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APPENDIX 2:
COUNTRY REPORT:
CAMBODIA
3
CONTENTS ACRONYMS ............................................................................................................................... 1
1 COUNTRY PROFILE – STATISTICS ........................................................................................ 3
2 OVERVIEW OF COUNTRY AND SOCIAL NEEDS .................................................................. 4
2.1 OVERVIEW OF COUNTRY ............................................................................................................................ 4
2.2 SOCIAL ISSUES IN THE COUNTRY ............................................................................................................... 4
2.3 SOCIAL ISSUES TACKLED BY SOCIAL ENTERPRISES ................................................................................... 5
2.4 POTENTIAL AND ECONOMIC VALUE PROXY OF SOCIAL ENTERPRISES ................................................... 5
3 OVERVIEW OF SOCIAL ENTERPRISE SECTOR AND HISTORY ........................................... 5
3.1 OVERVIEW .................................................................................................................................................... 5
3.2 TIMELINE OF MAJOR EVENTS ..................................................................................................................... 6
3.3 GOVERNMENT POLICIES ............................................................................................................................. 6
4 ECOSYSTEM ........................................................................................................................... 7
5 SOCIAL ENTERPRISES ........................................................................................................... 8
5.1 SECTOR OF ACTIVITIES ................................................................................................................................ 8
5.2 BENEFICIARIES ............................................................................................................................................. 8
5.3 GEOGRAPHICAL REACH .............................................................................................................................. 8
5.4 TYPES OF SOCIAL ENTERPRISES .................................................................................................................. 8
5.5 REVENUE STREAM AND MARKETS ............................................................................................................. 9
5.6 LEGAL FORMS .............................................................................................................................................. 9
5.7 BUSINESS LIFE CYCLE .................................................................................................................................. 9
5.8 SIZE OF SOCIAL ENTERPRISES (BY NUMBER OF STAFF, FINANCIAL REVENUE AND REACH) ................. 9
5.9 SOCIAL FINANCE ...................................................................................................................................... 10
6 CHALENGES AND OPPORTUNITIES .................................................................................. 10
6.1 CHALLENGES ............................................................................................................................................. 10
6.2 OPPORTUNITIES ....................................................................................................................................... 11
7 RECOMMENDATIONS ......................................................................................................... 12
ANNEX 1: MAIN PLAYERS IN THE SOCIAL ENTERPRISE ECOSYSTEM .............................. 14
ANNEX 2: TYPES OF LEGAL ENTITIES ................................................................................... 15
ANNEX 3: PROMINENT SOCIAL ENTERPRISES .................................................................... 17
REFERENCES ............................................................................................................................... 19
1
ACRONYMS ADB Asian Development Bank
ASEAN Association of Southeast Asian Nations
AVPN Asian Venture Philanthropy Network
GDP Gross domestic product
ICNL International Center for Non-Profit Law
NGO Nongovernmental organization
PPSA Association Phare Ponleu Selpak
PPSE Phare Performing Social Enterprise
RUPP Royal University of Phnom Penh
SEC Social Enterprise Cambodia
SME Small and medium enterprise
UNDP United Nations Development Program
WFP World Food Program
3
1 COUNTRY PROFILE – STATISTICS
4
2 OVERVIEW OF COUNTRY AND
SOCIAL NEEDS
2.1 Overview of country
Cambodia has enjoyed strong growth rates in recent years, with an average gross domestic
product (GDP) growth rate of 7.6 percent from 1994 to 2015, which ranks it sixth globally.
As of 2015, Cambodia graduated to a lower middle-income status, after two decades of strong
economic growth (World Bank 2017a), with GDP per capita reaching US$1,270 in 2016.
The Asian Development Bank (ADB) projects continued increases in annual GDP growth.
Cambodia’s export potential is promising, with growth projected in major industries. While
growth in construction and agriculture is expected to even out, growth is expected in garment
and footwear production as well as services. In the services industry, tourism will see
increased competition from emerging Southeast Asian attractions like Myanmar. Government
investment in agriculture is expected to increase, but deep-rooted problems continue to stunt
the growth of the sector. The ADB believes that a thriving agriculture industry is key to
continued rapid economic growth and poverty alleviation (ADB 2017).
