46560 VOICES of Cambodian Women Entrepreneurs VOICES of Cambodian Women Entrepreneurs September 2008 ACKNOWLEDGEMENTS IFC would like to acknowledge a number of people who helped to make this publication a success. We are especially grateful to all the businesswomen who participated in our in-depth interviews or focus groups and spoke freely about their successes, their challenges and their ambitions. We are very grateful as well to the Women's Association of Small Businesses (WASMB) for their constant support over the course of the study. Without their excellent contacts and help in arranging many of the individual interviews and focus group discussions with their members, the study could not have been completed. Overall supervision and advice on the study was provided by Soneath Hor and Charles Schneider. Thien Huong Nguyen initiated the study; Khy Touk coordinated the study and preparation of the report; Dr Sieng Huy conducted the focus groups and most of the in-depth interviews; Ka Ying Yang prepared the report; Khemara Ros, Lili Sisombat and Lang Sok provided additional research and insights; Ann Bishop was technical editor and proof reader; and Michael Wild took the photographs for the study. Special thanks go to Kunthea Kea for her efforts in designing and laying out the publication and to Tonie Tan for valuable administrative support. TABLE OF CONTENTS INTRODUCTION 1 CHAPTER 1: STARTING AND OPERATING A BUSINESS 7 Business Entry 8 Business Operations 10 Dispute Resolution 14 Taxes 16 Recommendations 17 CHAPTER 2: TO GROW OR NOT TO GROW 19 Infrastructure 20 Securing Financing 21 Cultural Aspects 24 Recommendations 27 CHAPTER 3: TRADING ACROSS BORDERS 29 FINAL THOUGHTS 33 Introduction Voices of Cambodian Women Entrepreneurs Women entrepreneurs are important views about the role of women contributors to private enterprise being limited to the family also make development in Cambodia. A it difficult for businesswomen to significant number of micro and penetrate the `old boys' network. small business owners in Cambodia With so many challenges facing are women and they are important them, it is not surprising that creators of jobs, especially in smaller women-owned businesses usually communities and rural areas where remain small and largely in the job creation is crucial. informal sector. However, despite their importance, Due to all of these factors, women the achievements of women entrepreneurs are not fulfilling entrepreneurs are largely their potential as creators of jobs, unrecognized. As studies show, while developers of human resources, women have equal rights according payers of taxes and ultimately, to the law, they face considerable contributors to economic growth challenges in starting, operating, and and poverty reduction. expanding a business. In order to raise awareness of both Due to their usually lower levels the successes and the challenges of education and training, women faced by women business owners, find it harder to access and interpret Voices of Cambodian Women regulatory information. They also Entrepreneurs summarizes the findings find it harder to negotiate with of an exploratory study which predominantly male authorities, asked women entrepreneurs about and to borrow money. In addition, the challenges they face and how their unequal share of family these problems could be resolved. responsibilities hampers women In the course of this study, 101 from networking and other business businesswomen from four provinces development activities that occur ­ Kampong Cham, Kampot, outside working hours. Conservative Phnom Penh and Siem Reap ­ were 2 interviewed. Thirty-three of these children; the exceptions being a few women provided in-depth interviews widows and divorced women. and 68 participated in one of eight discussion groups. This study is divided into three chapters: The entrepreneurs covered here 1) Starting and Operating a Business own a cross section of businesses discusses challenges posed by the from micro-enterprises in rural business environment; areas, to larger businesses in urban 2) To Grow or Not to Grow highlights centers. The majority of women constraints that prevent or interviewed have only a secondary discourage business expansion; and education, some even less, and a few 3) Trading Across Borders discusses the are illiterate. Almost all the women challenges involved in exporting. interviewed are married and have 3 Following these three chapters The Provincial Business is a chapter on Final Thoughts Environment Scorecard (PBES) that is meant to leave the reader survey, which was conducted in ten with the main conclusions of the provinces in 2006, can be used as a study. At the end of each chapter proxy for estimating the percentage are recommendations aimed at of women business owners, the size helping government, donors of their businesses, as well as the and businesswomen to gain sectors they work in.1 As part of understanding and address the many this survey, a census was taken of a challenges facing businesswomen in large number of private businesses Cambodia. which identified the gender of each business owner. Since the ten provinces covered by the PBES Profile of Women represent 75% of Cambodia's Entrepreneurs GDP and contain 64% of the total population of Cambodia, the PBES Private enterprise is the main driver provides a good indicative profile of of economic development in women entrepreneurs. Cambodia, accounting for 92% of the country's total jobs. Women play According to the PBES data, women an important role as entrepreneurs accounted for 55% of all private in the private sector in Cambodia. business owners (Figure 1). Although In order