A DRAFT law on financial leases was adopted Wednesday by the National Assembly that officials say will help businesses and enterprises obtain long-term sources of capital from banks or lease companies in the wake of the global economic crisis.
"Currently, banks in Cambodia dare not grant long-term (five- or 10-year) loans to businesses because they are worried about losing their money, and this is an impediment for entrepreneurs to expand businesses and-small-and-medium enterprises (SMEs)," Chea Chanto, governor of the National Bank of Cambodia (NBC), told the Assembly. "The draft law on financial leases will enable businesses and SMEs in Cambodia to obtain a long-term source of capital from the banking and financial system with limited collateral."
He explained that financial leases refer to the leases of assets and properties over the long term, between a lessor (a licensed bank or lease company) and a lessee (a developer, manufacturer or other customer). He added that financial leases could include properties such as machinery and all kinds of equipment, but excluded land and buildings.
Chea Chanto said that the law passed by the National Assembly set out the legal framework for financial lease agreements, including the items that can be leased, and pricing structures and the periods of lease fee payment.
It will help develop
Cambodia's SMEs, which contribute about 65
percent to GDP.
"Commercial banks or lease companies which want to operate as a financial lessor can apply for an operating licence from the NBC," he added.
Sam Rainsy Party parliamentarian Yim Sovann said he supported the law. "I appreciate the government for creating this law, as the country is suffering from the global financial crunch," he said. "It will help develop Cambodia's SMEs, which contribute about 65 percent to GDP and employ 85 percent of the entire workforce."
But Ly Sreyvina, another SRP lawmaker, expressed concerns that the process of applying for a licence to operate as a lessor would be unfair due to corruption and bureaucratic red tape.
"I'd like to appeal for openness in applying for licences to avoid monopolies ... the period of the licence issuance should be stated clearly to facilitate investors," she said.
Chea Chanto said that after the law was passed, the NBC would cooperate with the Asian Development Bank to ensure licences were issued fairly.