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CMA rejects call to suspend microloan debts

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Millions of Cambodians, many now laid off, are wallowing in a $10 billion debt crisis. POST STAFF

CMA rejects call to suspend microloan debts

The Cambodian Microfinance Association (CMA) rejected a statement by local non-profit NGO Cambodian League for the Promotion and Defence of Human Rights (LICADHO) which claims that millions of Cambodians are suffering due to a deep debt crisis of over $10 billion in loans from microfinance institutions (MFIs).

This comes after LICADHO issued a joint statement on Monday with 134 other organisations that “microfinance debt should be suspended and land titles returned to property owners . . . with full rights”.

At the same time, the NGO has urged MFIs to suspend all loans and interest payments for at least three months to ensure that people will not be at risk, said the statement.

“We insist that the Royal Government and MFIs prioritise the health and livelihood of Cambodians.

“More than two and a half million Cambodians currently hold microloans, with an average loan of more than $3,800 – the largest amount in the world. This puts millions of Cambodians’ livelihoods, health and land tenure security at risk,” it said.

CMA deputy chairman Bun Mony told The Post on Tuesday that although there are more than two million MFI borrowers in Cambodia, MFIs had taken mortgages from only about one million.

“We do not take their mortgages to seize their property for our own use, they still use it . . . They can put up their house title if they still live in the house.”

“[LICADHO] says we have to give them land titles so that they can have a way to do business and that’s not right. I think LICADHO doesn’t have any economic knowledge,” said Mony.

He said the CMA has been taking “soft” measures in dealing with customer debt after an appeal from Prime Minister Hun Sen and the National Bank of Cambodia (NBC).

“We will suspend debt payments upon the client’s request to the MFI. We do not force them to sell their land under the present circumstances because we know that they are facing hardships. Additionally, we won’t require them to pay late fees.

“The success of the customer is the success of the MFI, and the MFI cannot succeed on the failures of its customers,” he said.

LOLC (Cambodia) Plc CEO Sok Voeun said the institution has been following the NBC’s guidelines for settling debt with clients.

“Why would they request to take back their land titles? There is no risk of them being lost, we are working peacefully together,” Voeun said.

However, LICADHO has acknowledged that the measures introduced by NBC encourage MFIs to restructure credit and delay repayments on a case-by-case basis, said the statement.

“We hope that the NBC and the government consider issuing regulations for this sector and order MFIs to ease the burden of borrowers as soon as possible,” it said.

At the end of last year, Cambodia had 46 commercial banks, 15 specialised banks, 82 MFIs, 248 rural credit operators, 15 leasing companies and 20 payment service providers, said the NBC’s Macroeconomic and Banking Progress 2019 Report and 2020 Outlook.

Banks’ outstanding loan portfolio reached $24.5 billion last year while deposits stood at $25.5 billion. Among MFIs, loans reached $7.2 billion and deposits $3.9 billion, said the report.

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