Chapter three provides an overview of the SME sector in Cambodia. Most businesses in Cambodia are micro-enterprises, and the number of SMEs and large enterprises is very limited. Cambodia's industrial structure lacks a middle level, which means that Cambodia has many more micro-enterprises and fewer SMEs to support large enterprises. However, the performance of micro-enterprises and SMEs makes a significant positive contribution to gross value added and job creation for the economy. Furthermore, in chapter four we will provide the reader with the main barriers that SMEs and micro-enterprises are facing recently, such as the legal and policy framework, limited access to finance and competitive barriers. In this chapter, some solutions will be provided as measurement to improve these SMEs and micro-enterprises -business barriers and identify opportunities for the future development of SMEs and micro-enterprises. 5.1 Policy and legal framework reform It is really important that the RGC improves its legal and policy framework on SMEs and micro-enterprises. The effective legal and regulatory framework encourages investors to start businesses in a sound business environment. There are several areas in the reform of the legal framework that the government should give consideration to, such as the following: Efficiency of government institutions: To improve the sound and safe legal and policy framework for SMEs and micro-enterprise development, there is a need for efficiency of government institutions. Cambodia established the SME Subcommittee in 2004; however, government department or agency has not been established, so RGC should create a department or agency responsible for SME development. This department and agency should have locally which is easy to find… middle of the paper… and large businesses and foreign direct investment. Improving the legislative and regulatory environment (reliable regulation, stable political environment, economic stability) can attract more FDI and investment in potential sectors. The government can help SMEs to subcontract with large companies. First, SMEs can subcontract producing some spare parts and components to support large enterprises. Thanks to improved production, SMEs can be suppliers of all these products directly to large companies. In addition to subcontracting, networking in formal coordination and information exchange between SMEs are very important to activate the agglomeration effects of industrial clusters. A significant positive point arising from the development of business connections allows SMEs to gain experience from large enterprises by acquiring new technologies and innovation.