appendix 2 - pdf.usaid.gov

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APPENDIX 2:

COUNTRY REPORT:

CAMBODIA

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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

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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

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1 COUNTRY PROFILE – STATISTICS

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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

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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

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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.

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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


Marks, labels, and certification


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

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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.

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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


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


5.8 Size of social enterprises (by number of staff, Financial revenue and reach)


2 However, this study has been unable to ascertain the proportion that are considered social enterprises, i.e.,

that have trading activities.

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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.

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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).

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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

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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).

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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

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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

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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.)

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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).

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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

Capita (Constant 2010 US$).” Databank online.

World Bank.

http://data.worldbank.org/indicator/NY.GDP.M

KTP.KD.

Population World Bank. 2017. “Population (Total).”

DataBank online. World Bank.

http://data.worldbank.org/indicator/SP.POP.TO

TL

Population age structure ASEANstats. 2016. ASEAN Community in Figures

(ACIF) – 2016. Manila: ASEAN.

Percentage of population living in urban

areas

World Bank. 2017. “Urban Population (% of

Total).” DataBank online. World Bank.

http://data.worldbank.org/indicator/SP.URB.TO

TL.IN.ZS.

Adult literacy rate ASEANstats. 2016. ASEAN Statistical Leaflet –

Selected Key Indicators 2016. Manila: ASEAN.

Number of people living under

international poverty line (US$1.90 per

day)

World Bank. 2017. “Poverty Headcount Ratio

at $1.90 a Day (2011 PPP) (% of Population).”

DataBank online. World Bank.

http://data.worldbank.org/indicator/SI.POV.DD

AY.

National poverty line Ministry of Planning, Royal Government of

Cambodia. 2013. Poverty in Cambodia- A New

Approach. Phnom Penh.

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Poverty%20Line-FINAL%20APR%202013.pdf.

Human Development Index United Nations Development Program. 2016.

“Human Development Reports. Table 1:

Human Development Index and Its

20

Components.” Table online. UNDP.

http://hdr.undp.org/en/composite/HDI

Gini coefficient ASEANstats. 2016. ASEAN Community in Figures

(ACIF) 2016. Manila: ASEAN.

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appendix 2 - pdf.usaid.gov

Documents