How the Global Alliance for Trade Facilitation helped unlock opportunities for small businesses in Cambodia

Micro, Small and Medium Enterprises (MSMEs) are typically characterized as businesses with fewer than 500 employees, with micro and small ones having between one and 50 employees. These companies make up 90% of businesses globally and contribute 50% of the world's GDP.

In a country like Cambodia, where 99% of the private sector consists of small enterprises that contribute over 70% of employment and 58% of GDP, tackling trade inefficiencies could yield substantial economic benefits. Currently, only 10% of exports come from these businesses, but increasing their market share to 30% could boost exports by an additional $3.2 billion.

Despite their importance, small businesses often struggle to access international markets due to the high costs of infrastructure, marketing, distribution, compounded by complex compliance and regulatory barriers. However, technological advances, especially in online shopping, are alleviating some of these barriers by providing affordable digital storefronts and access to global customers without needing a physical presence.

Over the past decade, the Cambodian government has made significant strides to enhance the export potential of its small enterprises. Key initiatives include the 2019 e-commerce law and the 2020 e-commerce strategy. Combined with factors such as increased internet affordability and usage, these efforts are projected to expand Cambodia's e-commerce market to 2.9 million users by 2029.

Yet on a worldwide scale major challenges persist, as many countries continue to struggle with bureaucratic hurdles that slow down the efficient movement of goods. The Global Alliance for Trade Facilitation, a public-private initiative hosted by the World Economic Forum, ICC, CIPE and GIZ, is addressing these challenges by implementing projects to help small businesses participate in global e-commerce.

It supports governments in developing and least developed countries in implementing the World Trade Organization’s Trade Facilitation Agreement. By emphasising digitalization and delivering other best practices, Alliance projects enable businesses to trade more easily. Ultimately, this boosts trade competitiveness and business conditions, which are key drivers of inclusive economic growth and poverty reduction.

The Cambodian government recognizes that the success of e-commerce growth hinges on the country's ability to efficiently process the cross-border movement of small packages. Unlike multinational companies, small businesses often ship in small packages. Due to their size and frequency, these often present logistical challenges, requiring customs officials to efficiently manage data exchange, risk assessment and clearance procedures to prevent delays and ensure compliance.

In Cambodia, the customs and post office were not digitally linked, preventing the advance sharing of shipping information. Consequently, inbound shipments were temporarily stored until customs completed risk assessments and inspections. For outbound shipments, Cambodian customs could not provide pre-departure advice to destination authorities, increasing the risk of returned or destroyed items due to security measures in other countries.

The Global Alliance for Trade Facilitation, using an agile public-private approach, worked with Cambodia Post and Cambodia Customs to connect their digital systems by implementing an Electronic Advance Data platform. Establishing this digital link led to:

The Alliance also collaborated with the Cambodian Women Entrepreneurs Association to develop the e-logistics platform BoxShipper. Integrated with an e-commerce system, it facilitates access to postal and express shipping services for over 600 small businesses engaged in domestic and international online commerce. This streamlined solution serves as a comprehensive platform for tracking orders, receiving real-time shipping rates, generating shipping labels and customs forms, and processing online payments for service fees.

Taking advantage of the enhanced e-commerce landscape fostered by the project, the Alliance initiated capacity-building programmes known as Small Package Exporter Champions (SPEC) to bolster the export-readiness of small businesses. SPEC aimed to strengthen the online presence of small businesses and foster their participation in cross-border e-commerce, with a specific focus on small package exports.

Within one year of programme completion, 84% of participating small businesses actively engaged in domestic e-commerce, and 55% successfully exported their goods. Among those that successfully exported, 70% increased their number of customers, 60% increased their revenue, 70% increased their employees' wages, and 50% hired more employees.

Building on the success of this initiative, the Alliance has launched small business empowerment projects in the Dominican Republic and Malawi. In the Dominican Republic, these efforts are focused on enabling small businesses to participate in global value chains, access new markets and strengthen their capabilities. In Malawi, the focus is on enhancing the capacity of registered small businesses to engage in cross-border regional trade. Find out more about these projects here.

The challenges faced by small businesses are diverse and intricate. Addressing these challenges necessitates public-private partnerships. The Alliance actively seeks input from corporate partners present in emerging markets, keen to explore solutions-oriented approaches to facilitating trade in specific regions. If your business can contribute to such endeavors, we welcome your collaboration and insights in order to address global trade barriers and boost shared prosperity.