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This survey of 63 firms in Phnom Penh aimed to document the status of the private manufacturing sector and the opportunities and constraints they faced. The authors then identified how Government, donors and firms could address these opportunities and problems.
Sample firms were private, registered, majority Cambodian-owned, Phnom Penh region manufacturing firms employing 20 workers or more. Managers were on average 45 years old, 65% were ethnic Chinese, and most had previous private sector experience. Formal business skills were low. Firms were typically independent family businesses, less than eight years old, employing an average of 35 workers, and with median annual revenue of $120,000. They were – with the exception of the garment sector - domestic-market oriented. While 40% did not use banks at all and two-thirds were in need of long-term loans, 70% were profitable and most were a growing source of new jobs with a median 25% annual increase in employees.
An inadequate banking system was deemed largely responsible for the sectors’ greatest problem, financing capital. Firms also complained of illegal competition, lack of enforcement of laws, and corruption. Cambodia’s difficult past and years of central planning and economic isolation had left the country with poor infrastructure, widespread corruption, no experience with rules-based market competition, and a severely underdeveloped business environment. Despite the success of the firms surveyed, they were found to be ill-prepared for global competition without significant improvements in many areas, which required Government support and the assistance of international donors and institutions such as the IFC and MPDF.
