In the afternoon of February 28, 2023, CGCC, led by Mr. Wong Keet Loong, welcomed the delegation of the Ministry of Industry and Commerce of Laos for the study visit to understand Cambodia’s credit guarantee system in order to further develop the credit guarantee system for small and medium enterprises (SMEs) in Laos.
The Delegation of The Ministry of Industry and Commerce of Laos to Study Visit to Understand CGCC’s Credit Guarantee
CGCC is honored to share the good experience and success of the credit guarantee with the delegation from the Ministry of Industry and Commerce of Laos for the development of the credit guarantee system in Laos.
The Delegation of The Ministry of Industry and Commerce of Laos to Study Visit to Understand CGCC’s Credit GuaranteeThe Delegation of The Ministry of Industry and Commerce of Laos to Study Visit to Understand CGCC’s Credit Guarantee
On 27 February 2023, Mr. Wong Keet Loong, CEO of CGCC participated as a panelist in the panel discussion on “Intervention programs of related stakeholders in promoting and developing women entrepreneurship” in the seminar on “Women Entrepreneurs in MSMEs: Expanding Opportunity for Women Entrepreneurs in Digital Economy and Society”, organized by the Ministry of Women Affairs, with more than 100 participants from Ministry and Provincial Departments of Women Affairs, related ministries, private sectors, and development partners.
CGCC in the Seminar on “Women Entrepreneurs in MSMEs” of Ministry of Women Affairs
This seminar is organized to promote the focus on women entrepreneurs in business development in the digital era and review the mechanisms of relevant institutions to support women entrepreneurs more effectively.
During the Panel Discussion, CGCC’s CEO shared with audiences about CGCC’s credit guarantee scheme for women entrepreneurs, as well as the positive trend of providing credit guarantee to women entrepreneurs. He also highlighted CGCC’s additional support mechanisms for increasing credit guarantees, as well as supporting access to finance for women entrepreneurs in response to capital requirements and other skills, especially digital skills for business development through various training collaborating with partner banks/microfinance institutions.
CGCC in the Seminar on “Women Entrepreneurs in MSMEs” of Ministry of Women AffairsCGCC in the Seminar on “Women Entrepreneurs in MSMEs” of Ministry of Women Affairs
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.
On 10 February 2023, Mr. Wong Keet Loong, CEO of CGCC, provided a Keynote Presentation on “Credit Guarantee Schemes of CGCC and its Role in Enterprise Development” at “Give a Day” event, co-organized by Swisscontact, Khmer Enterprise, and Pact Cambodia, and presided over by H.E. Dr. Chhieng Vanmunin, Mr. Rajiv Pradhan, Country Director of Swisscontact, Ms. Sabine Joukes, Chief of Party, WE Act/Pact Cambodia, and participated by almost representatives from Entrepreneur Support Organizations (ESOs), investors and business associations.
CGCC and Role of Credit Guarantee Schemes in Enterprise Development of “Give a Day” Event
“Give a Day” is a forum gathering the entrepreneurial ecosystem community in Cambodia that are mutually supporting each other with the willingness to bring any open discussion related to entrepreneurship for effective solutions. Today’s “Give a Day” event theme is credit guarantee schemes that are a gateway for SMEs to access formal loans, therefore it is crucial that SMEs and ESOs understand the schemes.
Mr. KL Wong introduced credit guarantee schemes’ journey in Cambodian Financial Ecosystem and its role in supporting potential MSMEs to be able to obtain an easier and larger amount of loans under CGCC’s credit guarantee through CGCC’s participating financial institutions. Participants were pleased to learn about the benefits of credit guarantees and how this financial instrument could address the challenges in access to finance that their members and network are currently facing.