to understand how they women business owners are contribute to the economy, it is numerous, most women own micro necessary to look at the percentage of businesses which are owned by women, and the size and type of their businesses. However, there is limited reliable 1 The PBES study, which was published in March data on women business owners 2007, was jointly undertaken by IFC MPDF and The Asia Foundation (with funding from AusAID). as no nation-wide study has ever The PBES was conducted in Cambodia's ten most been carried out which counts all economically active provinces and municipalities to the enterprises in Cambodia and identify business environment problems that hamper private enterprise, and especially SME development. identifies whether these are owned Based on results of the PBES study, the ten prov- by men or women. inces were compared on key measures of `business friendliness'. 4 and small businesses. Cambodia's medium-sized and large enterprises are primarily owned by men. (Figure 2). 2 Figure 1: Firms by Gender 45% 55% Female owners Male owners The largest number of women entrepreneurs (29%) are engaged in commerce (import, export, distribution, and retail businesses). The second largest group of businesswomen (23%) operate service businesses (food services, maintenance activities, and professional activities such as private hospitals, medical clinics, dental clinics, law firms and private schools). The smallest percentage of women entrepreneurs are found in manufacturing and construction (2%), and natural resource exploitation (1%) (Figure 3). 2It should be noted that the government defines micro-enterprises as businesses with fewer than 10 employees; small businesses as having between 11 and 50 employees; medium-sized businesses as having between 51 and 100 employees and large enterprises are those with over 100 employees. 5 Figure 2: Size of firms Most women entrepreneurs 40% conduct business within 35% Cambodia, rather than focusing 30% on the international market. Thus, the majority of exporters 25% are men. Women entrepreneurs 20% Female owners Male owners interviewed for this study say 15% they focus on the national 10% rather than the international 5% market because family 0% responsibilities mean they do Small Medium Large not have the extra time required to navigate the complexities Figure 3: Firms by Sector of exporting. Also, unless their businesses are registered, they 35% are barred from exporting. 30% 25% This profile of women 20% Female owners entrepreneurs shows that 15% Male owners although women entrepreneurs 10% are more numerous than male 5% entrepreneurs in Cambodia's 0% most economically active Services Manufacturing Commerce Natural and Resources provinces, the smaller size and Construction Exploitation & narrow market focus of their Others businesses demonstrate that Figure 4: Business Focus women are at a disadvantage in expanding their businesses. 60% Given these findings, it would 50% appear that women face even greater challenges than men in 40% starting a business, expanding 30% Female owners a business and trading across Male owners 20% borders. In the three chapters to follow, we will explain the 10% nature of these challenges. 0% Local International Both 6 Chapter 1 Starting and Operating a Business As the previous chapter shows, examples of the barriers that women's enterprises are primarily discourage business owners from small and in the informal sector. As registering their businesses or even this chapter explains, there are many starting a business at all. reasons for this. Women entrepreneurs interviewed BUSINESS ENTRY for this study state that due to the high cost of business registration, Although formally starting a business they either do not register their in Cambodia is difficult for all business or use a paid facilitator to entrepreneurs, it is especially so for assist with registration procedures. owners of smaller businesses and Unless they need to get a bank loan, even more challenging for women a business license or export, which all entrepreneurs. In Doing Business require registration, businesswomen 2008, the World Bank Group's often do not see the importance annual survey on indicators of the of registration. For many women, ease of doing business conducted illiteracy or limited education makes in 178 economies around the world, the paper work involved in starting a Cambodia ranked unfavorably, at business too great a challenge.3 145. The cost of starting a business here is nearly double per capita income. Getting the licenses required to operate a business is also time consuming. On average it takes 86 3The gap between boys and girls in the education system in Cambodia increases markedly as they days to obtain all the licenses needed progress to higher levels of education. While almost to legally start a business. equal numbers of boys and girls are enrolled in pre- school and primary school, only 63 girls are enrolled for every 100 boys in lower secondary school. In High official and unofficial fees upper secondary and tertiary-level education, less are another deterrent to business than 50 girls are enrolled for every 100 boys. Of adult registration. These are just three women, 45% are completely illiterate. Source: A Fair Share for Women, Cambodia Gender Assessment. April 2008. 