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Fresh calls for loans to fuel SME recovery, growth

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Workers are packing chips at LyLy Food Industry in Phnom Penh's Por Sen Chey district on June 25, 2020. Heng Chivoan

Fresh calls for loans to fuel SME recovery, growth

The heads of Cambodia’s apex banking and microfinance industry bodies have issued a fresh call for financial institutions to extend more loans to small- and medium-sized enterprises (SME) that would better allow them to grow their businesses as the economy continues a brisk post-Covid-19 recovery.

Speaking at the “4th CEO Gathering & 2nd SMEs and Financial Institutions Night” in the capital on October 7, Association of Banks in Cambodia (ABC) chairman Raymond Sia Say Guan said: “SMEs represent 70 per cent of employment, 99.8 per cent of Cambodia’s enterprises, and contribute to 58 per cent of the country’s GDP [gross domestic product].

“I am encouraged to see the support provided by the financial sectors to SMEs in Cambodia. Over the years, we have seen [a rise] in loans to [the] SME segment,” the Malaysian national said.

“Recognising the exponential growth and benefits of SMEs, Cambodia was selected by International Finance Corporation [IFC] to host the 9th Global SME Finance Forum in Phnom Penh from 19th to 21st of September.

“This is a testament to Cambodia[n] SME’s growing and important contribution to the country’s economy.

“To bridge the gap in access to finance and to assist more SMEs and women entrepreneurs, I would encourage our banks and financial institutions to work closely with [them] to tailor innovative SME lending products and services to fill their needs,” he added.

At the same event, Cambodia Microfinance Association (CMA) chairman Sok Voeun highlighted the crucial roles micro-, small- and medium-sized enterprises (MSME) and financial inclusion play in economic growth, inclusive and sustainable development, and poverty alleviation, especially in developing countries such as Cambodia.

As drivers of economic recovery and growth, the CMA and its members have been very actively engaged in initiatives spearheaded by the Ministry of Economy and Finance and other government agencies, he affirmed.

Offering an example, Voeun said CMA members have joined hands with the state-owned Small and Medium Enterprise Bank of Cambodia Plc (SME Bank) to empower local SMEs with loans at low interest rates.

Many CMA members are also participating financial institutions (PFI) of the $150 million Tourism Recovery Co-Financing Scheme (TRCS), which aims to provide businesses involved in the tourism value chain with access to finance, allowing them to recover and grow, he said.

Moreover, Voeun added, the CMA was an “early supporter” of the state-owned Credit Guarantee Corporation of Cambodia Plc (CGCC), which he said provides expert credit guarantees designed to resolve some imperfections in the credit market and improve financial inclusion.

“Many CMA members are PFIs of CGCC, which offers the financial institutions the opportunity to provide MSMEs with access to finance, so they can rescue their businesses, especially those in high-risk sectors,” he said.

ABC’s Sia added: “small business loans dominated the share of the loan balance in banks, and average loan size of Cambodian borrowers has also increased by almost 250 per cent from $2,800 to $ 9,600.”

Outstanding loans extended by financial institutions to all sectors have grown progressively as of late, rising by 21.2 per cent in 2021 to close the year at 186.4 trillion riel ($45.7 billion), as indicated by preliminary data provided by the central bank in a report released at end-2021.


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