2.2 Social issues in the country
Rural poverty and growing inequality
Despite strong economic growth during the last decade, rural development still lags behind
(World Food Program [WFP] 2017). Rural communities—which make up more than 70
percent of the population—account for most of the country’s poor. Although progress has
been made in reducing the national poverty rate (from about 50 percent in 2007 to 14
percent in 2014), a significant proportion of Cambodians lives on the brink of poverty: “An
estimated loss of just US$0.30 in income per person would double the country’s poverty
rate” (WFP 2017). In addition to regional disparities between the urban population and the
rural poor, Cambodia has a significant income disparity at the national level, with 40 percent
of the total income held by the 20 percent of the population (World Bank 2017b).
Environment and food security
According to the United Nations Development Program (UNDP), Cambodia is rich in
biodiversity, and many rural poor depend on forest resources for their livelihoods. However,
of late, forest resources have been threatened by economic land redevelopment. In addition,
the country is vulnerable to detrimental effects of climate change due to a weak capability to
adapt to such changes. The rural populations, who are mostly near poor, are the most
vulnerable to such catastrophic climatic events (UNDP 2017).
Under-skilled labor force and education
5
Youths (aged 15–30 years old) make up 33 percent of the population. This means the
country’s youth labor force is substantial in size. Many of the young Cambodians who enter
the labor market every year are under-skilled. Equipping these young people with quality
education and skills is imperative, as it will determine whether Cambodia can leverage this
demographic bonus, which UNDP has described as “a one-time opportunity for
development” (UNDP 2017).
As for education, while net enrolment in primary education increased from 82 percent in
1997 to 97 percent in 2016, completion rates at lower secondary school were 43 percent in
2013—significantly below the average for lower middle-income countries (World Bank
2017a).
Health
Health poses an important challenge and development priority for Cambodia. Thirty-two
percent of children under five (approximately 0.5 million children) are stunted due to
malnutrition. In addition, as of 2015, 70 percent of the population (12.3 million people) still
had no access to piped water and 58 percent (9.3 million people) had no access to improved
sanitation. While there have been improvements in maternal health, the delivery and quality
of public services need to be improved (World Bank 2017a).
2.3 Social issues tackled by social enterprises
Using NGOs as a proxy (given Cambodia’s context where the majority of social enterprises
emerge from the NGO sector, elaborated in Section 3 below), social enterprises in
Cambodia address issues of poverty, child rights, education, sexual trafficking, disability,
health and environmental concerns (Lyne et al. 2015). How social enterprises (NGOs)
tackle such issues is elaborated in Section 5 below.
2.4 Potential and economic value proxy of social enterprises
No information found in literature review.
3 OVERVIEW OF SOCIAL
ENTERPRISE SECTOR AND
HISTORY
3.1 Overview
The emergence of social enterprises in Cambodia can be largely attributed to its NGO
sector. Following the end of the civil war, billions of dollars in foreign funding was channeled
into Cambodia to finance post-conflict reconstruction efforts. This led to numerous
international NGOs operating in the country, which in turn also led to a proliferation of
6
local NGOs being set up to draw on such funds (Lyne 2017). However, since 2006,
international aid has been channeled more to government budget support than to civil
society, resulting in greater competition for grants amongst NGOs. Grant funding for
NGOs has been especially scarce in recent years, especially after Cambodia was accorded
lower middle-income status by the World Bank. Pledges fell dramatically by more than 70
percent after 2012, as international donors directed their efforts elsewhere (Lyne 2017).
The drying up of foreign aid has led to local NGOs to diversify their approach to financing
and revenue streams. In recent years, one out of every five NGOs has sought to establish
earned income as an alternative to grants (Lyne et al. 2015). Some NGOs have adopted
partnerships with private sector companies and investors, in a model known as “social
business.” Others have forged partnerships with cooperatives in the agriculture sector.
However, the most popular model is that of a “trading non-profit,” in which NGOs use a
business model to deliver goods and services, in effect replacing grants with trading profits
as much as possible (Lyne 2017).
Cooperatives (the majority of them being agriculture cooperatives) and microfinance
institutions are also present in the social enterprise sector in Cambodia (Lyne 2017). Both
are formally supported by government legislation. For example, microfinance was
incorporated into the government’s Financial Sector Development Plan in the early 2000s.
Agricultural cooperatives date back to the 1950s, and were revived by a Royal Government
of Cambodia decree in 1998 and a subsequent sub-decree. They are designed for exclusively
mutual dividends, where dividends are returned to shareholders (Lyne et al. 2015).
