Chapter 1 CAMBODIAN SMALL AND MEDIUM SIZED ... - ERIA

Preventing smugglingTo lessen the incentive to would be smugglers both the penalty and possibility of beingcaught could be increased. Cambodia has an anti-smuggling task force, but due tocultural norms and the low pay of officials, many smugglers get away with paying abribe rather than significant penalties, even if caught. The capacity of theanti-smuggling task force needs to be strengthened. They need to have the ability andwillingness to challenge anyone caught smuggling.The ADB suggests a number of measures for improving the efficiency of theanti-smuggling task force. Employees of the task force should receive more training and,as with the judiciary, better formal rewards for doing their job. Controls at both bordersand at product destinations, such as stores and markets, need to be strengthened.Regulations requiring Khmer labelling should be firmly enforced. 615.2 Access to FinanceThe 2006 World Bank Doing Business report ranks Cambodia at 174 out of 175countries for ease of getting credit. This ranking was based on the strength of legalrights and the availability of credit information. 62Access to finance is also a primary issue as identified by a number ofcommentators, including the ADB and the Cambodian Development Resource Institute.Cambodian firms receive over 98 percent of their capital through informal sources. 63 In2004, only about one percent of investment capital and slightly more than one percentof working capital was provided by commercial banks. 64 This increases the cost ofcapital, limits the size of loans, and reduces the period money can be borrowed for,restricting the ability of SMEs to purchase productive capital.Data shows that loans are more common in the manufacturing sector, but this islikely a result of borrowing by large garment factories rather than SMEs.According to the Cambodian Sub-Committee, SME access to finance isconstrained by four main factors. 6522