PM urges MSMEs to gear up for LDC graduation

PM urges MSMEs to gear up for LDC graduation

The government remains committed to ensuring MSMEs are equipped for the next phase of economic transformation, especially as Cambodia prepares to graduate from LDC status.

Prime Minister Hun Manet yesterday called on Cambodia’s micro, small and medium enterprises (MSMEs) to prepare for a new chapter in the country’s economic history, urging them to adapt, innovate and comply with international standards as the Kingdom heads toward graduating from Least Developed Country (LDC) status by 2029.

In a message released to mark the 2nd National MSME Day under the theme ‘MSMEs Readiness for LDC Graduation’, the Prime Minister stressed the importance of the sector and encouraged business owners to embrace reforms to remain competitive in a rapidly changing global landscape.

“On behalf of the Royal Government, I am pleased to join the celebration of this important national day, which reflects our continued support and appreciation for MSMEs—the backbone of our economy and key drivers of social development,” he said.

MSMEs, which account for the majority of registered enterprises in Cambodia, play a central role in job creation, income generation, poverty reduction and economic diversification. According to the Ministry of Industry, Science, Technology and Innovation (MISTI), nearly 1,300 new MSMEs were registered in 2024, pushing the total to approximately 44,000 enterprises, employing more than 476,000 workers across the country.

However, despite this growth, the sector also faced challenges. A total of 1,950 MSMEs ceased operations in 2024, resulting in a net loss of over 13,500 jobs. Even so, MISTI noted that 25,833 new jobs were created through new registrations and licences.

Mr Hun Manet acknowledged the sector’s mixed performance but emphasised that the government remains committed to ensuring MSMEs are equipped for the next phase of economic transformation, especially as Cambodia prepares to graduate from LDC status—a milestone that will bring both opportunities and tougher global requirements.

“MSMEs must view the LDC graduation not as a threat but as an opportunity to upgrade and integrate more deeply into global value chains,” Mr Hun Manet said, adding, “The reality is that the trade preferences and development assistance that Cambodia has relied on will be gradually reduced. That is why compliance with international standards is no longer optional—it is essential.”

He stressed the importance of investing in technology, skills development, and innovation to meet new demands and rising consumer expectations, noting that compliance with quality, safety, hygiene, and productivity standards would be key to unlocking future growth.

“The market now demands more than just low-cost production. We must produce goods and services that meet global benchmarks. This requires a shift in mindset and a willingness to modernise operations,” he added.

The Prime Minister also pointed to recent progress in digital finance and inclusion. Through initiatives such as the National Bank of Cambodia’s Bakong payment system, over 1.5 million self-employed individuals have gained access to digital transactions via QR code issuance. MSMEs now account for 36.3 percent of total credit in the banking system, equivalent to approximately 85,330 billion riel.

In another notable development, more than 70,000 informal economy workers have registered with the government in the past six months, allowing them to benefit from public services and financial support. Officials say this reflects growing awareness of the benefits of formalisation and the government’s broader push to bring more businesses into the formal economy.

MISTI Minister Hem Vanndy said recently that the government has been working on multiple fronts to improve the regulatory environment and streamline service delivery. These efforts include decentralizing registration services, expanding digital tools, and simplifying administrative procedures for small businesses.

“The Ministry’s role extends beyond just MSMEs—we are working on strengthening the national quality infrastructure, science, technology and innovation, and productivity as a whole,” Hem Vanndy said. “All of these pillars contribute to building a more resilient and competitive economy.”

Despite global headwinds, Cambodia’s economic fundamentals remain solid, with GDP growth reaching 6 percent in 2024 and forecast to climb to 6.3 percent in 2025. The industrial sector remains a strong contributor, with an 8.5 percent growth rate last year and a projected 8.6 percent expansion in 2025.

Mr Hun Manet stressed that the road to LDC graduation will be challenging, but the government is confident in Cambodia’s ability to meet its goals with the participation of all stakeholders, public and private alike.

“Our success depends on the readiness of our enterprises – big and small – to embrace change, build trust with international partners, and adapt to an increasingly complex economic environment,” he said.

He concluded the message by calling on all MSME owners, associations, and sector stakeholders to collaborate closely with the Ministry of Industry, Science, Technology and Innovation to build a stronger, more integrated MSME ecosystem.

“The Royal Government strongly hopes that this 2nd National MSME Day will inspire renewed energy and serve as a catalyst for transformation,” he said. “We stand ready to support MSMEs on this journey, as they are not only essential to our current growth—but central to our future as a resilient, inclusive and competitive economy.”

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