No longer will small and medium enterprises (SMEs) have to submit various paper documents to various institutions for registration. The Ministry of Commerce (MOC) has just announced that they will be launching a new online business registration system. From 4th January 2016 onwards, this system will replace the paper registration system for all new companies. Existing companies will be required to re-register after the registry comes online. It features lesser procedures as compared to before and the registry will contain all the companies’ information that can be accessed by both government agencies as well as the general public.
The implementation of an online registration site will be good news for the countless SMEs in Cambodia, as it would make the standard business procedure of registering the business as a legal entity a lot more efficient. As SMEs play an important role in contributing to a country’s economy, commonly known as the backbone in society, it is essential to have a system in place to support their growth. More so in a country like Cambodia where according to a government survey conducted in 2011, only about 3.5 per cent of the 505,000 SMEs in Cambodia were registered with the government.
With the implementation of an online registry, it is also expected to reduce corruption, ensure transparency and encourage the collection of detailed information, thereby strengthening the framework that has been set in place for the companies. To register, the companies would simply have to go to the website and upload a memorandum or article of association, as well as proof of address and identity cards for company directors. Once submitted, the registering company will be able to use Acleda Bank’s online payment gateway to pay the relevant fees without having to take time to physically make a trip down. According to the Doing Business 2016 report, in Cambodia, it takes an average of one week to register a company with the government and with this new system, it would only take about an hour.
The Ministry of Commerce (MOC) has also provided a list of upcoming features even though the various specifications have not yet been released. Some of the new features include, a single interface whereby using a common form, the procedures will be consolidated into a single point registration for business, tax and other permits, thus simplifying the process. A unique enterprise ID will also be introduced, which would be recognizable by the different institutions involved and it has been stated that the online registration would be a national computerized business registry offering the same standardized service countrywide. Not only does the online registration reduce the time taken for both the process of registration and the formalization of amendments, there will also be electronic-based information services for other businesses where the authorities or the general public will be able to use the legally valid enterprise data compiled in the business registry.
By simplifying the process of registering a business and submitting the various paperwork, it is said that this registry is currently a high priority program aimed at improving the business climate in the country. The following are some of the reasons why a straightforward and centralized businesses registration process would be beneficial for all the parties involved.
1. Relevance for market access and enterprise development
Once the business has been registered, their information would become legally valid which makes up the basic business operations and is also important for contract enforcement. For employees, the registration of a business ensures the protection of their rights and for business owners seeking business support incentives, having a formal establishment is usually a precondition before applying.
2. Relevance for the business community
With all the businesses’ information collated in a single registry, it would be the go-to website to search for potential clients or business partners. As verification of the business information is allowed, it in turns reduces the risk and cost of potential business partnerships.
3. Relevance for public sector at large
As business registrations provide the basis for tax collections, with more businesses registering, it would help by broadening the tax base in which would almost directly affect the public. More than just the finances, it is important for informed public decision making as the statistical data is a source of knowledge and insight on the private sector in the country. The business registry would also function as a pillar supporting the other fields such as credit information systems, social security, land registries, secured transaction registries and the courts.
All in all, this will be an opportunity for existing companies to rectify or update their information and it will also be a chance for the SME sector to grow with a proper framework set in place. Even though the system will be newly launched next month, one thing for sure, this new improvement would definitely make Cambodia more attractive to investors and will hopefully spark a boost in the local economy. However, do note that all registered enterprises would have to register before 31st March 2016 or face a fine that will be imposed by the government.
To find out more, check out the Ministry of Commerce’s website here.