8 to expand her export activities and Norm Bunnak established decided to formalize her business Villageworks in 2000. Villageworks in order to obtain a Certificate of produces and sells silk products Origin. This certificate would allow locally and exports to overseas her to export to the United States markets. In 2008, Bunnak wanted and European Union markets with low or no tariffs charged to those importing her products. In registering Norm Bunnak said her business, Bunnak found it hard to I did not know how to undertake register by herself due to complicated the registration procedures. If I procedures required by government undertook the registration work by agencies, and she commissioned a myself, I believe it would have taken broker to register for her. longer than a broker, as officials would have demanded more and It was less costly for me in terms of time and more documents from me. Moreover, money to register my company by paying a access to information on registration broker to do it. procedures depends on relations with officials. Building these relations Lack of access to business requires time and money. information is another barrier that impacts women entrepreneurs. 9 Business regulations governing particular industries are not readily available to anyone except the staff working in these ministries or offices. Although summaries of business regulations are published in the Royal Gazette and on the Internet, few women have easy access to either of these sources of information. Men face fewer barriers in gaining access to business information. First, they usually have higher levels of literacy and education than women, which helps men in finding the best sources of information and interpreting it. Second, as women BUSINESS OPERATIONS interviewed for this study noted, while men can `wine and dine' In addition to greater challenges male government officials outside in starting a business, Cambodian of working hours in order to get women entrepreneurs usually face the information they need, cultural greater challenges than men in norms for women discourage operating a business on a day-to- them from doing so. Also family day basis. The majority of women responsibilities mean that women interviewed stated that unlike men, are usually occupied at home in the they did not have prior experience evening. or training for their line of business. Most say they started their business Men are also better able to engage without researching the market in business networking. With or understanding the kinds of fewer family responsibilities, they challenges their business might face. have more time to gain valuable Because women entrepreneurs are information and contacts for forced to learn through `trial and business deals through networking. error,' they believe their businesses Also, it is more culturally appropriate are at greater risk than those and safer for men to participate in operated by better educated and activities held in the evening. 10 more knowledgeable men. Although a few women interviewees indicated they had tried to learn more about their business before starting it, they found few sources for the information they were seeking. Negative attitudes towards women managers are another disadvantage listed by the women in this study. Interviewees indicate that men often see women as less capable managers and, as a rule, most men do not want to work for a woman boss. According to interviewees, men see women supervisors as Chum Sokha, owner of a more temperamental, and they lack construction company, Chum respect for women. This negative Sokha Enterprise, and a farm, cultural stereotype, together with Samnang Serey Vath Farm, women's lower levels of education, where she employs 150 staff, training and experience, cause believes that if she were a man, women difficulties in managing their her business would be more businesses. Women interviewees successful. My businesses require report that difficulties in managing many male workers and men respond male staff make hiring and retaining better to a male boss than to a woman. qualified staff a never-ending However, when it comes to ability or challenge, and some consider this the talent in management, I believe that greatest obstacle for women business men and women are equal. owners. 11 Eng Sok Kech, 32 years old, married with two children, operates Gravel, Stone and Sand Enterprise in Siem Reap. I employ more than 80 workers. Seventy-five are male and 8 are female. My business requires specialized equipment and skilled workers, and I find it a constant challenge to recruit and retain qualified staff. Because most of my staff are men, gaining their respect takes a long time. To overcome this problem, I rely on my male relatives to assist me in running the company. In addition to the challenges than men when dealing with public of managing staff and business officials. One respondent gave an operations, women entrepreneurs example of the problems she faces each believe they face greater disadvantages time she has to deal with the police. Eng Sok Kech of Gravel, Stone One respondent stated: and Sand Enterprise stated my When a tourist at my guesthouse loses a personal business sometimes faces challenges and item through theft, we report this to the police. In unfair competition due to cumbersome order to file an insurance claim, the tourist wants regulations and weak enforcement of a copy of the police report. The police provide the regulations. Sometimes I have to rely on report needed by the tourist, but then ask me to pay my male relatives and husband to assist for the time spent preparing the report. The police me in getting permission to transport pressure us into paying by accusing our guesthouse and dig for sand. In my business, women of not providing adequate security, even though this are especially disadvantaged because we is the responsibility of the police. As a woman, I are not respected as business owners and feel intimidated when dealing with the police. leaders. 