Logo of Phnom Penh Post newspaper Phnom Penh Post - AEON widens HP to farmers

AEON widens HP to farmers

AEON widens HP to farmers

9 Kampong Cham province

AEON Microfinance (Cambodia) Co Ltd says it has expanded its instalment payment services into the agricultural sector, a new business type industry insiders say could be successful, but will still not be enough to strengthen one of Cambodia’s most crucial economic sectors.

“We will co-operate with agricultural equipment shops and provide the instalment for appliances such as cultivators, which cost about $2,000. We pay to the shop, and the customer pays to us monthly,” managing director Daisuke Maeda told the Post.

“But we understand that the customer [farmer] might not have a monthly income. So we will look at the market first, and the scheme will be changed according to the market demand.”

Part of Japan’s AEON Group, the microfinance institution (MFI) started offering an instalment service, or hire purchase (HP), in December 2011 for electrical appliances and motorbikes, which is different from loans directly given in cash to the customer.

Compared to other players in Cambodia’s crowded MFI market, AEON will charge a relatively high interest rate of about 3.3 per cent per month but does not take any collateral.

Bun Mony, president of the Cambodia Microfinance Association and chairman of MFI Sathapana Ltd, said despite their higher interest rates, they can compete with players who take collateral on a cheaper rate and “if [AEON] is professional enough, they can be successful.”

Independent agricultural analyst Srey Chanthy said “[Demand for agricultural loans and services] is quite high, and the supply is still limited, so I think they can do a good business because farmers need . . . planters, they need pumps.”

Earlier this week the Post reported that experts have long been concerned that a shortage of loan activity in Cambodian agriculture sector hinders its development. Even if loans are rising from major financial institutions, they fear it does not answer the real market demand.

Research by Srey Chanthy showed that at least $1 billion per year is needed by farmers to strengthen production, he reported.

“A loan cannot be the solution – we need more support from different sectors,” Bun Mony said.   

Srey Chanthy said having one more contributor to the sector “can increase the amount of loans [and] offset some of the demand”.

But microfinance institutions “won’t care very much how farmers do their work”. He said rather than just giving them capital, MFIs should provide more advice to the farmers.

“The service provider should provide advice on . . . how can they increase productivity, where can they market their products – they [currently] don’t have those things. That’s why farmers cannot move out of poverty as fast as they wish.”

MOST VIEWED

  • Proof giants walked among us humans?

    For years a debate has waged about whether certain bas relief carvings at the 12th-century To Prohm Temple, one of the most popular attractions at the Angkor Wat Temple Complex in Siem Reap province, depicted dinosaurs or some rather less exotic and more contemporary animal,

  • New US bill ‘is a violation of Cambodian independence’

    After a US congressmen introduced bipartisan legislation that will enact sanctions on Cambodian officials responsible for “undermining democracy” in the Kingdom, government officials and the ruling Cambodian People’s Party on Sunday said they regarded the potential action as the “violation of independence and sovereignty

  • Long way to go before Cambodia gets a ‘smart city’

    Phnom Penh, Siem Reap and Battambang will struggle to attain smart city status without adopting far reaching master plans, according to officials tasked with implementing the program. The brainchild of the Association of Southeast Asian Nations (Asean), the smart city program seeks to link up

  • Japan bank buys major stake in ANZ Royal Bank

    Japan's largest bank acquired more than half of ANZ’s shares in Cambodia on Thursday, according to a statement from Kith Meng’s Royal Group. Japan's JTrust Bank, announced that they had acquired a 55% of stake in ANZ Royal Bank. According to a Royal Group