Logo of Phnom Penh Post newspaper Phnom Penh Post - Latest microlender aims to compete on interest rates

Latest microlender aims to compete on interest rates

Latest microlender aims to compete on interest rates

Mothers Financial Japan Plc became the latest entrant to Cambodia’s crowded microfinance market when it launched operations on Friday, yet the new microlender sees no shortage of opportunity given the country’s rapidly expanding consumer economy.

The Japanese-owned microfinance institution (MFI), which received its operating licence from the National Bank of Cambodia in February, will provide loans of $500 to $1 million to cover purchases of cars, motorcycles, furniture, consumer electronics and housing.

It hopes to carve out a niche in the market by offering competitive introductory monthly interest rates of 1 to 1.8 per cent with terms from 1 month to – in the case of home loans – 25 years.

“Mothers Financial Japan has a competitive edge in that it offers lower interest rates and longer-term loans than other [microlenders],” said Po Orors, the MFI’s chief operating officer.

Orors said the MFI would establish a foothold in the capital before tackling the provinces, initially aiming to set up 80 per cent of its branches in Phnom Penh.

The company has already invested sufficient capital to meet the central bank’s recently revised minimum capital requirement of $1.5 million for MFIs, he added.

“Our investment size meets the requirement of the National Bank of Cambodia, and with the addition of funds reserved for lending to our customers, we have sufficient liquidity to provide credit,” Orors said.

Hout Leng Tong, president of the Cambodia Microfinance Association (CMA), said Mothers Financial was the industry body’s fourth new member since the start of the year – yet the market still had room to grow.

He said while approximately 45 per cent of the country’s 3.4 million families have access to finance, another 20-30 per cent are still in need.

“There is still room in the market for new investors, and I believe more will join the market this year,” he said.

The CMA’s member pool – comprising 41 MFIs, seven NGOs and Acleda Bank – issued a total of $2.9 billion loans in 2015, a 45 per cent year-on-year increase, according to Tong.

The average loan size was $1,460.

Tong said he expects 2016 to be another record year.

“Based on the volume of loans in the first quarter of the year, I believe the lending growth rate will soar this year,” he said.

MOST VIEWED

  • Construction begins on $1.5B Kampot seaport

    The International Multi-Purpose Logistics and Port Centre, principally invested by Kampot Logistics and Port Co Ltd and projected to cost $1.5 billion, has officially broken ground in Bokor town, Kampot province. The multi-purpose logistics and port centre, located in Prek Tnaot commune, will be built on

  • Cambodia eyes key role in electronics, auto hubs in SEA

    Two roadmaps, part of the LDC’s economic diversification plan, were designed to see it through its migration process, but experts say the journey might be arduous, particularly in the presence of two established hubs in the region By 2028, Cambodia hopes to have exited the

  • Hun Neng, lawmaker and PM’s brother, passes away aged 72

    Hun Neng, chairman of the 4th Commission of the National Assembly, has passed away from heart disease at the age of 72 on the afternoon of May 5, according to the Ministry of Information. Hun Neng is the older brother of Prime Minister Hun Sen, and was

  • CCC team off on US business trip

    The Kingdom’s leading economists and private sector representatives have called on the US to renew its tax preferential status for Cambodian exports, as a Cambodia Chamber of Commerce (CCC) delegation departed for a weeklong business visit to the US, where they will meet with

  • PM meets with US business giants

    Prime Minister Hun Sen has met with a number of major US companies who have expressed interest in investing in Cambodia, in a meeting convened by the US-ASEAN Business Council (US-ABC). A delegation of companies – including Amazon, Meta, Chevron, ConocoPhillips, ExxonMobil, Ford, Visa and Pernod

  • Massive stingrays may live in Mekong’s deep pools

    US scientists have suggested that unexplored deep pools in the Mekong River in an area of Stung Treng could potentially be home to significant populations of giant freshwater stingrays, one of the world’s largest freshwater fish species. This comes as a fisherman hooked a 180