12 Women respondents complain frequently of government agencies coming to inspect their operations, One respondent complained, running often with no advance warning, a business today is more expensive than and charging them unofficial fees. before. Now senior authorities and Women consider themselves at institutions often demand money. Although greater risk of this than men due we want to report this to higher authorities, to their lack of knowledge about we don't because if we push too hard, the business regulations. Limited corrupt officials will find ways to make knowledge, as well as a lack of our lives difficult. Each time they come, we assertiveness, mean that women likely must pay up. If we don't, we may be soon pay more unofficial fees than men stopped from doing business. Also if we do in order to maintain good relations not pay and we need officials' help to solve with government officials. Women some problem, they will ignore us. Many interviewees also felt that they were unofficial fees are needed in order to obtain at greater disadvantage compared public services or protection, and we are to men because the majority of forced to pay extra, even for trash collection. government inspectors are men. Women entrepreneurs tend to have greater fear of confrontation than men and are more easily intimidated into paying when asked for bribes. 13 The vast majority of all businesses report that they pay a considerable amount in informal taxes and fees. According to one survey, small and medium enterprises paid 5.5% of their revenues as bribes.4 The requirement to pay unofficial fees to numerous government inspectors is yet another incentive for women business owners to remain small and informal. A number of interviewees said that they were greatly discouraged by the growing level of corruption they face. DISPUTE RESOLUTION Enforcing contracts in Cambodia can be costly and time consuming. There a result, when a dispute occurs, the are 44 procedures to follow when disputing parties tend to find other enforcing a contract and these can means than the court system to take more than 400 days on average. resolve their disagreement. In most Out of 178 countries surveyed for cases, and especially for micro and Doing Business 2008, Cambodia ranked small enterprises, the case is brought 145th, making it one of the hardest to a third party such as the village countries to enforce a contract. or commune chief, police officer or 5 other respected or powerful figure. Accusations of judicial corruption This third party acts as an informal are widespread in Cambodia and mediator or arbitrator. The success public confidence in the judiciary is and fairness of these traditional very low. Going to court to settle a means of dispute resolution depend dispute is expensive, time consuming and the outcome uncertain. One may spend more money and time going 4Cambodia Seizing the Global Opportunity: Invest- through this process than the amount ment Climate Assessment & Reform Strategy, World Bank Group, August 2004. which was originally in dispute. As 5Doing Business 2008, Comparing Regulation in 178 Economies, 2007. 14 advantage over women. Women often lack the powerful connections men have. In fact, widowed and divorced women stated in this survey that they prefer to resolve problems on their own, without having to ask male relatives to negotiate on their behalf. They say they have the intelligence to resolve disputes by themselves, but the male-dominated system forces them to rely on male relatives when settling disputes. Eng Sok Kech, owner of Gravel, Stone and Sand Some interviewees believe that Enterprise says, in general we femininity is a double-edged sword. sell on credit and about 30% of our On the one hand, women see customers cause problems in paying us. themselves as eloquent negotiators, We lose about 10% of our revenues able to gain trust through building annually for this reason. If a customer relationships. However, at the same owes a large debt, and we bring the time, if women rely too much on case to court, we only get about 80% verbal commitments and friendship, of what we are owed. Even more rather than written contracts, they frustrating is the fact that we must pay will be at a serious disadvantage if a court costs as well as lose on the money dispute arises. we are owed. Illiterate women are likely to be especially disadvantaged if a dispute occurs because they have to rely on others to find and read documents for them. strongly on the connections of each disputing party and the power of those who serve as mediators. Interviewees report that in using these informal means of dispute resolution, men again have an 15 TAXES month, tax officials frequently try to increase the amount of tax she The Tax Law requires that all has to pay, without providing any businesses pay tax. There are two explanation of how they calculated primary ways that taxes are collected the amount. As an illiterate person, or calculated: 1) Real Regime where I cannot review the published rules or businesses file taxes based on their regulations to know how much tax I should financial statements and 2) Estimated pay. Therefore, the only choice I have is to Regime where taxes are paid on a negotiate with the tax official to lower the monthly lump-sum basis through amount, but this is not always successful. negotiation between the tax collector and the taxpayer at the provincial or As with other aspects of doing district level. business, women entrepreneurs consider themselves at a disadvantage One of the problems with the tax with regard to paying taxes. Although system is that it is unclear how all businesses face problems