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The Royal Government of Cambodia has undertaken a series of broad-based reforms aimed at strengthening and diversifying the productive sector base and achieving economic/trade-related competitiveness growth. These strategic objectives are enshrined in the national development agenda, articulated by the Rectangular Strategy IV, the National Strategy Development Plan (2019-2023), the Cambodia Trade Integration Strategy Update (2019-2023), and the Cambodia e-commerce strategy which has been launched in November 2020. A common thread running through these policy instruments is the recognition of E-commerce as a driver of private sector growth, both from a domestic-market and international trade perspective.
The potential for e-commerce development is significant in Cambodia, promising to diversify the economy, provide new jobs, and increase financial inclusion, as well as contributing to improved lives and livelihoods. Cambodia has considerable advantages that could be leveraged to create ICT jobs and benefit the national economy. Yet E-commerce is relatively undeveloped compared to Cambodia’s neighbors and has not yet contributed to export diversification despite its potential in particular for agricultural commodities, handicrafts, and garments.
Some important considerations have been noticeably constrained the future growth in this sector, though. SMEs, in general, face a lot of challenges ranging from the lack of proper status, high transaction costs, to uncertainty related to incentives and regulations, and particularly e-commerce firms, IT start-ups and other segments in newly emerging areas. Remarkably, access to finance is reportedly the most burdensome and challenging for SMEs to find in the formal lending sector.
In this context, UNDP in collaboration with co-financing support from the Ministry of Commerce, Enhanced Integrated Framework (EIF) and Khmer Enterprise jointly implementing a key components of Cambodia’s e-commerce acceleration project (Go4eCam) that aims to boost domestic and international opportunities for small and medium enterprises through a digital platform. Under this component, there are two initiatives: the MSMEs Incubation on Digitalisation Programme and the Innovation Challenge Programme. The Incubation programme focuses on improving the basic functionalities and capabilities of MSMEs in their entrepreneurship to uptake the e-commerce solution to sell online domestically and internationally. Meanwhile, the Innovation Challenge will offer 70 awards, with a maximum prize of up to USD 5,000 per awardee, through the Innovation Challenge modality aiming at helping those MSMEs with no and little access to formal lending and to demonstrate the benefits the SMEs could gain by going digital and by doing so, they could reach out to wider markets and clientele.
Regarding the Innovation Challenge implementation status, the programme runs in two cohorts. Cohort 1 has completed the selection process by identifying 30 awardees, who will take three months to complete their innovation projects. In parallel, cohort 2 is calling for application until 15th May. It is expected that the remain 40 awardees will be identified through a complete selection process by late May or early June 2022. In accordance with UNDP’s private sector partnership principle, due diligence is a compulsory step to assess on potential risks associated with each private sector company as well as the partnership with UNDP.
Therefore, UNDP is currently seeking a National Consultant to perform due diligence for up to 70 MSMEs, who are selected awardees in the Innovation Challenge programme in both cohorts.