3.2 Timeline of major events
Year Major Event
2011 First Social Enterprise Conference of Cambodia held: jointly organized by
the Royal University of Phnom Penh, the University of Bradford, and the
Friends International (an international NGO), and funded by the U.K.
Department of International Development (RUPP 2016).
2013 Angkor Hub, the first known coworking space supporting social
innovation, is established in Siem Reap (LinkedIn 2017).
2013 Young Startups, a social business incubation program initiated by Investing
in Children and their Societies (ICS) is launched in November (Cheung
2014).
2013 Social Enterprise Cambodia, an online communication platform and
directory of social enterprises, is launched (Crane 2015).
2015 Impact Hub Phnom Penh, a community and coworking space for
entrepreneurs and social entrepreneurs, is established in Phnom Penh in
March (Crane 2015).
3.3 Government policies
Policy framework
As there is no legal recognition of social enterprises by the Royal Government of Cambodia,
there are no policies, legislation or formal government support in place specific to social
enterprises.
7
Legal framework
Cambodia does not have a legal definition for social enterprises. In general, the forms of social
enterprise found in Cambodia are microfinance institutions, agriculture cooperatives, and
trading activities run by NGOs. With the exception of microfinance institutions and
agriculture cooperatives, the majority of social enterprises operated by NGOs tend not to be
registered as separate business entities, as the legality of non-profit trading in Cambodia is
currently ambiguous. Other reasons for the lack of formal business registration is the
bureaucratic complexities and corruption as deterrents (Lyne 2017).
Tax exemptions and incentives
No information found in research.
Schemes to encourage consumption and investment in social enterprises
No information found in research.
Marks, labels, and certification
No information found in research.
4 ECOSYSTEM
Categories of Ecosystem Players List of Organizations
1. Policy Makers
Ministry of Commerce (for businesses)
Ministry of Interior (for local NGOs)
Ministry of Foreign Affairs and
International Cooperation (for
international NGOs)
2. Professional and Support Services
Providers
Emerging Markets Consulting
Sevea Consulting
3. Capacity Builders
a) Incubator/Accelerators
SHE Investments
Impact Hub Phnom Penh
Trybe
b) Educators of Social
Entrepreneurship
(none- currently no SE-specific programs
taught in educational institutions)
c) Facilitators of learning and
exchange platforms for social
enterprises
Development Innovations
Social Enterprise Cambodia
Friends International
4. Research Institutes Cambodia Development Resource
Institute
Royal University of Phnom Penh
5. Network Providers Impact Hub Phnom Penh
Trybe
6. Fund Providers ARUN LLC
8
Insitor Management
Uberis Capital
Nexus for Development
7. Competition Organizers Mekong Challenge
5 SOCIAL ENTERPRISES
5.1 Sector of activities
Social enterprises in Cambodia are active in a number of fields including the following:
Vocational training businesses
Energy, environment, and livelihoods
Health
Agriculture
Education
Hospitality and tourism
Apparel
Handicrafts and artisanal Products (Lyne et al. 2015)
5.2 Beneficiaries
Using NGOs as a proxy as discussed earlier, the main beneficiaries targeted by social
enterprises in Cambodia are children and youth, women, and people with disabilities (Lyne
et al. 2015)
5.3 Geographical reach
Social enterprises are more concentrated in urban areas and are working nationally (SEC
2017). Most have not ventured overseas.
5.4 Types of social enterprises
Total
Number of
Social
Enterprises
Number of
Cooperatives
Number of
Microfinance
Institutions
Number of
Social
Enterprises
Number of
Other Forms
of Social
Enterprises
412–1,847 375 farmers
cooperatives
(2012) (Ministry
of Planning,
2014)
37 (2013)
(Ministry of
Planning, 2014)
85 (SEC 2017)1
approximately
1,350 active
NGOs and
1 The listing on SE Cambodia is not exhaustive, it is believed there are more social enterprises than listed here.
9
associations
(ICNL 2017)2
It is hard to estimate the total number of social enterprises in Cambodia.
However, there are a number of different and sometimes overlapping statistics available for
consideration. Social Enterprise Cambodia has a listing of 85 social enterprises (SEC 2017),
though the listing is not exhaustive and it is believed that there are many more social
enterprises than those listed there. There are also an estimated 1,350 active NGOs and
associations (ICNL 2017), of which some of these may have social enterprise arms or projects.
