The Credit Guarantee Corporation of Cambodia (CGCC) provided credit guarantees of $120 million to businesses as of February 2023.
CGCC announced on Wednesday that it supported 1,367 businesses by providing credit guarantees for their loan applications as of the end of April 2023.
The report stated that a significant portion of the loan guarantees were used for working capital, investment, business expansion, and capital expenditures.
The total amount of outstanding guaranteed loans was $97.5 million, while the total amount of outstanding guaranteed obligations was $70.32 million.
It said that there are 1,249 small and medium-sized businesses (SMEs) and 118 large businesses in Cambodia.
About 550 were women-owned, 513 were secured loans, and 854 were unsecured loans.
CGCC said that various credit guarantee schemes played a vital role in strengthening entrepreneurship and improving financial inclusion in Cambodia, particularly during the Covid-19 pandemic, by facilitating the smooth distribution of loans.
It launched three guarantee schemes so far, including the Business Recovery Guarantee Scheme (BRGS) in March 2022; the Co-Financing Guarantee Scheme (CFGS) in September 2021; and the Women Entrepreneurs Guarantee Scheme in April 2022. The CGCC also extended the CFGS to the tourism sector.
The CGCC, which is under the Ministry of Economy and Finance, extended the BRGS from January 1, 2023, until the $200 million scheme is fully utilized.
These guarantee schemes are a way to help businesses get the money they need to grow and succeed. They are a valuable tool for supporting entrepreneurship and financial inclusion in the country.
The extension of BRGS will include updates to some of its features, such as the scheme period, the definition of MSMEs and large firms, and the maximum loan amount for each guarantee.
BRGS aims to help businesses, including MSMEs and large firms, obtain formal loans from participating financial institutions for working capital, investment, and business expansion.
CGCC, the first credit guarantee institution in the country, was established in August 2020, during the Covid-19 pandemic, to provide timely credit to support the rehabilitation and sustainability of local businesses.
The Cambodian Credit Guarantee Corporation has played an important role in serving the needs of small and medium enterprises in Cambodia, which are struggling during the epidemic of Covid-19 and the inflation crisis, and need credit from banks for their businesses.
It played a vital role in supporting SMEs who have been struggling during the Covid-19 pandemic and the inflation crisis, and they need credit from banks to keep their businesses afloat.
The Credit Guarantee Corporation of Cambodia (CGCC) and Cambodia Chamber of Commerce (CCC) have entered a strategic partnership to improve access to guaranteed loans for Micro, Small, and Medium Enterprises (MSMEs) in Cambodia.
The partnership was formalized with a Memorandum of Understanding (MoU) signing ceremony. This collaboration aims to provide support to MSMEs, primarily CCC members, enabling them to obtain financing despite collateral challenges and promote financial literacy across the country.
CGCC is a state-owned enterprise that provides credit guarantees on loans disbursed by participating financial institutions, offering support to viable businesses that lack collateral when applying for loans.
On the other hand, CCC, the National Chamber of Commerce, represents the interests of the business community in Cambodia and plays a crucial role in promoting the private sector’s development and supporting MSMEs’ growth. This partnership will allow CCC members to benefit from CGCC’s guarantee services, providing additional security to partnering financial institutions and making it easier for CCC members to access financing.
Improving financial inclusion and financial literacy
H.E. Oknha Nguon Meng Tech, Director General of CCC, emphasized the importance of MSMEs in Cambodia’s economic development and the challenges they face, particularly financial constraints. The partnership between CCC and CGCC aims to promote access to guaranteed loans for MSMEs’ development and deepen the cooperation between the two institutions.
CGCC CEO Wong Keet Loong noted that the MoU with CCC is a significant milestone for CGCC, as it allows the organization to reach CCC members across the country. Together, CGCC and CCC will support the development of SMEs in Cambodia by improving financial inclusion and financial literacy.
The CGCC has been organizing seminars to inform the business community in Cambodia about guaranteed loans, such as the recent seminar held in Svay Rieng Province in collaboration with the Svay Rieng Chamber of Commerce. More than 50 participants attended, including management and staff of participating financial institutions and small and medium business owners in Svay Rieng.
Initially launched as a tool to close the credit gap that emerged between small businesses during the pandemic, the CGCC issued its first guarantee in April 2021, the CGCC has already supported 1,275 businesses by providing credit guarantees for their loan applications, amounting to $113.6 million. Wong Keet Loong has set an ambitious goal for CGCC in 2023: to provide guarantees to 1,500 SMEs and guarantee $100 million in loans.