with taxes are calculated and charged to taxes, women entrepreneurs believe businesses. Chheng Somala, owner that men are better able to negotiate of Chheng Somala Rice Mill, with tax officials because, as men, says that while she pays taxes every they command more respect and 16 are more assertive in conducting they face. Unfortunately, they have negotiations. Although women may to do this alone or only with the keep good financial records for support of their family. In order their businesses, they rarely have any to provide a more supportive formal training in accounting and, business environment for women as a result, their records may not entrepreneurs, policy changes conform to official requirements. In need to be initiated by a variety of these cases, women are at a serious stakeholders. disadvantage when challenging the taxes they are being asked to pay. Laws and regulations must be implemented and enforced with RECOMMENDATIONS transparency. Government officials should strive to make regulatory Despite the many challenges listed information easily accessible to all above, women entrepreneurs are business owners and should hold resourceful and have found effective information sessions specifically ways to overcome the obstacles targeted at women, which take into 17 account their usually lower levels of literacy, lack of business experience and limited experience working with government agencies. Business associations should encourage more businesswomen to join and provide specialized programs to meet their needs. In doing so, business associations should collaborate with government agencies to ensure that information on policies and regulations reaches businesswomen. Also, efforts to advocate for improvements in the business environment should take into account the needs of women business owners and ensure that their voices are heard. Due to problems with the court system, other methods of resolving disputes need to be developed such as arbitration. To ensure women utilize the arbitration system, arbitrators need be trained to understand the disadvantages commonly faced by women when they are trying to resolve business disputes. 18 Chapter 2 To Grow or Not to Grow Many businesswomen report owned businesses from achieving stable or growing revenues from their potential. These are also often their businesses. They also say that the main reasons why businesses running a business has benefited run by women tend to be small and them and their families tremendously. informal. Not only do their profits finance their children's education and enable In considering how to help women them to make charitable donations, entrepreneurs overcome the by running a successful business problems they face, it is important women say they gain respect in their to realize that if their enterprises communities, create jobs for others remain small and informal, not only and they are proud of becoming do they lose, but society as a whole financially independent. For women loses. Due to their many constraints, who are widowed or divorced, women-owned businesses are not financial independence is especially achieving their potential as creators important. of jobs, developers of human resources, payers of taxes and However, despite their successes, contributors to overall economic when it comes to business expansion, growth and poverty reduction. women entrepreneurs list many obstacles. In addition to internal INFRASTRUCTURE disadvantages such as their lack of education and business skills, Access to physical infrastructure, businesswomen face serious external including roads and electricity, is challenges. These include lack often a major constraint to private of infrastructure, cultural biases, sector development as it increases corruption and the inability to access the cost of doing business. For financing, especially the longer-term example, the poor quality of roads financing that would enable their reduces agricultural producers' businesses to upgrade and grow. All access to markets. However, in the of these challenges limit women- last decade, the government of 20 Cambodia deserves credit for having significantly improved national roads all over the country. Improvements are still needed though for provincial roads. For women owners of small businesses, bad road conditions increase delivery costs, which in turn reduce profits. Women entrepreneurs interviewed for this study also complained about high energy costs pushing up their production costs. Hay Leang Eng, the owner SECURING FINANCING of an ice factory, stated the main challenges in my business are Banks in Cambodia lend money transportation and the high cost of based almost entirely on fixed fuel. Delivering ice to customers over collateral (land and buildings). In great distances takes time, especially addition, lenders only want collateral when roads are bad. Also, the cost that is located in Phnom Penh or a of gasoline to fuel my generator is major provincial town, and generally very high, which increases my cost of they will only lend between 30% operating. As a woman, I have no to 50% of the value of land and access to decision makers to advocate buildings pledged as collateral. Also for the policy changes that could lower banks are reluctant to provide the the cost of fuel. The inability to longer-term financing that businesses impact change is common to both men need to upgrade and expand. The and women, but women frequently feel information banks require of more helpless because they are invisible borrowers is another hindrance. in the eyes of policy-makers. Few women have experience in developing the business plans required by banks. This