Individual Consultant for an Analysis of incentives for formalization, including gender responsive and inclusive options (Албания - Тендер #46218458)

Over the last decade, Cambodia has made significant strides in developing its economy and reducing poverty. Consumption and disposable household incomes increased substantially in the 2010s. According to recent labour force surveys, average incomes increased from US$117.70 per month in 2012 to $263.20 per month in 2019. This coincided with a shift in workers away from contributing family work and towards own-account and wage and salaried work. There has also been a sectoral shift in work, away from agriculture and towards both services and industry.

Cambodias private sector has grown significantly in the last decade, and MSMEs continue to play an important economic role, providing incomes for millions of Cambodians. There were 735,456 non-agricultural establishments according to the 2022 economic census, excluding agricultural businesses involved in production. Approximately 99.8 percent of these are MSMEs, which are collectively responsible for 58 percent of employment and 58 percent of gross domestic product (GDP).

For small and medium enterprises (SMEs), the drivers of informality are more complex. There are numerous types of financial and time costs associated not just with formalizing, but with remaining formal, and these shape enterprise decisions about formality. The time and financial costs of taxes are one example. However, it is not only the cost of paying taxes that must be taken into account, but also the tax-related risks and uncertainty. The financial costs of formalizing are also comparatively high. Other drivers of informality are the lack of enforcement, the perceived value for money of the public services in place, and issues in the legal and regulatory framework.

Cambodia has a range of incentives to encourage enterprises to formalize though at present they are targeted at SMEs only. Existing incentives include a three-year income tax exemption for new SME tax registrations in certain sectors, and for all SMEs located in SME clusters. The Business Recovery Guarantee Scheme launched in 2021, the Entrepreneurship Development Fund, and the Skills Development Fund are other examples.

Against this background, the ILO Office of Cambodia is seeking proposals from qualified and experienced service providers to conduct an analysis of options to increase incentives for formalization, including options that are gender-responsive and inclusive. Please refers to the attached ToR file for details and deliverables, and strictly follow the application process.