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views or policies of the Asian Development Bank


Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy
of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with
ADB official terms.

Discussion on Paper “Connecting Cambodia’s


SMEs to Regional Value Chains: the ‘bridging
gap’ and ‘missing link’”
SOK Kha, PHIM Runsinarith, KEO Socheat, and KIM Veara

ADBI’s Project: “Trade, Global Value Chains and


Small and Medium-Sized Enterprises”
February 6-7, 2020, ADBI, Tokyo, Japan

Sothea Oum
Consultant, UNDP and National University of Management, Cambodia
Contribution of the Paper
2

1. Provide comprehensive understanding of what has


worked – the ‘bridging gap’, and what has not – the
‘missing link’, in terms of promoting value chain
participation of SMEs in Cambodia.
2. Methodology – qualitative, desk research, World
Bank’s Enterprise Surveys database, relevant
economic and surveyed data, and interviews with
nine selected experts – in academia, think tank,
practitioner, and government
Framework
3
Key Findings
4

o Overall constraints
o Financing, adequately educated workforce, crime
o Infrastructure constraints: electricity and
transportation.
o Business regulation: corruption, anti-competitive and
informal practices, regulatory policy uncertainty,
tax rates and tax administration, customs and trade
regulations, and business licensing, operating
permits, labor regulations, courts system
Key Findings
5
o Bridging gap and missing links based of the constraints
o Some improvement in business regulation and regulatory practice, in certain
aspects of corruption practice, tax administration, and anti-competitive
practice. Widespread corruption and other remaining business regulatory
constraints, informality issue prevails and remains an obvious ‘missing link’.
o Better access to finance but at high cost
o Some progress in infrastructure and logistic upgrade – gaps
o Some improvement in customs and trade facilitation - the missing links include
the lack of streamlining and automation of trade-related procedures in other
government agencies, coordination issues
o Private sector capacity, still gaps, if not widening: weak corporate
governance, poor financial literacy, entrepreneurial mind-set, lack of
negotiation skills, networking. Production capacity, market access, financing,
inadequate quality and quantity of both raw materials and finished products,
information access, standard, and certificates issues.
o Regional and global environment
o Opportunities: ASEAN, RCEP, Connectivity, BRI, “X plus 1”, Industry 4.0
o Risks – Trade preferences, Everything but Arm – EBA, overdependence on
China
Some suggestions
6

1. GVC participation
o More in-depth discussion, at the industry (TiVA)
and firm level if possible
o Explore more the World Bank’s Enterprise Surveys
database – panel data
• Report importing and exporting activities of
firm in the sample – proxy for GVC
• Highlight key characteristics by GVC firms –
informality, productivity, labor forces, etc…
Some suggestions
7

2. Bridging Gaps and Missing links


o More evident to make case for promoting value
chain participation of SMEs in Cambodia – not
automatic
o Using TiVA and World Development Indicators
• Participation rate, backward, and forward
indices
• Human capital, infrastructure, logistics, business
environment etc.
• Panel regressions, synthetic control method…
Example – TiVA data
8

Total Participation in Backward Participation Forward Participation


GVCs
2005 2010 2015 2005 2010 2015 2005 2010 2015
Agriculture 21.8 16.2 16.1 21.1 15.7 15.4 0.7 0.5 0.7
Mining and quarrying 25.7 23.2 25.0 25.3 22.8 24.8 0.4 0.4 0.3
Food products and beverages 37.4 21.9 24.0 32.2 18.3 19.3 5.2 3.6 4.7
Textiles, leather and
47.4 41.7 41.0 45.3 40.7 39.0 2.0 0.9 2.0
footwear
Wood, paper, paper products,
17.1 14.3 17.1 16.6 13.6 16.6 0.6 0.6 0.5
printing and publishing
Chemicals and non-metallic
47.3 43.5 41.3 46.0 42.0 39.9 1.2 1.5 1.4
mineral products
Basic metals and fabricated
42.7 47.4 41.7 42.3 46.9 41.2 0.4 0.5 0.5
metal products
Machinery and equipment
42.7 42.5 39.6 42.4 42.0 39.1 0.4 0.5 0.5
n.e.c
Electrical and optical
43.3 42.8 42.3 42.0 41.3 39.8 1.3
equipment 1.6 2.5
Transport equipment 39.2 39.0 37.5 38.6 38.1 36.3 0.6 0.8 1.3
Manufacturing n.e.c;
35.9 34.0 27.6 35.1 32.9 26.9 0.9 1.1 0.7
recycling
Wholesale and retail trade;
10.4 16.7 17.4 9.6 16.0 16.7 0.8 0.7 0.7
hotels and restaurants
Transport and storage 27.4 27.6 32.1 27.0 26.7 31.3 0.5 0.8 0.8
Financial intermediation 11.0 12.5 13.3 10.9 12.4 13.1 0.1 0.2 0.2
Information and
14.0 17.2 19.6 13.8 16.7 19.3 0.2 0.4 0.3
communication
Other business services 11.2 13.3 13.1 11.0 13.0 12.8 0.2 0.3 0.3
Public administration and
15.6 14.5 13.7
other services 15.6 14.4 13.6 0.1 0.1 0.1
Source: OECD Stat, Online database 2018 edition.
Thank you very much for your
attention