However, the rise in global interest rates might impact the CGCC’s growth. Loong pointed out that the increasing cost of funding due to rising US interest rates affects financial institutions and their lending capabilities. Despite these challenges, the CGCC remains committed to expanding the reach of its guarantees.
A focus on female-led businesses
The CGCC currently offers four different guarantee products, including the Women Entrepreneurs Guarantee Scheme (WEGS), aimed at supporting women and female-owned businesses.
According to CGCC’s data, 40% of its guarantees go to female-owned businesses, while 65% of Cambodian MSMEs are run by women. By increasing financial literacy and awareness of credit guarantees, the CGCC aims to bridge this gap and promote female entrepreneurs’ growth in Cambodia.
One factor contributing to the gap between female-owned businesses and those receiving guarantees is the lack of registration for many women entrepreneurs. Improving financial literacy can address this issue, resulting in more confident, informed entrepreneurs who can negotiate better loans.
Mr. Loong has previously explained that CGCC supports unregistered businesses for their first year, with the expectation that they will register by their anniversary. If they remain unregistered, an additional 0.5% charge is applied, incentivizing businesses to formalize their registration. This approach aims to increase the number of registered female-owned businesses while still providing initial support.
The partnership between CGCC and CCC is a testament to their shared commitment to promoting economic growth and development in Cambodia. By working together, the two organizations will help SMEs overcome financing challenges and unlock their potential to drive economic growth in the country.
The Credit Guarantee Corporation of Cambodia (CGCC) provided credit guarantees of $113.6 million to businesses as their working capital for expansion in the first quarter of this year.
CGCC said in a report that by the end of the first quarter it supported nearly 1,300 businesses by providing credit guarantees for their loan applications, amounting to $113.6 million.
The large portions of loan guarantees were used as working capital and other purposes of investment or business expansion, and capital expenditure, the report mentioned.
Various credit guarantee schemes played crucial roles in strengthening entrepreneurship and enhancing financial inclusion in Cambodia, especially during the Covid-19 pandemic, through the smooth disbursal of loans, CGCC said.
For SMEs and MSMEs, it improves financial inclusion. It enables them to borrow without having the burden of providing collateral whenever their business capacity grows and they have higher loan requirements.
The CGCC has come up with three guarantee schemes so far — the Business Recovery Guarantee Scheme (BRGS) launched in March 2022, the Co-Financing Guarantee Scheme (CFGS) unveiled in September 2021 and the Women Entrepreneurs Guarantee Scheme, which was launched in April 2022, besides the extension of the CFGS to tourism.
The CGCC of the Ministry of Economy and Finance has extended the BRGS from January 1, 2023, until the $200-million scheme is fully utilized to support businesses including MSMEs as well as large firms by enhancing their access to formal loans from the Participating Financial Institutions (PFIs) for working capital investment and business expansion.
Updating some scheme features, including the scheme period, the definition of the micro, small and medium enterprises (MSMEs) and large firms, and the maximum loan amount for each guarantee are on the extension of BRGS.
BRGS aims to support businesses, including MSMEs and firms, to enhance their access to formal loans from Participating Financial Institutions for working capital, investment, and business expansion.
State-owned Credit Guarantee Corporation of Cambodia Plc (CGCC) and Cambodia Chamber of Commerce (CCC) are joining forces to foster better access to guaranteed loans for the development of the Kingdom’s micro-, small- and medium-sized enterprises (MSME), and to provide support to these smaller businesses, “mainly CCC members”, according to a statement.
A memorandum of understanding (MoU) was signed to this effect between CGCC CEO Wong Keet Loong and Nguon Meng Tech, director-general of the CCC – the Kingdom’s apex trade body, at a ceremony last week, the statement noted.
“This cooperation will provide support to MSMEs – mainly CCC members – for greater access to finance despite collateral challenges, and to promote financial literacy, including credit guarantees to CCC members across the country,” it said.
Meng Tech underlined the damage wrought by the Covid-19 crisis on regional and global economies, especially how MSMEs have struggled to procure sufficient funds to keep their doors open.
“The MSMEs play significant roles in economic development. However, they face a lot of challenges, particularly financial constraints. In this regard, the MoU signing [by] CCC and CGCC today aimed specifically to promote access to guaranteed loans for the development of MSMEs.