combination of the high demands from lenders, plus women's limited education and business skills, prevents most women from accessing bank loans. Thus, the majority of Cambodian women entrepreneurs start a business with 21 their own capital or they borrow bank's estimate of the value of my home from family and friends. Taking out was 30-40% lower than the market value. a bank loan to start a business is rare for women. Although undervaluing property may be a typical practice, most women Borrowing to expand a business is feel that this is unfair as it limits their also challenging. Lack of knowledge ability to borrow. Also, their lack about how to prepare proper of knowledge about bank lending financial statements creates problems procedures exacerbates women's in borrowing, even though a woman's anxiety when borrowing. business is well managed and is clearly making a good profit. Keo Because of their difficulties in Davy, owner of Craft Souvenirs said, accessing bank loans, women must I started my business with personal funds resort to informal sources of but as the business grew I reinvested the financing. If not able to borrow profit back into the business and eventually from family members, women received a loan from a bank for expansion. go to money lenders who do not I used my home as collateral. But the require collateral, but charge much 22 higher interest rates than financial it is impractical for the longer- institutions. The advantage of term financing needed to upgrade borrowing from money lenders and expand. Also, the high cost of is that the funds can be accessed borrowing from money lenders relatively quickly. However, the reduces the profitability and cost of borrowing is so high that sustainability of a business. Kuoch Sak Hun, 37 years old, With my house as collateral, I applied for has been selling children's clothes a $20,000 loan. But after two months of since 1993. Most of the time, she administrative processes, the bank offered depends on her own profits to me only $10,000. The process of getting finance expansion of her business, a large loan from a commercial bank is but, in May 2008, she was looking for complicated and time consuming, and other sources of money. She applied required me to provide a lot of formal for a loan from a commercial bank, documents. To get an authorization letter, but gave up due to the complicated I had to deal with local authorities (both procedures required by the bank. village and commune level) and this took about a week of my time and required me to pay $10, in addition to the bank's service fee of $100. The bank also required financial statements that I never prepare as part of my business. 23 Sokuntheary is now fearful for CULTURAL ASPECTS her personal safety and she is also conscious of greater public scrutiny. Underlying gender inequalities She says she must always tread continue to limit women's choices cautiously and be discreet in her and options in Cambodia. In this business affairs. She believes too that hierarchical society, women are still her male counterparts do not need considered of lower status than to be as concerned about safety and men. These negative perceptions appearances. of women continue to undermine women in business. Some Negative perceptions about women participants in this study argue that continue despite the fact that they society does not appreciate women play an increasingly important and fully, especially widows, divorced visible role as income providers for women and single, unmarried their families and are significant women. contributors to economic development. Even a very successful woman like Ung Sitat Sokuntheary, 46 years old and owner of Star Cable TV in Siem Reap, has experienced discrimination because she is a widow. She believes that widows who lack her social status and financial independence face the worst treatment. However, as a result of more success and visibility, 24 Women in business face more difficulties than men and they have more responsibilities. They are farmers, child care providers, house keepers, etc. When I have to go to the market, I must wake up very early to cook for my family before I leave the house. As women, we have to divide our time between household chores and our businesses. Chheng Somala, owner of Chheng Somala Rice Mill, also says that one of the reasons she went into business was to allow her to stay home and take care of her children. She said fortunately, I haven't heard any criticism of me as a business owner. Some people have even complimented me that I can afford to send my children to school. Eam Phiny (Salt Craft, Kampot my business and my seven children. I District) is 59 years old, and overcame this by asking my children a widow with seven children. to share the household chores so that Phiny started her salt business in I can spend more time overseeing the 1990. Prior to that, she worked business. My life has improved greatly as a public servant in the salt since I started my business. I now own production sector. Today, her a two-storey house and receive praise business employs 20 people, from other community members who all of whom are women. The appreciate that as a widow I'm able to company produces approximately provide for my family. 