The Small and Medium Enterprises Bank of Cambodia (SME Bank) is opening up $150 million of low-interest loans to nurture the regeneration of the Kingdom’s travel sector, hit hard by the global Covid-19 pandemic.
The Tourism Recovery Co-Financing Scheme (TRCS) is providing finance for working capital and investment for maintaining, improving and expanding tourism-related businesses.
With an interest rate as low as 6.5 per cent per annum, together with a grace period of interest payments only for the first 12 months, business owners will benefit from the low cost of financing and a smaller repayment burden at the start of re-operation.
Other benefits include loan terms of up to seven years, amounts of up to $400,000 and the option of receiving funds in either riel or US dollars.
The TRCS works within wider efforts to boost the recovery of the Kingdom’s tourism sector.
This scheme is part of the “Strategic Framework and Programme for Economic Recovery in the Context of Living with the Covid-19 in New Normal 2021-2023”, through providing economic support to private sector tourism and creating employment.
Following the devastating impact of the pandemic, tourism is considered high risk from a lending perspective, with some lending institutions limiting their exposure to the sector.
To promote the recovery of tourism, the Cambodian government implemented the scheme to address a lack of financing support for tourism-related businesses for them to re-operate fully.
It aims to help them improve and modernise services and facilities, and to strengthen and diversify tourism services and products to prepare for the return of national and international tourists.
The scheme is targeting existing tourism-related businesses whose operations completely or partly closed, or whose products or services were discontinued due to the pandemic.
Targeted businesses include hotels, guesthouses and restaurants, as well as those providing other products and services supporting the tourism sector.
With global and regional travel having improved with the removal of a slew of travel restrictions, Cambodia’s tourism is expected to gradually return to pre-Covid numbers, with approximately seven million international tourists by 2026, according to the Ministry of Tourism.
The Ministry of Tourism forecasts Cambodia having between 800,000 to one million international visitors in 2022, with between 10-11 million local tourists.
And to ensure the Kingdom can again offer them its famous hospitality and warm welcome, the TRCS is there to support the tourism sector.
Eligible business owners can apply for a loan under the scheme from one of the 19 participating financial institutions (PFIs) following their respective credit assessment policies.
If the application is approved, the loan will be disbursed to the business owner via fund sharing, with 50 per cent from the SME Bank and the remainder from the PFI.
Owners of tourism-related businesses looking for low-cost financing to restart and improve operations impacted by Covid can apply for a loan under the scheme.
The TRCS is subscribed on a first come, first serve basis and is available now.