Monday, 15 July 2024 – In this webinar, Dr Sothea Oum and Dr Phouphet Kyophilavong shared their views on the state of SMEs’ participation in the digital economies of Cambodia and Lao PDR. They discussed some of the ongoing challenges facing SMEs in adopting digital technologies and offered policy assessments and recommendations for the digital transformation of SMEs in the two countries.
ISEAS – ERIA JOINT WEBINAR
Small and medium-sized enterprises (SMEs) account for more than 90% of total enterprises and about 70% of total employment in Southeast Asia. Recognizing the importance of SMEs, governments in the region have implemented various policies to enhance the participation of these businesses in the digital economy. To discuss the state of SME participation in the digital economies of Cambodia and Lao PDR, the Regional Economic Studies Programme of the ISEAS – Yusof Ishak Institute, in collaboration with the Economic Research Institute for ASEAN and East Asia (ERIA), organized a webinar featuring Dr Sothea Oum, Senior National Economist and Consultant at UNDP Cambodia, and Dr Phouphet Kyophilavong, Professor of Economics and Business Management at the National University of Laos. The event was moderated by Dr Cassey Lee, Senior Fellow at ISEAS.
Dr Oum initiated the discussion by presenting the current economic outlook in Cambodia. He noted a significant decline in sales and profit by 86%, accompanied by a 14.3% increase in debt. Consequently, micro, small, and medium-sized enterprises (MSMEs) have reduced employment, increased marketing efforts, and scaled down their operations. To support MSMEs, the Cambodian government introduced a strategic framework and program for the post-COVID-19 era (2021-23), referred to as the “3Rs” strategy: Recovery, Reform, and Resilience. Additionally, they established the “SMEs Go Digital Supporting Hubs” to provide training, consultation, and act as intermediaries connecting digital service providers with businesses.
The new policy, Cambodia Digital Economy and Social Policy Framework (2021-35), further supports SMEs’ digital adoption through 139 policy measures focusing on six key areas aimed at advancing the digital economy. Dr Oum emphasized the importance of digital technology adoption, defined as the use of online platforms for sales and marketing or digital payment systems. Despite the benefits, smaller firms face challenges such as lack of finance and skilled personnel.
Dr Kyophilavong highlighted that Laos has experienced high economic growth over the past decade, though the impact on poverty reduction remains low. He discussed the government’s measures to counteract the Dutch disease and provided an overview of the economic situation in Laos. Dr Kyophilavong then focused on the challenges faced by MSMEs in Laos, including high competition due to regional economic integration and international trade agreements. The high cost of internet access, lack of high-speed internet infrastructure, and coordination issues further hinder digital technology adoption. The speaker also shared his research methodology and data, emphasizing the benefits of increased digital technology usage, particularly the use of computers, websites, and mobile payments.
The Q&A session began with questions mainly surrounding the implementation of digital technology. The speakers were posed a range of questions including: how can digitalisation benefit/hinder the government’s efforts to promote formalisation; whether formalisation affects digital adoption; what policies can be implemented to boost the adoption of cybersecurity and data protection safeguards amongst SMEs; whether digital infrastructure is the only way to implement digital payment or cloud solution appears to be an alternative; positive and negative effects of digital adoption. The webinar concluded with general comments from the speakers on the current state of digital transformation in their respective countries.