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Change in banking culture stimulates growth

Change in banking culture stimulates growth

A worker shovels cassava after it has been processed at Song Heng’s company, which is located several kilometres outside of Suong town. The growing of cassava in Cambodia is becoming much more widespread.

Photo by: Hector Bermejo

If Chhay Vuthy looks a contented man, it’s no wonder. ACLEDA Bank’s branch manager in Suong had a great 2010. Last year he oversaw a 45 percent increase in the amount of loans issued by his branch to clients, compared with 2009. 

Chhay Vuthy believes this growth indicates both a general improvement in the economy, and, more specifically, an increase in trade with Vietnam. The province’s proximity to the bilateral border crossing
at Trapaeng Plong makes it a natural trading point for goods to and from Vietnam. 

“Business here depends on imports and exports with Vietnam,” says Chhay Vuthy. 

Almost 80 percent of the bank’s loans were made to customers involved in the agricultural sector, with a further 13 percent to those in trade. Cassava is a good business.

“We make plenty of loans to cassava farmers,” says Chhay Vuthy. “They are very good customers for us because they always pay us on time as there is always customers for them.” 

Song Heng, 51, is one of Vuthy’s customers. He also happens to be a big buyer of cassava. 

“I can process 15 to 18 tonnes of cassava each day,” he tells us in the quiet of his office a few hundred metres from his voracious machinery.

Song Heng has been manufacturing cassava powder at his plant a few kilometres outside of the town of Suong since 2003. 

At first he used his own capital to develop his business, but last year he turned towards ACLEDA Bank. His initial loan of US$50,000 was extended to $170,000 earlier this year.

“I decided to increase my loan threefold because I had to buy the cassava at the right time,” he says. “Otherwise the farmers would export them to Vietnam.” 

The price he pays his suppliers is determined by the going rate across the border.

Song Heng fixes his price slightly below that on offer in Vietnam, knowing that lower transportation costs will drive Cambodian farmers to sell to him.

You get the sense that Song Heng would prefer to be further removed from his competitors to the east.

“All the powder I process here, I sell in Cambodia,” he says. “I don’t export.” 

Cassava powder is used in preparing prahok, fish sauce and many Khmer sweets, to mention just a few of the uses for this most ubiquitous of white powders.

Song Heng is pleased with the service. “For sure, ACLEDA Bank is my partner that I trust,” he says.

Back at the branch office, Chhay Vuthy believes Song Heng is typical of many Cambodians undergoing an attitude change towards the banking sector. “Now customers come to the bank to borrow money,” he says. “They think it’s normal.”

Increased trust can only be good for business.

Come next year, expect to see Chhay Vuthy look an even more contented man. TRANSLATION BY RANN RUEY

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