administration of the Ministry of Commerce, the Department of Business Registration has a crucial role in registering the business in the Cambodian market.||Link|
|Ministry of Labor and Vocational Training (MLVT)||MLVT’s role is to register an official business opening letter. Other than this, this ministry also deals with labor turnover and other benefits offered for workers such as the National Social Security Fund (NSSF) and more according to Cambodia’s Labor Law.||Link|
|Khmer Enterprise (KE)||KE is an implementation unit of the Entrepreneurship Development Fund (EDF) - a government trust fund mandated by the Ministry of Economy and Finance (MEF), to implement the support programs and directly work with partners and beneficiaries. It aims to mobilize, invest, and manage resources, from all legitimate sources, to support the development of a vibrant entrepreneurial ecosystem and provide financial and non-financial support to related entrepreneurial ecosystem builders.||Link|
|KhmerSME||KhmerSME was established under the leadership of MISTI to provide a digital information platform for MSMEs. KhmerSME provides micro-, small- and medium-sized enterprises (MSME) access to comprehensive business information, and ASEAN and global markets.||Link|
|Small and Medium Enterprises (SME) Bank of Cambodia Plc.||SME Bank is a commercial bank licensed by the National Bank of Cambodia in 2020 with a registered 100M USD capital to provide a reliable and sustainable banking system and financial support to all small and medium enterprises operating in the Kingdom. SME Bank offers loans to support the working capital with a 7% interest rate per annum.||Link|
|Agricultural and Rural Development Bank (ARDB)||ARDB is a state-owned bank and is classified as a commercial bank supporting the Agriculture Sector (Value Chain) in Cambodia.||Link|
|Startup Cambodia||Startup Cambodia is a national program led by the Ministry of Economy and Finance, which acts as a mechanism to support startups and promote participation in building a vibrant national entrepreneurial ecosystem.||Link|
|Credit Guarantee Corporation of Cambodia Plc. (CGCC)||CGCC is a state-owned enterprise established by Sub-Decree No. 140 ANKR.BK dated 1st September 2020. CGCC is operated under the technical and financial guidance of the Ministry of Economy and Finance.||Link|
|General Department of Taxation (GDT)||GDT is a revenue-collecting agency of the Royal Government of Cambodia overseen by the Ministry of Economy and Finance.||Link|
|National Institute of Statistic (NIS)||Under the administration of the Ministry of Planning, NIS is the focal point of statistical matters in Cambodia. The NIS compiles and consolidates statistics provided by decentralized offices and collects primary data through household and establishment surveys and population, agricultural and economic censuses.||Link|
|Institute of Standards of Cambodia (ISC)||ISC’s main duties are to circulate and certify standardization for local products and services.||Link|
|Techo Startup Center||Techo Startup Center aims to build viable early-stage emerging tech startups by igniting innovation and technology. The center will work with young talents to co-create startups.||Link|
|Skills Development Fund (SDF)||SDF is a newly adopted policy instrument envisioned to stimulate resource mobilization for demand-driven skill development and generate skilled laborers that are valued and needed by the market.||Link|
International Non-government Organizations (INGOs)
|Pact||Pact focuses on women's empowerment, innovation, and capacity development.||Link|
|Global Entrepreneurship Network (GEN)||GEN has the vision to build one global entrepreneurship ecosystem.||Link|
|Oxfam in Cambodia||Oxfam in Cambodia is committed to building a just and sustainable society through reduced poverty and inequality. Together with Khmer Enterprise and Platform Impact, Oxfam has launched a program called “Program Impact-Driven SME (PRISME)” that brings entrepreneurial solutions to tackle societal and environmental challenges by strengthening impact-driven enterprises and their local support ecosystem.||Link|
|Platform Impact||Platform Impact creates, develops, and empowers Impact-Driven Enterprises aiming to overcome poverty, reduce inequalities and maximize improvements in human and environmental well-being in Cambodia and Southeast Asia.||N/A|
|Federation of Associations for Small and Medium Enterprises of Cambodia (FASMEC)||FASMEC is a nonprofit organization working to enhance SMEs' promotion and development, and lobbying for a good business environment. FASMEC provides representation and protection of SME-related rights assured by Cambodian law.||Link|
