Cambodian Journalists Alliance Association

New Digital Platform Introduced to Assist Informal Businesses and Improve Livelihoods

Street coffee stalls are a common sight in Phnom Penh on December 16, 2024. (CamboJA/ Pring Samrang)
Street coffee stalls are a common sight in Phnom Penh on December 16, 2024. (CamboJA/ Pring Samrang)

The Ministry of Industry, Science, Technology and Innovation (MISTI) launched the “Digital Platform for Onboarding the Informal Economy” on December 16 to identify and support the informal economy, enabling targeted interventions during crises. Entrepreneurs hope the initiative will help sustain their businesses, many of which rely on private loans to operate.

During the COVID-19 pandemic, informal traders said they did not receive support packages, and many entrepreneurs turned to the banks as well as private loans to restart their operations. Prime Minister Hun Manet acknowledged the challenges faced by the government in providing targeted assistance during the pandemic due to the lack of a comprehensive database of formal and informal businesses.

He emphasized that registering informal economy workers would allow the government to gather clear data for targeted and timely interventions in crises, such as natural disasters or pandemics. The initiative also aims to provide the informal economy with access to various support mechanisms, including formal financial services, skills development programs, and social protection benefits like healthcare.

“By registering the informal economy, the government will have the capacity to deliver rapid and targeted support to informal economy workers during crisis,” Hun Manet said during the platform’s launch.

With regards to this, the government introduced a “Sub-Decree on the Onboarding of the Informal Economy,” to recognize businesses in the informal economy through a certificate of registration.

The initiative came up amid a lack of a comprehensive database, which has proven a challenge in ensuring efficiency, accountability, and transparency in government interventions, Hem Vanndy, MISTI Minister said. 

“Preparing a database and enabling informal economy workers to register themselves is crucial for promoting economic diversification, reducing poverty, and addressing social inequality,” Vanndy added. 

According to Hun Manet, the informal economy can register for free, and operators with an annual turnover of approximately $60,000 are exempt from taxation. 

To facilitate registration, informal economy workers can use the CAM-IE Mobile App or the Web Portal, ensuring a streamlined and accessible process for onboarding into the formal economy.

Peou Vorleak, Undersecretary of State of MISTI and director of the Coordination Committee for Informal Economic Development, told CamboJA that it was important to register with the digital system as it offers a certificate of informal economy registration with legal value. It opens access to government support, including soft loans and investments to expand the informal economy.

The government will help in accordance with collecting data on informal economy workers to provide targeted support during times of crisis.

“We know that Cambodia’s actual experience during the COVID-19 pandemic has shown that informal economy workers are the most vulnerable group,” she said.

A stall selling bread on a street in Phnom Penh on December 16, 2024. (CamboJA/ Pring Samrang)

Chhin Yong, a fresh fruit seller, told CamboJA News that she was unaware of the Digital Platform for Onboarding the Informal Economy but was excited about it, noting that she would be happy if it provided tangible support to informal workers.

After the pandemic, Yong had to take out high-interest private loans to restart her business. “At the time, we borrowed to expand our business. I’ve been struggling since then,” she said.

She also urged the government to focus more on supporting the informal economy, suggesting measures such as access to capital or collaborating with banks to offer low-interest loans.

Similarly, another seller, So Borey, said she had no knowledge of the program. She too experienced severe financial difficulties during and after the pandemic, and did not receive any assistance.

“When we started our business, we borrowed money from others. During the crisis, we couldn’t borrow money, so we had no goods to sell,” she explained.

Borey added that if the registration program were recognized by the government and private sector, it could greatly benefit businesses, especially facilitating access to capital.

Vorn Pao, president of Independent Democratic Informal Economy Association (IDEA), told CamboJA that it is also a contribution by the government to manage data for informal economy workers. 

He said the sub-decree also includes training opportunities in informal economy businesses which benefit workers, and enable the government to collect accurate data to provide targeted support. Additionally, he sees the government’s role in managing data to collect tax from informal economy workers.

That said, he thinks that online business registration is challenging, particularly the National Social Security Fund (NSSF) still has limited understanding. He added that the sub-decree requires identification documents, photos of business premises, and income data, which complicates the process.

“If the government does not provide training and skills to use the digital system, it will be a major obstacle,” Pao said.

He said for increased digital registration, there must be clear education and support to ensure they understand and use the system effectively. Additionally, providing capital is crucial due to the declining economy and struggling businesses. Training is necessary to help them manage and develop their businesses more effectively.

However, he observed that the main problem informal workers still experience is driven by the economic downturn caused by a decline in tourism. Another significant issue is the loss of income due to a large number of foreigners taking over traditional jobs of informal traders, which creates difficulties in running their businesses. 

The uncertainty often forces them to move their operations frequently. Additionally, climate change poses another challenge. 

“Other problems related to the modern technology era are also a problem because many of them do traditional businesses,” Pao added.

Hong Vannak, an economics researcher at the Royal Academy of Cambodia’s (RAC) International Relations Institute told CamboJA that digitizing the informal economy was a significant step, where the government takes responsibility for the informal economy and data management. 

He said registering informal workers is crucial in order to understand their needs and manage their resources effectively. It helps the government address the needs and support economic growth, especially through tax contributions from informal sectors.

“The important task of the state, which is to pay attention and monitor closely, is to help promote the systems and functions outside the economic system, and not leave them behind. However, we [the government] need to manage the numbers,” he said.

Vannak stated that the ministry must clearly define the responsibilities of each cluster or institution. The tasks should be set to promote the system externally, with clear principles to guide contributions and avoid ineffective policies, he added.

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