Cambodia IT Industry Still Faces Many Hurdles

Commerce Ministry Secretary of State Sok Siphana made an impassioned plea to accelerate reforms that will help the poor at a seminar geared to teach small businesses how to trade through the Internet at the Hotel Inter-Continental on Wednesday.

“We talk about poverty but in a 5-star hotel,” he said, veering from his prepared speech. “We talk about poverty but drive around in a Lexus. We talk

about poverty but have a cocktail party.

“We have to be more conscious, more vocal, more aggressive in pushing policy that helps the poor,” he added.

The unscripted speech set the tone for the two-day seminar, which aimed to highlight the challenges facing small businesses and teach them practical ways to benefit from the Internet.

Though the seminar revealed the many shortcomings of the country’s information technology infrastructure, it also showcased local companies that have used the Internet to increase sales.

Industry leaders say Phnom Penh youths are driving the IT sector here, which includes everything from computer sales to installing Internet networks to designing Web pages. But the industry faces several constraints: Infrastructure, such as the number of fixed phone lines for Internet connections, remains inadequate; computers are too expensive for many families to afford and students in computer-related courses often lack essential skills.

A report issued Wednesday by the International Trade Center, a body created by the UN and the World Trade Organization, which sponsored Wednesday’s seminar, showed that Cambodia has the “dubious distinction” of having the lowest Internet penetration in Southeast Asia and at the highest prices. A major reason for this, the report says, is that the country has only 27 fixed phone lines for every 10,000 people.

“Although important progress has been made in the last two years… [Cambodia] remains one of the least connected countries in the region and perhaps the only country in the world with mobile penetration rates double that of fixed line penetration,” the report said.

It also noted that investors shy away from investing in fixed lines because of excessive bureaucracy at the Ministry of Posts and Telecommunications and the lack of a clear framework for awarding licenses and setting regulatory rules.

“Overall, there is growth [in IT], but it’s restricted by lack of fixed [phone] lines and personal computers,” David Spriggs, general manager of MobiTel, said recently. “Most people still don’t have the money to buy computers.”

When more computers hit the market, the demand for IT services will increase, he added. Several businessmen implored the government to lower tariffs on computers, which would bring the cost below the current price tag of about $500.

The tariff on computers is about 15 percent plus a 10 percent value added tax. In Thailand and Vietnam, computer tariffs are less than 5 percent, businessmen said.

Sok Siphana said recently that the government plans to lower tariffs on IT goods as part of its obligations under the Asian Free Trade Area.

“We believe that reducing tariffs on some products will not affect the national budget,” he said. “But if we lower the tax on computers, the price will be cheaper and it will help increase the knowledge of thousands of people.”

Another challenge facing the IT sector is the lack of quality education.

“Students are not well-trained in schools,” said Kopy Nean, owner of Computer World, a local company that sets up networks and hosts Web sites. “They only know how to use software. Students from Japan and Singapore learn how to write programs. Here they only write small programs—they cannot create software.”

When managers of Internet-related companies look for new employees, they often set up an internship program. From the pool of interns, they select the most adept students who often move to another level of management training.

“IT is a tough industry—you need skilled people,” said Erya Houn Heng, president and chief executive officer of First Cambodia, which has set up networks for MobiTel, Cambodia Samart Communication and Cambodia Shinawatra. “Most companies cannot afford to send their staff overseas to be trained. At schools here, the people who teach only know a little more than the students.”

First Cambodia has an internship program that takes students mostly from the Royal University of Phnom Penh, Norton University and the National Institute of Management, Erya Houn Heng said.

Several students interviewed seemed disillusioned with their education.

“I pay $460 per year to study in the IT program, but I have a chance to touch the computer only two hours a week,” said De Rith Havay, a student at the National Institute of Management. “I believe we have low standards. In our country, the IT sector is just a concept.”

Despite the lack of infrastructure and quality human resources, the message to businesses on Wednesday was to get moving—and fast.

“Even though the problems have been well elaborated, people need to find solutions,” Osman Atac, an ITC official, told the conference.

As part of an ITC initiative to spread e-commerce throughout the developing world, two Cambodians received intensive training from ITC specialists in Geneva for a week in October. Upon returning, they began helping 12 small businesses here put their products online.

The results were immediate. In less than two months, Smile Techno-arts, a handicrafts company that employs people living below the poverty line, built a Web site and received an order from the US for $50,000 worth of goods earlier this month.

“If we do not have the Internet or e-mail, we cannot compete globally,” said Tor Pila, general manager of Smile Techno-arts. “The more we export, the more people we can employ.”

 

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