The government is allocating $50 million to support small and medium-sized enterprises (SMEs) in the agricultural sector. The funds can be accessed in the form of low-interest loans through the state-owned Rural Development Bank (RDB).
The initiative was revealed on Monday by Prime Minister Hun Sen, who said the goal is to increase the production capacity of local companies and make them more competitive on the international market.
“Our agricultural products are not able to compete with those of our neighbours, particularly Vietnam and Thailand, due to high costs.
“The Rural Development Bank will now be providing low-interest loans to SMEs, particularly those in the vegetable, husbandry and fishing sub-sectors,” he said
Cambodia Chamber of Commerce vice-president Lim Heng told The Post on Monday that the new fund is important because a lot of SMEs have limited access to finance.
“It is a good move, but we are still waiting to find out what the interest rate will likely be and what the collateral requirements will be,” he said.
An International Finance Corporation report released in August said Cambodia’s female entrepreneurs continue to struggle with limited access to finance for business expansion. Only three per cent have access to credit from microfinance institutions and banks.
The report estimates that the unmet demand for credit from women entrepreneurs is currently $4.2 billion – equivalent to almost 63 per cent of Cambodia’s $6.7 billion national budget for 2019.
A survey by the Ministry of Industry of 71 enterprises in the Kingdom found they needed assistance in market research, service development, packaging, technology adoption, human resources, access to labour, access to finance, business registration, taxation and improving hygiene standards.
Hun Sen urged the Ministry of Economy and Finance to speed work on the SME Bank, an institution which will provide financial assistance to local SMEs.
The initiative to set up the bank was introduced by the prime minister in December 2017. It is currently being set up with an initial capital of $100 million.