In addition, there are 375 cooperatives (Ministry of Planning 2014) and 37 microfinance
institutions (Ministry of Planning 2014). Based on these various statistics, the number of social
enterprises in Cambodia is likely to range from 412 to 1,847.
5.5 Revenue stream and markets
No information found in research.
5.6 Legal forms
There is no specific definition of a social enterprise under Cambodian law (British Council et
al. 2018). Instead, social enterprises most commonly register as an association or a
nongovernmental organization. Other possible legal structures include sole proprietorship,
partnership, limited company (limited companies take two forms: private and public), and
representative office of a foreign company (British Council et al. 2018). Note that “limited”
in the term “limited company” refers to limited legal liability. Descriptions of these legal
structures can be found in Annex 2
Under Cambodian law, charity-linked activities are tax-exempt. Various groups have
analyzed how this would apply to the work of NGOs. For example, Social Enterprise
Cambodia (SEC) concluded that the law means that the commercial activities of NGOs are,
in theory, tax-exempt as long as they are directly linked with the NGO’s mission (SEC
2017). However, how this exemption works in practice depends on how government tax
officials interpret the law.”
5.7 Business life cycle
No information found in research.
5.8 Size of social enterprises (by number of staff, Financial revenue and reach)
No information found in research.
2 However, this study has been unable to ascertain the proportion that are considered social enterprises, i.e.,
that have trading activities.
10
5.9 Social finance
Investment sources for social enterprises in Cambodia include impact investors, venture
philanthropists, and angel investors. Startup capital tends take the form of loans and/or gifts
from friends and families and the entrepreneur's own savings. At this stage, grants from
donors and seed monies from angel investors may also be available. Incubator programs or
competitions may also provide funding; in addition to non-monetary support, such programs
usually offer small seed monies to successful applicants (SEC 2017).
6 CHALENGES AND
OPPORTUNITIES
6.1 Challenges
Business registration
In Cambodia, 90 percent of the population makes its living in the informal sector, and less
than 8 percent of enterprises are formally registered as businesses (Lyne 2017). Bureaucratic
complexities and taxes are deterrents for formal business registration (Lyne 2017, The Phnom
Penh Post 2016). Cambodia currently ranks 135 (out of 190 countries) based on the measure
of ease of doing business by the World Bank (2018). This limits the potential for informal
social enterprises to access impact investment—a challenge that has also been mentioned by
Alberto Cremonesi, the co-founder of Impact Hub Phnom Penh (IHPP), one of the leading
social enterprise support entities in the country. He has noted that startups tend to delay
incorporation, which undermines their validity to customers and business partners and also
restricts their market access (Cremonesi 2017). This also leaves SEs that do register and pay
taxes at a cost disadvantage, says Dara Huot, CEO of Phare Performing Social Enterprise
(PPSE) (Huot, Dara 2017).
Limited access to financial support
Huot opines that Cambodia lacks a robust impact investment ecosystem. Social impact funds
are few in number and local investors lack awareness and understanding of impact investing
(Huot 2017). Specifically, there is a funding gap for social enterprise startups, says Cremonesi.
While there is a growing number of incubation programs and competitions awarding small
grants, there is still a lack of funding for small startups as they strive to mature to a stage at
which they can attract the attention of impact investors. Kongngy Hav of My Dream Home
(Hav, Kongngy, personal correspondence, Oct 18 2017) believes the gap is in the range of
US$50,000 – US$200,000.
Talent acquisition
Huot observes that the stronger social enterprises in Cambodia were successful because they
have strong, skilled staff, people with business skills and experience and also the heart for
social impact. Hav shares that the culture of doing business with a social mission is atypical,
therefore it is difficult for social enterprises to find good talent.
11
6.2 Opportunities
The potential of “strength-based approach” to support community-level efforts
Some commentators believe that top-down approaches do not make good use of the unique
ways social enterprises can help strengthen democratic communities (see, e.g., Lyne 2017).
Lyne also argues that international development institutions should support the further
development of strength-based social enterprise development approaches, in partnership
between academics, community development specialists, and the communities themselves.
Market for social entrepreneurial solutions
“The advantage that Cambodia has is that it has a lot of social issues that are urgent,
pressing, lacking resources and thus need addressing- in other words there is a market for
social entrepreneurial solutions,” says Cremonesi (Cremonesi 2017).
