THE Ministry of Finance brought a draft prakas, or edict, regulating pawnshops before about 100 Phnom Penh pawnshop owners for discussion on Tuesday.
Debate over the prakas, which would be the first set of regulations governing pawnshops in Cambodia, centred on two proposals – the minimum capital required to open a pawnshop and the maximum time period for loan contracts on pawned items.
According to the draft prakas, to open a pawnshop, an operator must have a minimum capital of 200 million riels (US$48,123), with 10 percent of the minimum deposited in a Finance Ministry account at the National Bank of Cambodia.
The prakas would also cap monthly interest rates on pawnshop loans at 5 percent, as well as limit loan contracts to four months with an option to renew. The measures raised concern in the industry Tuesday.
“The minimum is suitable for only the biggest pawn business – it will squeeze out small- and medium-sized pawnshops,” said Bun Sron, a pawnshop owner at Kandal market. “Minimum capital should be lowered to just $25,000.”