A total of $25.15 million in loans have been disbursed to 189 tourism-related enterprises under the $150 million Tourism Recovery Co-Financing Scheme (TRCS) as of September 30 – most of which are in the restaurant business – representing just over one-sixth of the scheme’s funds, according to the state-owned Small and Medium Enterprise Bank of Cambodia Plc (SME Bank).
Broken down by category, restaurants accounted for the most funds, at a 38 per cent share, followed by hotels (25 per cent), guesthouses (25 per cent) and other businesses (12 per cent). A total of 44 per cent went to women-owned businesses – accounting for rounding, this would be in the $10.938-$11.194 million range.
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 22 participating financial institutions (PFI) – including three newcomers.
The scheme’s lending rules and procedures were officially established on July 1, which opened the door for loan applications.
It was financed by a counterpart fund between the government and the financial institutions, with $75 million of the national budget to be disbursed in the form of loans issued by the 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 24-month grace period on principal payments, loan term of up to eight years, loan amount of up to $600,000, and the option of receiving funds in either riel or US dollars, SME Bank CEO Lim Aun told The Post on October 9, noting that some of these limits were only changed recently.
He said that from July 1 to September 30, owners of 191 tourism-related businesses applied for loans under the scheme at the SME Bank or the PFIs, noting that two were found to be ineligible – suggesting that one application was still pending as of the end of last month.
Aun stressed that TRCS loans had slowed down due to uncertainty in the international tourism market. “However, after a number of conditions were eased, and given the recent increase in loan size, we hope there’ll be a pickup in lending activity,” he said.
Pacific Asia Travel Association Cambodia Chapter chairman Thourn Sinan underscored that the TRCS in theory could be crucial to kickstarting the tourism sector post-Covid-19, but in practice, the scheme’s conditions present a barrier for businesses that have had financial problems.
He explained that many tourism businesses and a slew of other enterprises have been saddled with interest-laden debt and related problems due to the inability to repay during the height of the pandemic, as profits tumbled.
“Although the TRCS’s interest rates are a bit lower, its loan conditions present loads of obstacles,” Sinan said.
Regardless, he called on the SME Bank to look into expanding the scope of the scheme to other businesses that could be seen as significantly contributing to drawing in foreign visitors to Cambodia.
The SME Bank lists the 19 initial 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.
The state-owned enterprise also notes that three new PFIs have since been brought onboard: Amret Microfinance Institution Plc, Hong Leong Bank (Cambodia) Plc and Cambodia Asia Bank Ltd.
