Around 600 SMEs from allover the country come to Phnom Penh and attend a one full day meeting with about 50 bankers and

micro-financiers to discuss issues related SMEs Access to Finance.The event is organized by SME Sub-Committee, Ministry of Industry Mines and Energy (MIME) in cooperation with National Bank of Cambodia, International Financing Corporation (IFC) and European Community (EC). This is a first national forum promoting business matching between SMEs and Financial Institutions, pointed out by a representative of MIME. The whole event was open and chaired by H.E. Suy Sem, Minister of Industry, Mines and Energy and Chairman of the SME Sub-Committee.

The forum started with key speakers from relevant ministries and institutions presenting about strategic policies and overall picture related to SMEs Access to Finance, then followed by discussion on challenges and issues of both SMEs and Bankers in promoting SME Access to Finance. The forum concluded with key recommendations to build bridging between SMEs and Financing sectors and ways forward in promoting SME lending.
During the closing session of the forum, H.E. Meng Saktheara, director general of industry, reported the forum results as summarized below:

1. SMEs facing the following key issues and challenges:
   1. Lacking access to capital and high capital cost in starting and expanding business
   2. High bureaucracy and high cost in processing documents
   3. Low skill, low productivity coping with high production cost and high interest rate make SME un-competitive comparing to import products.
2. Banks facing the following key issues and challenges:
   1. Compliance with regulation in financing sector in providing loans
   2. Responsible for protecting the depositors
   3. c. Compliance with professional ethics and high standards which make documents and procedures more sophisticated for SMEs
   4. d. Most SMEs are informal business without appropriate accounting practices or records credible to banks
   5. Lack of implementing regulatory framework to implement leasing law, such as there is no commercial court to settle issues rose from business contracts.
3. SMEs requested 4 key areas for improvement:
   1. Reduce red-tape and simplify lending procedures for SME business
   2. Increase lending amount
   3. Expand long term repayment period
   4. d. Reduce interest rate
4. Forum recommend the following actions should be taken to address demands of SMEs and Banks in SME Access to Finance:
   1. What banks can do more to promote SME access to finance?
      1. Take appropriate risk sharing and establish specific lending schemes that are favorable for SMEs
      2. Consider providing long term period lending (more than 3 years)
      3. Reduce interest rate
      4. Consider taking other types of mortgages such moveable assets, in addition to fixed asset.
   2. What SMEs can do more to get improved access to finance?
      1. Change culture of family based business toward corporatization with proper and credible business financial management system
      2. Build capacity and improve work skill
      3. Build credibility in business and financing
   3. What government and development partners can do to promote SME access to finance?
      1. Reduce red-tape and cost of compliance
      2. Improve regulatory environment
      3. Establish commercial court and promote effective implementation of leasing law
      4. Promote SME capacity building
      5. Develop risk sharing mechanism for supporting starting up business by SME, especially during the first period of 1-3 years
5. What should we do next after this forum?
   1. SMEs can use the initial contact established through this forum to continue negation with banks for lending
   2. All parties understood the issues and actions should be taken, hopefully we can start from this point to make some actions happening
   3. Continue such meeting to retune actions and recommendations and to monitor progress and/or lessons learnt