Logo of Phnom Penh Post newspaper Phnom Penh Post - Primed for a crowded market

Primed for a crowded market

Primed for a crowded market

110131_7
Kim Seoung-su, CEO and director of Prime MF Microfinance, attends the company's opening in Phnom Penh on Friday.

Cambodia's 25th microfinance institution has opened its doors, becoming the latest entrant to what many say is an increasingly crowded sector. But financiers have welcomed the launch of South Korea’s Prime MF Microfinance, saying it provides another opportunity to extend credit to the Kingdom’s smaller borrowers.

Prime's Chief Executive Officer and director Kim Seoung-su said US$500,000 has been invested to start up the venture, adding that the company looked to offer $3.5 million in loans in its first year at low interest rates.

“We have many competitors, but I don’t think the industry is very competitive – though we still have some challenges,” he said at the company launch in Phnom Penh’s Tomnob Tek commune, Chamkarmon district, on Friday.

“I have two main plans – first to target middle [class] and poor people, and second we will enlarge our credit service," he said.  

The MFI intends to offer loans to groups of people, some without collateral, providing that fellow group members act as guarantors.

Although there is a high number of MFIs in the Kingdom, there are fewer than in neighbouring Vietnam and Thailand, he claimed.

Kim Seoung-su added hopes that Prime would be able to grow in line with the Kingdom’s economy.

“I hope we have more opportunities to grow within the next few years in Cambodia, especially if your economy keeps improving.”

Officials have welcomed the move. “I believe Prime will try its best to offer more products and services to more and more people, especially rural people,” said Kim Vada, deputy director general of the National Bank of Cambodia.

While Chea Phalarin, chairman of the Cambodia Microfinance Association, also welcomed the latest market entrant.

“We welcome more and more investors into the market, as loan demand is very high,” he said.

According to Sim Senacheert, general manager of the Kingdom’s largest micro-lender Prasac, although there may be too many MFIs in Cambodia, many are smaller operators that are not particularly competitive.

“Only about nine MFIs have a portfolio greater than $10 million,” he said. “Indeed, many MFIs are not a concern for us as they are small, and largely operate in the city.”

Prime is the second Korean-owned MFI to set up in the Kingdom, following Angkor ACE Star Credits Limited’s launch last year.

Prime plans to open more branches in Phnom Penh berfore spreading to the provinces, including branches in Kampong Thom, Battambang, Sihanoukville, and Kampong Speu.

Micro-lending from the Kingdom’s MFIs and ACLEDA Bank’s small loans increased more than 33 percent in 2010 to $647 million, from  a total of $485 million in 2009.

The Non-Performing Loan rate declined from 2.86 percent in 2009 to 1.29 percent last year, figures from the Cambodia Microfinance Association show.

MOST VIEWED

  • Hun Sen: Full country reopening to be decided in two weeks

    Prime Minister Hun Sen has announced that if the Covid-19 situation remains stable for 15 consecutive days from the end of the October 5-7 Pchum Ben public holiday, Cambodia will reopen fully, albeit in the context of Covid-19 whereby people have to adjust their lives to

  • Cambodia sets new Covid-19 quarantine rules

    The government has modified Covid-19 quarantine requirements, shortening the duration for, among others, Cambodian officials, foreign diplomats and delegations, investors and inbound travellers in general. According to an official notice signed by Minister of Health Mam Bun Heng late on October 16, quarantine length for Cambodian

  • Will Evergrande change the way Chinese developers do business in Cambodia?

    China’s property sector policy has exposed the grim financial condition of real estate developers including those operating in Cambodia, which raises questions over the viability of their projects and business going forward The dark blue netting draping over one of Yuetai Group Co Ltd’

  • Phnom Penh governor: Show Covid-19 vaccination cards, or else

    Phnom Penh municipal governor Khuong Sreng late on October 5 issued a directive requiring all people aged 18 and over and the parents of children aged 6-17 to produce Covid-19 vaccination cards when entering schools, markets, malls, marts, eateries and other business establishments that have been permitted

  • Cambodia seeks probe into 'false reports' on Hun Sen's alleged Cypriot passport

    Minister of Justice Koeut Rith on September 6 wrote a letter to his Cypriot counterpart Stephie Dracos requesting cooperation in investigating and providing the truth in relation to the "exaggerative and false allegations" that Prime Minister Hun Sen holds a Cypriot passport. In his letter, the

  • Cambodia unveils new quarantine regulations

    The government has modified Covid-19 quarantine requirements, shortening the duration for, among others, Cambodian officials, foreign diplomats and delegations, investors and inbound travellers in general. According to an official notice signed by Minister of Health Mam Bun Heng late on October 16, quarantine length for Cambodian