The lending rules and procedures of the recently-launched $150 million Tourism Recovery Co-Financing Scheme (TRCS) were officially established on July 1, in a move to boost recovery in the Covid-hammered industry, according to a tourism ministry letter issued on the same day.
The TRCS was rolled out on May 17 to provide a lifeline for businesses involved in the tourism value chain that are deemed to have been significantly impacted by the Covid-19 crisis, and is currently implemented with the support of 19 participating financial institutions (PFI).
The scheme was financed by a counterpart fund between the government and financial institutions, with $75 million of the national budget to be disbursed in the form of loans issued by state-run Small and Medium-sized Enterprise Bank of Cambodia Plc (SME Bank), and the other $75 million through loans made via the PFIs, which comprise commercial banks and microfinance institutions (MFI).
Key offerings of the TRCS include a maximum interest rate of 6.5 per cent per annum, a 16-month grace period on principal payments, loan term of up to seven years, loan amount of up to $400,000, and the option of receiving funds in either riel or US dollars, according to a July 1 notification letter addressed to tourism industry bodies and business owners in Cambodia.
The letter instructed business owners to apply at PFIs for loans under the TRCS, “for the purpose of restoring business operations, or expansions or diversification of tourism services, to be ready to receive national and international tourists”, and noted that financing would be provided on a first-come-first-served basis until funds are exhausted.
Cambodia Association of Travel Agents (CATA) president Chhay Sivlin told The Post on July 3 that the move comes timely as the tourism sector gears up from a sizeable uptick in foreign travellers expected from October.
However, she argued, obtaining loans from the TRCS will not be a walk-in-the-park, especially for businesses without adequate collateral, which she noted would be required to purchase credit guarantees from the Credit Guarantee Corporation of Cambodia Plc (CGCC) for a pretty penny.
Regardless, Sivlin believes that the scheme will have a considerable number of takers as more foreign holidaymakers book trips to and across Cambodia, and create multiple tailwinds to support a long-awaited recovery in the ailing tourism sector after more than two years of Covid blows.
CGCC deputy director-general No Lida previously noted that eligible businesses can obtain a Letter of Guarantee (LG) by contacting the institution where they applied for the loan, which will in turn request the LG from the CGCC.
The tourism ministry listed the 19 current PFIs as Chip Mong Commercial Bank Plc, Hattha Bank Plc, ACLEDA Bank Plc, Advanced Bank of Asia Ltd (ABA), Sathapana Bank Plc, Cambodia Post Bank Plc (CP Bank), Wing Bank (Cambodia) Plc, Prince Bank Plc, Canadia Bank Plc, Phillip Bank Plc, Asia-Pacific Development Bank Plc (APD Bank), Phnom Penh Commercial Bank Plc, CIMB Bank Plc, Saigon Thuong Tin Bank (Cambodia) Plc (Sacombank Cambodia), RHB Bank (Cambodia) Plc, Foreign Trade Bank of Cambodia (FTB), LOLC (Cambodia) Plc, Prasac Microfinance Institution Plc and CAMMA Microfinance Ltd.