“The MoU signing is also a positive sign that will help strengthen and deepen the cooperation between the two institutions,” he said in the statement.
The CGCC’s Wong added in the statement: “This MoU signing with the [CCC] is an important milestone for CGCC, as it enables CGCC to reach out to the members of CCC across the country.
“CCC, being an established business chamber with many SME [small- and medium-sized enterprises] members, will be a key partner to CGCC in promoting the understanding of the benefits of the credit guarantee,” the Malaysian said.
“Together with CCC, we can support the development of SMEs in Cambodia by improving financial inclusion and financial literacy,” he added.
The statement lauded the CGCC-CCC partnership as a demonstration of “a shared commitment to promoting economic growth and development” in the Kingdom. “By working together, the two organisations will help SMEs overcome financing challenges and unlock their potential to drive economic growth in the country,” it said.
Cambodia Post Bank Plc (CPBank) CEO Toch Chaochek commented to The Post on April 30 that the CGCC’s credit guarantees have played an “important role”, as collateral for loans, in ensuring access to formal finance among MSMEs.
“With the CGCC’s support, our MSMEs have been able to access more funds to support their businesses after being hit so hard by the Covid-19 pandemic over the past two years,” he said.
Incorporated in November 2020, the CGCC is run under the Ministry of Economy and Finance’s technical and financial assistance. The state-owned enterprise’s (SOE) central mission is “to provide credit guarantees to lenders on loans made to businesses based on international standards to share the risk with lenders and to improve financial inclusion”, its website says.
The CGCC was established by Sub-Decree No 140/ANKR/BK on September 1, 2020, and its $200 million Business Recovery Guarantee Scheme (BRGS) was launched on March 29, 2021 in a bid to widen access to formal loans from participating financial institutions (PFI) for working capital, investment and business expansions.
The enterprise announced that it had issued a total of 1,275 Letters of Guarantee (LG) for loans worth $113.6 million equivalent as of March 31 – up eight per cent from end-February and up 258 per cent year-on-year, in terms of value. MSMEs accounted for 1,173 – or 92 per cent – of the LGs.
As of March 31, the outstanding guaranteed amount was $65.4 million out of the $90.7 million worth of loans covered by the LGs, as noted by the CGCC, remaining in the 70-80 per cent target range at just over 72 per cent.
PHNOM PENH, April 28 (Xinhua) — State-owned Credit Guarantee Corporation of Cambodia (CGCC) and the Cambodia Chamber of Commerce (CCC) have signed a memorandum of understanding (MoU) to promote access to guaranteed loans for the development of micro, small and medium enterprises (MSMEs), said a joint statement on Friday.
The cooperation will provide support to MSMEs, mainly CCC members, with greater access to finance despite collateral challenges, and promote financial literacy, including credit guarantees to CCC members across the Southeast Asian country, the statement said.
The CGCC is a state-owned enterprise providing credit guarantees on loans disbursed by participating financial institutions to support viable businesses that lack collateral when applying for loans, the statement added.
CGCC Chief Executive Officer Wong Keet Loong said the MoU will make it easier for CCC members to access financing, and demonstrate a shared commitment to promoting economic growth and development in Cambodia.
“Together with CCC, we can support the development of SMEs in Cambodia by improving financial inclusion and financial literacy,” he said. “By working together, the two organizations will help MSMEs overcome financing challenges and unlock their potential to drive economic growth in the country.”
CCC Director-General Nguon Meng Tech said the MSMEs play significant roles in economic development, but at the same time, they face a lot of challenges, particularly financial constraints.
“The MoU is a positive sign that will help strengthen and deepen the cooperation between the two institutions,” he said.
Incorporated in 2020, the CGCC had supported 1,275 businesses by providing credit guarantees for their loan applications in a total amount of 113.6 million U.S. dollars as of March 2023, the statement said.
The Credit Guarantee Corporation of Cambodia (CGCC) provided credit guarantees of $105 million as of February to businesses as their working capital for expansion.
In a factsheet issued on March 10, CGCC said that as of the end of February it has supported 1,155 businesses by providing credit guarantees for their loan applications, amounting to $104.9 million.
Large portions of the loan guarantee were used as working capital and other purposes of investment or business expansion, and capital expenditure, the report mentioned. As of January 2023, the outstanding guaranteed loan was $81.6 million while the outstanding guaranteed amount was $58.8 million.