CGCC and Role of Credit Guarantee Schemes in Enterprise Development of “Give a Day” EventCGCC and Role of Credit Guarantee Schemes in Enterprise Development of “Give a Day” Event
CGCC is honored to donate the water treatment system to Koh Sdach High School on 05 February 2023, led by Mr. Wong Keet Loong, CEO of CGCC, and presided over by Mr. Say Heng, Chief of Koh Sdach Commune, Mr. Rov Ratanaksambath, Chairman of the School Management Committee, Mr. Phok Hoeun, Principal of Koh Sdach High School, and participated by students of Koh Sdach High School and the parents of the students, in total about 200 participants.
CGCC’s CSR Event – Donating Water Treatment System to Koh Sdach High School
The donation of this water treatment system from CGCC will enable students and the community to have clean drinking water. This system can supply drinking water for the entire island. This would save cost for the community and improve their livelihood and hygiene as well as maintain a clean environment on the island.
During this CSR event, Mr. No Lida, Deputy CEO of CGCC, led the CGCC’s team on 4 February 2023 to pay a coutesy visit to the Chief of Koh Sdach Commune and Koh Sdach High School’s Principal, and to collect waste around the island for a cleaner environment with participation from students of Koh Sdach high school.
CGCC’s CSR Event – Donating Water Treatment System to Koh Sdach High School
CGCC is very pleased and highly appreciates the administration and the people of Koh Sdach for their support and assistance in making CGCC’s CSR mission completed successfully.
CGCC’s CSR Event – Donating Water Treatment System to Koh Sdach High School
“I’m Financially Literate” training program was concluded last weekend on 28 and 29 January 2023. This program was successfully launched by Sathapana Bank, in partnership with Credit Guarantee Corporation of Cambodia (CGCC), Khmer Enterprise, and Manulife Cambodia, aiming to promote and improve financial literacy for women entrepreneurs and business owners.
CGCC Supports the Accelerating SMEs’ Financial Literacy through the “I’m Financially Literate Program” 5th Cohort
CGCC and other partners have the great honor to support this training program in enabling and championing women in Business in Cambodia as well as providing the development in technical, soft, and entrepreneurial skills including project management, operation handling, financial management, marketing, and sales. As a result, 30 SMEs and business owners attended the 5th cohort and shared their experiences and related financial issues.
CGCC Supports the Accelerating SMEs’ Financial Literacy through the “I’m Financially Literate Program” 5th Cohort
1. What is your bank perspective toward the credit guarantee schemes in Cambodia and what encourage Sathapana to join as CGCC’s PFI?
Credit guarantee scheme is important in filling the financing gap for SMEs. The scheme provides credit risk mitigation to Sathapana Bank. This, in turn, helps us to extend loans to SMEs which contribute significantly to the economy of Cambodia. The Credit Guarantee of Cambodia (CGCC) therefore plays a crucial role in supporting credit access for SMEs in the country.
2. After signing a partnership with CGCC and becoming one of the most supportive CGCC’s PFIs in disbursed guaranteed loans, how do the credit guarantee schemes benefit the bank and your customers?
Majority of the lending products in Cambodia are secured loans. We saw working with CGCC as a good opportunity for us to extend our support to our customers who require funding to help their business grow with no collateral needed. The scheme allows us to innovate and provide a 100% hard collateral-free loans to business owners. We are proud to be the first bank to do so. As of September 2022, more than USD12 million of loans have been booked under Credit Guarantee Scheme. For our clients, the scheme gives them the opportunities to continue growing their business with better access to financing.
3. What motivates Sathapana to initiate the uncollateral loan product “Business Installment Loan Program (BIL)” that is 100% unsecured loans for borrowers with the capacities to repay but lack of collateral?
In Cambodia, FIs are mainly lending against hard collaterals. Access to credit will be curtailed for business owners who do not have hard collateral to provide to FIs to secure the loans. We believe this represents a large segment of the market. Our goal is to help them to gain access to financing to help them grow while managing our credit risks.
