The Effects of WTO Membership on the Small and Medium Enterprises and Garment Sector by Hang Chuon Naron Deputy Secretary General, Ministry of Economy and Finance, Royal Government of Cambodia The vast majority of firms operating in Cambodia are microenterprises, very small firms of 10 or fewer employees. These informal, unregistered firms play an important role in economic development, offering employment and income opportunities to poor and unskilled people. These microenterprises are the most common stepping-stone to small and medium-scale enterprises (SMEs), which typically employ up to 20 employees. In turn, the SMEs serve as a major vehicle of upward social mobility, enabling people to move out of lower-productivity occupations. Over the past several years, the garment industry has rapidly developed and grown, becoming the most important industrial and manufacturing sector of the Cambodian economy. Employment in garments and textiles has been a major stabilizing force for the population and the economy in recent years, as the sector has absorbed a large number of skilled and semi-skilled labor, especially female workers who would have otherwise been unemployed or under-employed. The development and sustainability of SMEs and the garment industry are crucial to the short-to-medium term development and welfare prospects of Cambodia. Cambodia is in the midst of the process toward becoming a member of the World Trading Organization(WTO). Given the overall fragility of the economy, 42