Various credit guarantee schemes have played a crucial role in strengthening entrepreneurship and enhancing financial inclusion in Cambodia, especially during the Covid-19 pandemic, through the smooth disbursal of loans, CGCC said.
The CGCC has come up with three guarantee schemes so far — the Business Recovery Guarantee Scheme (BRGS) launched in March 2022, the Co-Financing Guarantee Scheme (CFGS) unveiled in September 2021 and the Women Entrepreneurs Guarantee Scheme launched in April 2022, besides the extension of the CFGS to tourism. The CGCC of the Ministry of Economy and Finance has extended the BRGS from January 1, 2023, until the $200-million scheme is fully utilised.
Updating some scheme features, including the scheme period, the definition of the micro, small and medium enterprises (MSMEs) and large firms, and the maximum loan amount for each guarantee are on the extension of BRGS.
BRGS aims to support businesses, including MSMEs and firms, to enhance their access to formal loans from Participating Financial Institutions for working capital, investment, and business expansion.
Credit Guarantee Corporation of Cambodia Plc (CGCC) reportedly issued a total of 1,155 Letters of Guarantee (LG) for loans worth $104.9 million equivalent as of February 28 – up 13 per cent year-to-date – as part of its mission to improve financial inclusion among small- and medium-sized enterprises (SME) and promote the sustainability and expansion of businesses worst hit by Covid-19.
As of January 31, the outstanding guaranteed amount was $58.9 million out of the $81.6 million worth of loans covered by the LGs, as noted by the state-owned enterprise in a new report, remaining in the 70-80 per cent target range at just over 72 per cent.
The CGCC was established by Sub-Decree No 140/ANKR/BK on September 1, 2020, and its $200 million Business Recovery Guarantee Scheme (BRGS) was launched on March 29, 2021 in a bid to widen access to formal loans from participating financial institutions (PFI) for working capital, investment and business expansions.
Cambodia Microfinance Association (CMA) chairman Sok Voeun lauded the CGCC’s credit guarantee arrangements as important tools for SMEs to access formal unsecured loans to keep their businesses afloat and expand in light of Covid-19 bruises.
He told The Post on March 13 that commercial banks accounted for 80 per cent of loans covered by the 1,155 LGs, while microfinance institutions (MFI) “partnering with the PFI” constituted the rest.
On the other hand, banking institutions accounted for about 95 per cent of the $104.9 million loan value, he said.
“We’ve provided credit to most of the priority sectors, including services, agriculture and manufacturing,” he affirmed.
“We are happy to join the CGCC because risks are guaranteed. We’ve noted that since the beginning of the project, the rate of bad loans has been minimal because the businesses have the potential to stimulate economic activity, although they may not have collateral.
“Hence the credit guarantee scheme has been a big help for them to expand their businesses,” he said.
The finance ministry has authorised the extension of the BRGS beyond December 31, 2022, until all funds have been utilised, an early-January CGCC statement confirmed, which noted that the terms of the scheme had also been updated, including the maximum guarantee amounts for differing categories of businesses.
The statement disclosed that loans, mostly unsecured, totalling about $89 million were guaranteed by the CGCC as of December 31 under the BRGS.
Cambodia Post Bank Plc, one of the PFIs, accounted for roughly $1 million of that, all of which went to SMEs, confirmed its CEO Toch Chaochek, telling The Post on March 13 that the plan is to increase that to $5-10 million in 2023.
To this end, the bank aims to shift its focus, from large SMEs with adequate collateral that are seeking to expand, to smaller ones without the assets needed for the secured loans to do the same, he revealed.
“The CGCC project is great for SMEs that do not have the collateral to obtain the loans – they have a shot at rehabilitating and expanding their businesses,” Chaochek said.
The 11th Give a Day has featured the Credit Guarantee Corporation of Cambodia as its keynote as well as enabled Cambodia’s entrepreneurial ecosystem to connect at the new Khmer Enterprise Headquarters for the first time in 2023.
Khmer Enterprise CEO Dr. Chhieng Vanmunin delivered the welcoming remarks highlighting the ongoing progression of the initiative which was first piloted in 2021 before receiving its full funding for monthly and quarterly meetings in 2022 and has now been renewed for 2023.