4. Recently, CGCC, Sathapana and two other partners have jointly organized a flagship training program called “I am Financially Literate (IFL)”, how does this program support SMEs and drive more growth to their businesses including access to financing?
IFL is an executive program initiated by Sathapana Bank in a joint partnership with CGCC and two other partners. The program aims to promote and improve financial literacy for women entrepreneurs and business owners through practical training sessions. The training includes project management, operation handling, financial management, marketing, and sales. Through IFL, participants are better equipped with making financial assessments and the know-how in getting access to financing.
5. As currently, Sathapana Bank’s momentum in disbursing unsecured loans for businesses under CGCC’s guarantee is moving fast, what is the future plan/strategy of Sathapana Bank for further expanding the usage of credit guarantees all over Cambodia?
In line with the government strategy to support the tourism sector to recover from the pandemic, we are working on a program with CGCC to support the recovery scheme. In addition to this program, we are launching a few initiatives country-wide to support clients in supply chain, leveraging on our extensive branches network.
6. As the credit guarantee topic is still considered as a new topic in Cambodia, what should Sathapana Bank and CGCC do to raise awareness of credit guarantees to the borrowers?
Through IFL, Sathapana Bank and CGCC are reaching out to customers who need to help grow their businesses. This is one of the few initiatives that we are working together to create more awareness and promotion of the credit guarantees to our customers who are looking for financing but are not sure how and what are their options. We can also personalize our message and communicate the benefits of our BIL program and scheme to the meet the needs of customers from different geographical locations and industries.
As one of the first banks who become CGCC’s PFIs, what motivates Canadia Bank to utilize the credit guarantee schemes with the existing loan products of Canadia?
One of the main reasons that motivates us to use credit guarantee schemes is that we believe that the CGCC credit guarantee scheme can help potential business owners who need loans to for their businesses but do not have enough collaterals to access more capitals to meet the financial needs of their businesses, especially to recover and expand the businesses after the COVID crisis has been eased.
After adopting CGCC’s credit guarantee schemes for more than a year, how do those schemes benefit the bank and your customers?
We have provided loans under the CGCC credit guarantee schemes to more than 200 clients with a total loan size of nearly $ 20 million over the past year. Through these guaranteed loans, clients are able to expand their business in various sectors that generate more employment and contributed significantly to the country’s economic recovery.
How does Canadia Bank structure loans with credit guarantee?
We have CGCC’s guaranteed loan programs for potential clients with good credit histories and clear business plans. It can be provided to both existing customers and new customers.
Recently, both Canadia Bank and CGCC have each launched products supporting women entrepreneurs. How will the “Smart Lady Loan” and CGCC’s “Women Entrepreneurs Guarantee Scheme” (WEGS) impact women-owned SMEs in greater access to finance regarding unsecured loans?
“Smart Lady” of Canadia Bank and “Women Entrepreneur Guarantee Scheme (WEGS)” of CGCC are making a significant contribution to support women entrepreneurs to access to the finance for their business needs, avoiding high-risk and risky loans. Through these two projects, women entrepreneurs have not only been able to access their loans more easily and conveniently but have significantly reduced their financial costs, especially in the first year, which included lower interest rates and guarantee fees. In addition, women entrepreneurs will receive many other benefits through the Smart Women Lady loan program from Canadia Bank.
Canadia Bank is currently the top performer of using CGCC’s scheme, what is Canadia Bank’s strategy of further expanding the usage of credit guarantees, especially to the rural area SMEs?
We continue to reach out to our target customers, especially those who have potential businesses but do not have sufficient collateral to secure a loan. We will also continue to link credit guarantee schemes with our new loan products to provide a wider range of options for our customers.
As the credit guarantee topic is a new topic in Cambodia, how should Canadia Bank and CGCC do to raise awareness of credit guarantee to the borrowers?
In order to raise awareness about credit guarantee, we should continue to promote it more comprehensively, especially reach out to more business owners through social media, workshops, business associations, etc.
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.