|Cambodia Chamber of Commerce (CCC)||CCC provides a wide range of information related to business and investment in Cambodia, mainly on their trend and current development. Established under sub-decree no.16 in 2017, CCC performs the following roles: implements economic and trade policies, provides recommendations on economy and investment to be submitted to the government, is a negotiation partner with the government, makes the connection with the foreign-source economy, and finance, establishes and controls business and training institutes, and cooperates with regional and global chambers of commerce.||Link|
|ASEAN Access||ASEAN Access, with the tagline Your Business Information Gateway to ASEAN and Beyond, is an online portal serving as the first port of call for ASEAN SMEs and other businesses for information on trade and market access in ASEAN. It provides businesses interested in the ASEAN region with trade and market-related information, and access to support services necessary to penetrate new markets.||Link|
|Cambodian Women Entrepreneurs Association (CWEA)||CWEA provides a representative platform for women in business to bring issues to the attention and solution, facilitates the growth of business activity in which women are constructively involved, and provides networking opportunities for members, share information and met with stakeholders and manage industry-specific awards.||Link|
|Healy Consultants||Healy Consultants is a private company that assists multinational clients with business set up in over 200 countries.||Link|
|PRASAC Microfinance Institution||PRASAC is a private microfinance institution that participated with SME Bank in the SME co-financing scheme. It offers loans to SMEs with an investment capital of up to 840 million riels or 200,000 USD with a 7% interest rate for up to four years.||Link|
|Wing Bank (Cambodia) Plc||Wing Bank works closely with Khmer Enterprise to boost the operations of SMEs in four key priority sectors – agriculture, manufacturing, services, and ICT. As of 2020, Wing Bank has worked with more than 2,400 SMEs for collection and disbursement services. Wing Bank finances the operation of SMEs and especially those severely affected by Covid-19.||Link|
NGOs and social enterprises
|Open Development Cambodia (ODC)||ODC is an open data institution that provides information on various topics and issues from economic to environmental, government, social, and landing.||Link|
|Young Entrepreneurs Association of Cambodia (YEAC)||YEAC builds capacity, empowers entrepreneurs, constructively advocates, and engages the public.||Link|
|Global Entrepreneurship Network Cambodia (GEN Cambodia)||GEN Cambodia is the organizer of Global Entrepreneurship Week (GEW), the world's largest celebration of innovators and job creators, who launch startups that bring ideas to life, drive economic growth, and expand human welfare in conjunction with YEAC. The event displays the success stories of young entrepreneurs in Cambodia and their challenges, struggles, achievements, advice, and business models.||Link|
|Pact Cambodia||Pact Cambodia is a local chapter of Pact Global serving as a community-based organization that conducts awareness-raising campaigns for grassroots citizens in a targeted commune and district in Battambang province.||Link|
|Women Entrepreneur (WE) Act in Cambodia||WE Act Cambodia is a five-year project funded by USAID that supports young women in Cambodia's urban centers to realize their path toward empowerment and success as entrepreneurs and leaders in their communities. It provides technical and financial support to build entrepreneurship for women in Cambodia.||Link|
|Support Her Enterprise (SHE) Investment||SHE provides training and mentoring, access to info, finance, business info platform, research and consultation, women's empowerment, women's leadership, support for women micro-small entrepreneurs to scale up and create long-term social, environmental, and economic impact for people and communities.||Link|
|Ngeay Ngeay (Easy Easy)||Ngeay Ngeay (Easy Easy) is a business information platform that aims to make business registration information needed to register their businesses such as the registration process and tax obligation to be accessible in a clear and detailed way for all Cambodians, particularly female entrepreneurs. It provides every step of the business registration process.||Link|
|Geeks in Cambodia||Geeks in Cambodia is the first online media in Cambodia 100% focused on startups and new technologies. It provides daily content about technology, mobile, digital trends, social media, and startups.||Link|
|Startup Grind Phnom Penh||Startup Grind is a global startup community designed to educate, inspire, and connect entrepreneurs.||Link|
|Impact Hub||Impact Hub is the biggest community of change-makers in Cambodia working to inspire, connect and enable young Cambodians who want to have a positive impact in Cambodia through entrepreneurial initiatives.||Link|
|Business Information Center (BIC)||Business Information Center (BIC) aims to contribute to the development of sustainable & competitive Cambodian SMEs. BIC will promote transparency and effectiveness in implementing related laws and regulations for private enterprises.||Link|