“The Give a Day monthly meetings and quarterly ecosystem builder events have been greatly welcomed by Cambodia’s entrepreneurial community – and have provided both learnings and networking opportunities between various sectors,” he told over 50 attendees from the ecosystem at KE headquarters.
Give a Day: Credit Guarantee Schemes & Its role in Enterprise DevelopmentSabine Joukes Pact Cambodia Country Director and WE Act Chief of Party, Khmer Enterprise CEO Dr. Chhieng Vanmunin, Rajiv Pradhan Country Director at Swisscontact in Cambodia.
“We also wanted to welcome everyone to our new headquarters at the Business Development Center in Chroy Changvar, Phnom Penh, and advise that our open working space is available to everyone in the ecosystem as well as both our meetings’ rooms and event space,” he added.
Rajiv Pradhan Country Director at Swisscontact in Cambodia and Sabine Joukes Pact Cambodia Country Director and WE Act Chief of Party echoed this statement adding it was fantastic to reconnect the ecosystem for the first time in 2023.
Increase credit guarantee issuance by 50% in 2023
Delivering the keynote CGCC CEO, Wong Keet Loong commented the scheme was looking to increase the number of transactions it underwrites by 50% in 2023 as the organization looks to increase its outreach to the country’s micro and small and medium businesses, (MSMEs).
CGCC received its sub-decree on September 2020 and was fully incorporated in November 2020 its guarantees are intended to expand the availability of credit to smaller enterprises that may not have the collateral which banks typically require to advance working capital loans.
Give a Day: Credit Guarantee Schemes & Its role in Enterprise DevelopmentConversations after the keynote presentation.
Initially launched as a tool to close the credit gap that emerged between small businesses during the pandemic, the CGCC issued its first guarantee in April 2021 and has since given a total of 985 Letters of Guarantee (LG) for loans worth $92.7. Mr Loong said that the CGCC had even more ambitious targets for 2023.
“My biggest goal for this year is to increase the outreach of our guarantees. The CGCC wants to provide guarantees to 1500 SMEs this year. We want to guarantee $100 million of loans in 2023. I know that is optimistic but I believe it can be done,” he said in response to a question from Cambodia Investment Review.
Rising interest rates may impact growth
Mr Loong said that the main barrier to reaching this target was the global macro picture, particularly the impact of rising US interest rates.
“The main issue right now is that external factors are affecting the cost of funding, which is going up as US interest rates rise and this is affecting a number of financial institutions (FIs). They see that fixed deposit rates are going crazy which is good for depositors, but not FIs and this impacts their lending,” he added.
Give a Day: Credit Guarantee Schemes & Its role in Enterprise DevelopmentAttendees at the 11th Give a Day.
Global factors may act as a drag on the CGCC’s work in the near term, but fellow speaker H.E. Dr. Chhieng Vanmunin, CEO of Khmer Enterprise, said that if credit guarantees become more widely used in Cambodia it would make it much easier for firms to do business internationally.
“In their current state, a lot of Cambodian companies are unable to demonstrate a track record of success, however, if they run through the credit guarantee program with CGCC it provides a history of how well they managed issues such as shipping and cash flow.
So this is one of the things that we support them to expand their market internationally,” he said.
40% of its guarantees go to female-owned businesses
The CGCC currently offers four different guarantee products and in April last year, it launched it’s third the Women Entrepreneurs Guarantee Scheme (WEGS), a $50m capped fund that is aimed at supporting women and female-owned businesses.
According to the CGCC’s data up to 40% of its guarantees go to female-owned businesses, whereas Mr Loong said that up to 65% of Cambodian MSMEs were run by women. An audience member, who didn’t identify herself, suggested that this gap was partly due to issues over lack of financial knowledge.
“One reason is that we know most women entrepreneur’s businesses are not registered and one way to improve that is via financial literacy, and this will have many benefits. If financial literacy is growing then entrepreneurs are more confident, more informed, and able to negotiate good loans,” she said.
Give a Day: Credit Guarantee Schemes & Its role in Enterprise DevelopmentQuestions and answer session.
Mr Loong responded that the CGCC did support unregistered businesses, for the first year at least and that expanding awareness of credit guarantees should in turn increase the number of registrations by female business owners.
“However, we tell customers that you need to be registered after a year, because when the anniversary comes, if you’re not registered, then we charge you an additional 0.5%. So, in a way, it incentivizes businesses to be registered. But when they come on board, they can be unregistered,” he said.