Young, entrepreneurial population
Cambodia’s youth makes up more than half of the population and has great potential. This
can be an opportunity for social enterprise, especially given the cultural change apparently
underway and observed by experts such as Cremonesi, in which people are more open to
risk and entrepreneurship more accepted at family level (Cremonesi 2017). It has also been
noted that young people are more socially and environmentally-aware, and ready to
incorporate impact into their business ideas (Hav 2017).
12
7 RECOMMENDATIONS
More resources directed to local and rural entrepreneurs
While there is good market potential for social entrepreneurial solutions, most of the social
entrepreneurship development is limited to the main cities. Better distribution of
opportunities beyond the cities is needed (Cremonesi 2017). Directing more funding to
rural social entrepreneurs would also be advised, as would investing more in local social
entrepreneurs, who have more staying power than most foreign actors (Hav 2017).
Enhancing the role of government in supporting social enterprises
Some commentators believe that government support could significantly catalyze the
development of social enterprises in Cambodia. While this could take the form of support
specially tailored to social enterprises, these enterprises could even benefit from
government support targeted more broadly to cover all start-ups (Cremonesi 2017).
The government could also help by lowering the costs of registration and running a
business. In lowering high taxes for businesses, Huot recommends that there could be more
synergy between the Ministry of Economy and Finance which oversees taxation, and the
Ministry of Commerce which oversees businesses (Huot 2017). Other useful measures
would include legal recognition of social enterprises, so as to receive special support such as
tax incentives, as well as recognition by local authorities to facilitate better cooperation
(Hav 2017).
Finally, the establishment of a formal association for social enterprises, similar to a chamber
of commerce, would also assist in coordination and support for social enterprises trying to
get started (Huot 2017). Ideally, such an entity would have legitimacy to lobby the
government and other policy makers to implement policies that support the social
enterprise sector.
Better channeling of financial resources for more holistic support
Financial resources should be better channeled to meet the needs of smaller companies and
start-ups, and room should be created for experimentation through a variety of funding
mechanisms including the use of incubators (Cremonesi 2017). Given that one obstacle for
smaller entities is the cost of due diligence, this cost could be lowered by outsourcing the
due diligence to incubators. More resources should also be made available for
intermediaries who support the growth of budding social enterprises (Cremonesi 2017).
More holistic support and pooled resources to help social enterprises grow should also be
provided. There should also be educational efforts that help supporters to better
understand the problems faced by social enterprises and share localized knowledge (Hav
2017). Increasing the total amount of funding available to social enterprises would be a key
component of those efforts. In that vein, it would be worth exploring the possibility of
international investors partnering with regional and local investors such as Insitor
Management, ARUN LLC, and Nexus for Development to gain further insights into the
13
sector and offer more informed support (Asian Venture Philanthropy Network [AVPN]
2017).
Social entrepreneurship education
Given the growing interest in social impact amongst the youth in Cambodia, relevant
decision makers should consider incorporating teaching on social impact and social
entrepreneurship into existing business curricula (Cremonesi 2017). Investors and
incubators should also increase opportunities for young, budding social entrepreneurs to
learn and experience entrepreneurship through fellowships, incubation/accelerator
programs, and competitions (AVPN 2017).
14
ANNEX 1: MAIN PLAYERS IN THE
SOCIAL ENTERPRISE ECOSYSTEM
The following descriptions of the organizations drawn from and may quote their websites
and/or other indicated sources. The players are grouped according to types of ecosystem
players.
1. Capacity Builders
Development Innovations
http://www.development-innovations.org/about-us/
Development Innovations is a six-year project funded by the United States Agency for
International Development and implemented by DAI Global, a global development company
based in Bethesda, Maryland in the United States. Running from 2013 through 2019, the
project is designed to help civil society organization (CSOs), technology companies, and
social enterprises design and use information and communication technology (ICT) solutions
to address Cambodia’s development challenges.
More specifically, the project provides the following support services:
Tech coaching and ICT for development (ICT4D) advisory services;
Tech services to help Cambodians use in-demand technologies;
Grants and partnerships fund to support ICT solutions;
Building the capacity of Cooperation Committee for Cambodia to deliver sustainable
ICT services for NGOs; and
Partnering with Impact Hub to pilot a tech-focused incubator program to support
social startups.