20,000 sacks of salt annually. One of my biggest challenges as a widow is finding a balance between 25 As women become more and more successful, they also defy the stereotype that they are weaker. As demonstrated by the women in this study, women business owners recognize that they have certain strengths as women. These include tolerance and communication skills which women believe give them a competitive advantage. In addition, they have reduced the constraints of being a woman and used their natural talents to achieve economic success. Despite their self-awareness, women believe they still have a long way to go, given the many constraints to doing business in Cambodia. Ung Sitat Sokuntheary, owner of Star Cable TV in Siem Reap says she started the cable TV business because she wanted Cambodians to stay abreast of world news and also to be exposed to other languages. Additionally, she had close friends in Thailand who gave her guidance on how to set up the TV Company. She used her own money to purchase the equipment needed to start her business. and respect me. Like all effective managers, My business employs 28 people (two females I provided incentives such as bonuses or and 26 males). At the beginning I had overtime pay, etc. which helped motivate difficulties managing employees because most staff to work harder. As a woman, I have of them were men. Except for the team to work twice as hard to earn respect from leaders, many lacked experience and had my employees. low levels of education. Even though I am the boss with more knowledge than my staff, it took a while for my employees to trust 26 stronger and they feel safer when delivering products to customers. As a woman, it's not safe for me to travel alone, nor can I express my opinions freely without being challenged. RECOMMENDATIONS For a number of reasons already discussed, many women small business owners want to remain small and in the informal sector. In interviews for this study, women said they do not have the cultural Keo Davy, 45 years old, owner freedom or the powerful networks of Craft Souvenirs, Phnom Penh, and alliances that men have in is married with three children. Cambodian society. Their alliances Davy started the business at the and connections enable men to encouragement of her friends navigate the complexities of the who live abroad and thought that business environment more easily. exporting crafts would be successful. As a government worker with a low An important policy salary, she felt that having a business recommendation for government would supplement her income as agencies, particularly in partnership well as help to employ other women. with the Ministry of Women's Davy buys 98% of her supplies Affairs, is the promotion of more from local producers and 2% from women into decision-making Thailand. positions in government, and for women already in leadership Holding down a job and running a business roles in government to develop keeps me very busy. I rely on trained strategic policies that support staff to supervise the other staff. My two women entrepreneurs. This could daughters also help with design. Now be achieved through funding and that I have more income, I can afford to through training that impacts a hire a housekeeper to do the housework. number of women entrepreneurs. If I were a man, my business would be Successful women entrepreneurs also more successful because men are physically need to be promoted as role models 27 and efforts should be made to dispel Cambodia is now making it possible common negative stereotypes about to borrow against moveable and women. intangible assets such as machinery, vehicles, inventory and accounts Securing adequate financing for receivable. Once the regulatory business expansion is an obstacle for framework is in place, if a woman's all the women in this study. Although business is legally registered, the Law they often begin their businesses at on Secured Transactions should help home, expansion usually requires it get financing with moveable and moving to a larger facility and this, in intangible assets, even if it lacks land turn, requires capital that few women and buildings to use as collateral. can obtain. Lending institutions should simplify the loan application To reduce some of the hurdles process for business expansion and women entrepreneurs face, all the take into account the successful track women interviewed for this study record of a business, in addition to agreed that government should the availability of collateral. support women's entrepreneurship centers where women business With regard to collateral, there are owners and would-be business improvements on the horizon as owners, can get business advice, training and other opportunities. 28 Chapter 3 Trading Across Borders As a member of the World Trade resulting in conflicting requirements. Organization, Cambodia has Third, navigating complex export greater access to international procedures is very time consuming. markets. WTO membership helps As a result, women lacking Cambodia to benefit from `Most connections to government officials Favored Nation' treatment by other who could help them understand member countries, especially large export requirements and fees, are markets such as the United States, discouraged from exporting. the European Union and Japan. In addition, the United States' Seng Takakneary, 45 years old, Generalized System of Preferences established Sentosa Silk in February and the European Union's `Every 2004 in Phnom Penh with $15,000. Thing But Arms' schemes have Sentosa Silk offers three ranges provided Cambodia with tariff-free of products and services (soft and quota-free access to the US and furnishings, tailoring and gifts & EU markets. 