The Give a Day program returns in 2023
Give a Day is an initiative within the Entrepreneurship Ecosystem Building Project (EEB) which is jointly funded by Khmer Enterprise, USAID’s WE Act Project through Pact Cambodia and Swisscontact.
In addition, to monthly meetings, the initiative also included a quarterly Ecosystem Builders Network (EBN) event that focused on mapping the six pillars of Isenberg’s Model of the Entrepreneurial Ecosystem.
Give a Day: Credit Guarantee Schemes & Its role in Enterprise DevelopmentThe 11th Give a Day program at Khmer Enterprise Head Office on February 10, 2023.
The quarterly meetings created a space through which ecosystem builders and government agencies can share information, foster best practices, identify market gaps and opportunities, and explore collaboration or complementarity to strengthen the ecosystem.
Cambodia’s ESO ecosystem, broadly defined as groups that support, train, and fund entrepreneurs is still in the nascent stage with many new organizations launched to help nature and develop the sector.
The Credit Guarantee Corporation of Cambodia (CGCC) unveiled the Portfolio Guarantee Scheme (PGS) at the CGCC annual seminar on the ‘Role of Credit Guarantee Schemes in SMEs Development in Cambodia and ASEAN’, here on Tuesday. The scheme was launched by Mey Vann, high representative of Aun Pornmoniroth, Deputy Prime Minister and Minister of Economy and Finance, who also presided over the event.
The PGS will enable Participating Financial Institutions (PFIs) to customize guaranteed loans for their targeted borrowers and allow quick, efficient, and flexible disbursement of guaranteed loans.
Speaking at the seminar, Vann, said, “SMEs (small and medium enterprises) are the indispensable driving force to ensure Cambodia’s sustainable, inclusive and resilient economic growth. SMEs have played important roles in supporting Cambodia’s socioeconomic development and contributed significantly to poverty reduction from 50.2 percent in 2003 to 17.8 percent in 2020 through job creation and income growth.”
He also provided five points of guidance to continue to develop the credit guarantee system in Cambodia, which included strengthening CGCC’s institutional capacity, balancing between expanding outreach and setting specific target businesses for guaranteed loans, expanding cooperation with stakeholders, and encouraging financial institutions to use credit guarantees to disburse more loans without collaterals.
On the new scheme, K L Wong, Chief Executive Officer of the CGCC, told Khmer Times, “The PGS will very much be a targeted scheme for FIs (financial institutions) if they want to customize the guarantee for loans they want to provide. For the banks and the PFIs who have specific target segments among SMEs, we can customize the portfolio, especially for them so that they can give out the loans.”
Elaborating upon the scheme, the CEO said, “It will be very much customized for specific FIs. Because the individual guarantee scheme that we have is a general scheme for every FIs. The PGS is very much targeted. So, let us say, if the Canadia Bank wants to do it for certain sectors, a certain industry, we can do … specifically for them. So, we (will) focus specifically on what they want and customize the guarantee.”
On the leading banks for the scheme, Wong said, for “the new scheme that we have just launched, we are going to be working with Canadia Bank and Sathapana Bank, and, of course, other FIs who are interested as well. Right now, we are in discussion with Canadia Bank and Sathapana Bank.”
On the previous scheme, he said, “The reason why we started off with the individual guarantees was that we wanted to give time to the FIs to understand how they can structure the loans with guarantees. Now, the FIs have been more mature and ready.”
The new scheme would be able to address high volumes of loans with a guarantee. It’s meant to simplify the process, speed up and end up doing high volumes, he added.
Thus, the scheme is customized for the FIs where the FI and the CGCC would mutually agree on the credit criteria for the loans to be offered to MSMEs, is structured to target certain sectors or types of borrowers on which the FIs want to focus for lending, and will enable the FIs to have a faster turnaround time for guarantees and higher volumes of submissions, the CEO said.
SMEs can get quicker access to guaranteed loans, and easier loan approvals as the criteria will be transparent to the borrowers. As long as SMEs are able to meet the criteria, they will be able to get their guaranteed loans, he added.
In his concluding remarks, Deputy CEO of CGCC No Lida said, “The core mission of CGCC is to help businesses access to finance to support Cambodia’s economic growth. Imagine, if businesses with growth potential can get all the necessary capital to support the growth of their full potential, how would this help Cambodia’s economic growth?”