Royal University of Phnom Penh
http://www.rupp.edu.kh/content.php?page=about_rupp
The Royal University of Phnom Penh (RUPP) is Cambodia’s oldest university and a full
member of the ASEAN (Association of Southeast Asian Nations) University Network. With
over 12,000 students, RUPP is also one of the largest public universities. It offers a wide range
of degrees in the sciences, humanities and social sciences, as well as fields such as information
technology, social work, and tourism. RUPP maintains extensive relationships with Cambodian
and international NGOs, local and international universities and government ministries, and
adjunct faculty members from such entities regularly further expand RUPP’s capacity.
In 2009, RUPP’s Master of Arts Program in Development Studies collaborated with the
University of Bradford and Friends International successfully collaborated to secure three
15
years of seed funding from the British Council to develop post-graduate tuition and academic
research on social enterprise in Cambodia (RUPP 2016).
2. Network Providers
Impact Hub Phnom Penh
https://phnompenh.impacthub.net/about-us/
Impact Hub Phnom Penh describes itself a co-working space, a business incubator, and a
social enterprise builder, committed to fostering a community of like-minded people striving
to make the world a better place. Committed to aligning its work with the Sustainable
Development Goals, Impact Hub also encourages its members to do the same.
3. Fund Providers
ARUN LLC
http://www.arunllc.jp/en/arun/description/
ARUN LLC is a social investment platform, focused on investing in social entrepreneurs in
developing countries including Cambodia. With capitalization from Japanese individuals and
corporations, ARUN connects entrepreneurs and investors to create what it describes as a
“meaningful money flow of investments” to foster a sustainable and rich society and build a
platform for social investment.
ANNEX 2: TYPES OF LEGAL ENTITIES
Types of relevant legal entities recognized under Cambodian law.
Legal Entity Description
Sole Proprietorship A sole proprietorship is the simplest form of business, often
employed for small businesses. It is owned by one individual,
who is wholly responsible for financing and managing the
business. Tax rate on profit is progressive, and zero if below
12 million KHR, or US$3,000 equivalently. However, there
are still other taxes to consider, such as the annual patent
tax, value-added tax, minimum tax and withholding tax.
Under this structure, the capacity to raise capital is limited to
the owner’s personal and borrowed capital. While the owner
has full discretion over how the sole proprietorship should
operate, he/she is also wholly liable for all business debts and
obligations.
Partnership A partnership is similar to a sole proprietorship but has more
than one owner. It faces a similar tax structure to sole
16
proprietorship, and partners are jointly liable for all business
debts and obligations. In addition to partner’s personal and
borrowed capital, a partnership can issue new ownership
interests to increase capital, reducing the need to borrow
funds through equity financing.
Limited (Liability)
Company
A limited company is a legal entity that has the capacity,
rights, and privileges similar to a natural person, and can own
property and enter into contracts. Shareholders are
therefore not personally liable for business debts and
obligations, beyond their investment committed. A private
limited company can have up to 30 shareholders, while a
public limited company can issue debt and equity securities to
the general public. However, compared to above legal
structures, there are more registration formalities and
regulation, and most limited companies face a flat 20 percent
tax rate on profits.
Representative Office
and Branch Office of
Foreign Companies
A company incorporated outside Cambodia may establish
a Cambodian subsidiary in the form of a partnership or a
limited company as discussed above. While it faces minimal
regulatory requirements due to its limited scope of
operation, it is not permitted to generate revenue, and
therefore pay no taxes on profits. The parent company
remains fully liable for the branch’s obligations.
Association/NGO In 2015, Cambodia passed the Law on Associations and Non-
Governmental Organizations (LANGO) to govern and
restrict the activities of NGOs. Organizations can legally
register as a Domestic or Foreign Association, or a Domestic
or Foreign NGO. An association serve the interests of its
members, while an NGO serves the interests of the general
public. Under these legal structures, organizations cannot
share or generate profits.
NGOs are non-membership organizations which may include
foundations. While NGOs may be eligible for tax
exemptions, it faces heavy obligations in reporting assets and
liabilities, and registration may be challenging. LANGO does
not prohibit domestic NGOs from conducting income-
generating activities, though foreign NGOs may be prohibited
from doing so. All income generated must be retained or
invested in their social activities.