6 accessories). The enterprise employs nine staff (5 females and 4 males) Despite these opportunities, and 40 tailors. women entrepreneurs who usually own small, informal businesses, The activities of Sentosa Silk include find it difficult to take advantage selling their products in Cambodia of external markets. First, as and exporting, primarily to the previously explained, if a business US and EU markets. Because of is not registered as a limited liability difficulties in exporting, exports company, it cannot obtain an export represent only 10% of the profits of license. Second, women usually have poor access to information on export procedures because these often fall under several different government agencies 6A Summary of Cambodia's WTO Agreement, with overlapping responsibilities, Business Issues Bulletin No 6, IFC MPDF, 2006. 30 the business, and Takakneary leaves To benefit from tariff free or low it up to overseas buyers to arrange tariff rates when exporting to the these exports. EU and/or US markets, a Certificate of Origin is required. Obtaining I sell my products to buyers who then obtain this certificate from the Ministry of any export permits/certificates they require Commerce is complex and costly. by themselves. I decided to keep my business small and operate in an informal manner First, the firm has to register with the because my export activities are small and Ministry of Commerce and second, generate little profit. It does not make sense obtain a patent tax license from the for me to spend a lot of time and money Tax Authority. For Sentosa Silk, dealing with complicated export procedures. obtaining the Certificate of Origin Also becoming formally registered would would cost the business around reduce my profits. $1,000 a year, in addition to business registration and patent tax costs. 31 RECOMMENDATIONS opportunities for all entrepreneurs, but especially for women. Cambodia In order to encourage women as a whole will benefit because by entrepreneurs to export, it simplifying and clarifying export is important to increase the procedures, officials will have fewer transparency of export regulations opportunities to extort unofficial and simplify export procedures. payments and exports should This will reduce costs and increase increase.7 7Informal Charges Hinder Business Growth in Cambodia, Business Issues Bulletin No 13, IFC MPDF, 2007. 32 Final Thoughts Although the women profiled in This study raises questions about this study say they have gained self- whether the challenges women esteem, satisfaction and financial face in doing business in Cambodia success through operating their own are unique to women. Although businesses, a lack of supporting individuals may possess the services means that their businesses motivation and determination to have not achieved their potential. start a business, as this study shows, cumbersome laws and regulations When asked how many successful and unofficial and unpredictable business women there are in fees serve as important barriers to Cambodia, participants in this study's success. In many cases, operating a focus groups could only name one business here, as in other developing or two in their community. This is countries, is daunting for everyone, a clear indication that women lack regardless of gender. good role models in business who can challenge the stereotypes that Although there appear to be no block women's advancement in the obvious regulatory obstacles private sector. Until women have blocking the path of women the opportunity to participate in entrepreneurs, cultural biases, the the private and public sector on lack of education and training, an equal footing with men without limited access to information, and gender prejudices, their success a shortage of opportunities to will remain within the confines of network are significant barriers. their families and limited circles in As this study shows, while women their communities. Even though can start businesses and operate the contributions of women them well when they are small, if entrepreneurs are significant, their women owners want to expand, overall impact on the economy and many obstacles block their path. As society will continue to be small a result, we believe it is harder for unless steps are taken to reduce women to develop and grow their persistent barriers to their businesses' businesses in Cambodia. This makes growth. it far more likely that they will remain 34 small-scale entrepreneurs than if the on lavish entertaining or other public businesses were male owned. displays of success. Women are also usually good at solving problems and In conclusion, as with women they understand the importance of around the world, Cambodian building strong relationships with women entrepreneurs deserve praise their customers. and recognition for the successes they have achieved and their qualities In many ways, the women who took as managers. In making decisions, part in this study are pioneers, and women entrepreneurs often consider we hope that the concerns they the needs of both family and have raised here will inspire decision business before they make a decision. makers to take the actions necessary They also effectively juggle many to remove the barriers now faced personal and professional demands. by women. We also hope that the Women are usually considerate too women profiled here will serve as of the needs of their employees, and role models and encourage other manage their company's resources women to join Cambodia's fast well. Because women make investing growing and vibrant private sector, in their business a priority, they are and help Cambodia's economy to less likely than men to waste money grow. 35 In partnership with and funded by MPDF, whose donors are: Australia Canada Finland IFC Ireland Japan 70 Norodom Blvd., Sangkat Chey Chumnas New Zealand Phnom Penh, P.O Box 1115, Cambodia the Netherlands Tel: (855 23) 210 922 Norway Fax: (855 23) 215 157 Sweden Web: www.mpdf.org or www.ifc.org/mpdf Switzerland