The seminar, jointly organised by the MEF and the CGCC, was attended by over 150 participants, including high-level officials of the MEF, the National Bank of Cambodia, the Ministry of Women’s Affairs, the Ministry of Industry, Science, Technology, and Innovation; national and international development partners, banks and financial institutions and associations.
The seminar’s aims were to review CGCC’s annual guarantee progress, discuss the challenges and solutions on the implementation of credit guarantee schemes, share views on it in the development of SMEs as well as study the experiences of credit guarantee schemes in Malaysia and Thailand.
The MEF Secretary of State also awarded five PFIs of CGCC – Canadia Bank, Sathapana Bank, AMK Microfinance, ABA Bank, and LOLC Microfinance – for their excellent performance in 2022.
Credit Guarantee Corporation of Cambodia Plc (CGCC) has issued a total of 985 Letters of Guarantee (LG) for loans worth $92.7 million as of December 31 after more than two years of operation, as part of its mission to support post-Covid-19 economic recovery, especially among small- and medium-sized enterprises (SME).
These numbers were disclosed by CGCC CEO Wong Keet Loong on January 17 at the state-owned enterprise’s annual seminar on the “Role of Credit Guarantee Schemes in SMEs Development in Cambodia and ASEAN”.
The Malaysian shared that, as of November 30, the outstanding guaranteed amount was $51.2 million out of the $70.9 million worth of loans covered by the LGs – remaining in the target 70-80 per cent range at just over 72 per cent.
He broke down the proportions of LGs by sectors and other categories: retail trade (29%), services (11.6%), industry (8.3%), agriculture (2.6%), other (48.4%); SMEs (96.45%), large firms (3.55%); unsecured (66.70%), secured (33.30%).
Speaking at the seminar, Ministry of Economy and Finance secretary of state Mey Vann hailed SMEs as drivers of employment as well as income for locals and hence key vehicles for socio-economic progress in Cambodia, largely crediting these smaller businesses for reducing the poverty rate from 50.2 per cent in 2003 to 17.8 per cent in 2020.
He highlighted SME development as a government priority, stressing that a raft of key strategies, policies and even institutions have been established to this end.
And that includes the CGCC, which was set up to share risk with financial institutions and improve the accessibility to formal loans for businesses, especially SMEs, he said.
Vann identified the “leverage effect” as a major advantage of the credit guarantee mechanism, explaining that funds from the state budget allocated to the CGCC to secure credit are only used up when borrowers default on loans.
“Therefore, $200 million budgeted by the state as capital for the CGCC will support the issuance of new guaranteed loans worth more than $200 million,” he said, adding that an underlying “countercyclical crisis tool” helps to maintain market confidence and stabilise economic activity, especially during times of crisis.
Effective policy allowed the Cambodian economy to grow by an estimated five per cent in 2022, which is expected to accelerate to about six per cent this year, reversing the 2020 contraction, according to Vann.
Nevertheless, Vann added, challenges remain that could dampen economic outlooks for the Kingdom, such as the protracted Russo-Ukrainian conflict, rising inflationary pressures and geopolitical competition in the region, which he stressed would require constant preparedness to respond in a timely and effective manner.
“In this context, SMEs are an indispensable driving force that ensures the sustainable, inclusive and resilient development of the Cambodian economy. The government will continue to implement supportive policies through credit guarantee mechanisms to ensure SME development.
“The CGCC is the first credit guarantee institution in Cambodia, which was established with a deep commitment by the government for short-term use during the Covid-19 crisis’ onslaught on Cambodia.
“[The CGCC was also] to launch a credit guarantee scheme in a timely manner to support the rehabilitation and sustainability of local businesses,” he said, commending the institution for its work over the past two years.
The CGCC was established by Sub-Decree No 140/ANKR/BK on September 1, 2020, and its $200 million Business Recovery Guarantee Scheme (BRGS) was launched on March 29, 2021 in a bid to widen access to formal loans from participating financial institutions (PFI) for working capital, investment and business expansions.
The finance ministry has authorised the extension of the BRGS beyond December 31, 2022, until all funds have been utilised, the CGCC confirmed in a statement earlier this month, which noted that the terms of the scheme had also been updated, including the maximum guarantee amounts for differing categories of businesses.
The statement disclosed that loans, mostly unsecured, totalling about $89 million were guaranteed by the CGCC as of December 31 under the BRGS.
