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Trade finance grows in 2011

Trade finance grows in 2011

Some of Cambodia’s banks this week noted a sizeable jump in trade financing in 2011, pointing to the Kingdom’s resurgent economy after the global financial crisis.

But the banks also said many Cambodian businesses still were unaware of the financing services available to them.

ACLEDA Bank, the Kingdom’s largest, experienced a 20 per cent jump in trade financing to US$40 million for the year, with imports accounting for 70 per cent of the total, according to ACLEDA executive vice-president So Phonnary.

“We noticed a lot of our agricultural products were recognised globally this year, so we needed to import more equipment to increase our export capacity,” she said.

The agro-processing sector was one of ACLEDA’s biggest customers in 2011, as the need for increased capacity had driven an increase in trade financing, So Phonnary said.

ANZ Royal Bank CEO Stephen Higgins said his company’s clients also sought out higher levels of financing.

“Our trade-finance revenues are significantly higher than the previous year, as we have signed many new customers, and our existing customers have been more active,” Higgins said, adding that most funding went to imports, given the country’s import-heavy economy.

Kookmin Bank Cambodia had collected as much as 143 per cent more in trade financing fees in 2011 than the year before, executive vice-president Kim Eung Nam said.

These banks offered services such as payment and shipping guarantees, as well as letters of credit, that helped streamline the import-export process, the bankers said.

They also removed the risk of dealing with unknown business partners in other countries by keeping the transaction between each trade party’s respective bank.

Even so, many Cambodian firms were not taking advantage of these services, the bankers said.

“I don’t think local businessmen are aware of the benefits,” Outh Renne, managing director of rice miller Mega Green Imex Cambodia, said, adding that some companies did not know such services existed.

“It helps us a lot in planning our business and in preparing paperwork for our foreign partners. It also helps us to avoid risk,” he said.

National Bank of Cambodia director-general and spokeswoman Nguon Sokha yesterday highlighted the differences between trade financing and traditional loans.

Although traditional loans demanded collateral and contained strict lending guidelines, trade financing required only a clear business plan and company structure and sound financial reports, she said.

Nguon Sokha said the take-up of trade financing had increased over the past few years, but there was still plenty of room for growth. “Banks need to promote it more.”

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