Source: Extracted from British Council (2014) ASEAN Social Enterprise Structuring Guide, pp.
18–44.)
17
ANNEX 3: PROMINENT SOCIAL
ENTERPRISES
This annex provides examples of the range of social enterprises operating in Cambodia.
Example 1: Phare Performing Social Enterprise (PPSE)
Established in 2012, Phare Performing Social Enterprise (PPSE) is a former NGO turned social
enterprise. It creates, produces, and promotes artistic and cultural productions in Cambodia
and abroad. The Association Phare Ponleu Selpak (PPSA) is a local NGO which supplements
formal education for students by providing them with arts education. Artists from the
Association PPSA are then hired by the PPSE. One-third of students also participate in
performing arts, visual arts, or music classes. The majority of the students are underprivileged,
and some are orphans, street children, or live in difficult family settings. However, PPSA
fosters social diversity within the student cohorts by adopting an open-door policy that
welcomes students from all backgrounds and social classes (CERISE 2014).
Most of PPSA students are trained in the circus trade and upon graduation, are hired by PPSE
where they receive an average wage that is thirty times higher than that of other Cambodian
artists. Apart from providing quality employment opportunities, PPSE fortifies the cultural
identity of Cambodia. In addition, it guarantees the financial sustainability of its parent
organization PPSA, thus providing access to education for underprivileged youth (PPSA holds
71 percent of shares in PPSE).
PPSE managed to reach its break-even point before the target year of 2015. Its operates using
a social charter model, in which profit maximization is not the main objective and dividends
by shareholders are issued to social projects. The charter also lays out the terms of the share
ownership structure and conditions for shareholder withdrawal: PPSA will remain as the
major shareholder of PPSE for the next 99 years, which shields PPSA and PPSE from risks
(CERISE 2014).
Example 2: Hydrologic Social Enterprise Co. Ltd.
Hydrologic Social Enterprise is a for-profit social enterprise that manufactures, distributes,
and sells water filters to poor customers in rural Cambodia. As of June 2015, Hydrologic had
sold over 400,000 filters, benefiting nearly 2 million Cambodians (Roberts 2015).
Hydrologic grew out of a safe water program started by iDE, an international NGO, in 2001.
The goal of the project was to bring affordable household water treatment options to rural
Cambodia. It operated on a partial cost-recovery basis, using revenue generated by sales to
cover production and distribution costs, while marketing and back-office costs were covered
by grants. iDE later turned the grant-funded program into a for-profit enterprise. In 2010,
Hydrologic was formally registered as a wholly-owned subsidiary of iDE. It became profitable
18
in 2012 and has remained so each year since (Roberts 2015).
Case Study 3: Frangipani Villa Hotels
Frangipani Villa Hotels is a chain of mid-range hotels located in Phnom Penh and Siem Reap,
fully owned by Cambodians. The executive team consists of three local entrepreneurs: an
architect, a former UN development consultant, and a former university lecturer in
economics and public policy.
The goal of Frangipani is to alleviate the issue of sex tourism and to run its operations in an
environmentally-conscious manner that uses clean energy and reduces its environmental
footprint. Frangipani collaborates with international NGOs to train and provide job
opportunities to people from disadvantaged backgrounds such as handicapped individuals,
people from single-mother homes, and poor rural villagers. In addition, Frangipani supports
an orphanage by facilitating the sale of handicraft items made by the children in its hotel and
donates activity funds and bicycles to the orphanage. Frangipani also supports the local
economy by partnering with local carpenters to create interior equipment for the hotel
(ARUN 2017b).
19
REFERENCES
References for Country Profile Statistics
Some statistics have been rounded to two decimal places.
Key Statistics Source
GDP per capita World Bank. 2017. “GDP Per Capita (Current
US$).” DataBank online. World Bank.
http://data.worldbank.org/indicator/NY.GDP.PC
AP.CD.
GDP growth over past 5 years
(annualized)
Adapted from World Bank. 2017. “GDP Per
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World Bank.
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KTP.KD.
Population World Bank. 2017. “Population (Total).”
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TL
Population age structure ASEANstats. 2016. ASEAN Community in Figures
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Percentage of population living in urban
areas
World Bank. 2017. “Urban Population (% of
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Number of people living under
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AY.
National poverty line Ministry of Planning, Royal Government of
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Human Development Index United Nations Development Program. 2016.
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20
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