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Rice Credit Guarantee Scheme Inked to Boost Rice Productivity and Export

Posted on by Sorn Chhorvyvatey

The state-owned Credit Guarantee Corporation of Cambodia (CGCC), Cambodia Rice Federation (CRF), and Participating Financial Institutions (PFIs) signed an agreement on the Rice Export Guarantee Scheme (REGS), which helps millers expand their scope to stockpile rice for milling, processing, exporting, and increasing local value-added products.

The signing ceremony was held on May 10 under the presidency of Ros Seilava, Secretary of State at the Ministry of Economy and Finance, with the participation of more than 70 people who are members of the CGCC Board of Directors, the management and members of CRF, the management and staff of PFIs, and CGCC.

The ceremony was held to seal the official cooperation between CGCC, CRF, and PFIs on the Rice Export Guarantee Scheme (REGS). The scheme aims to increase the productivity and competitiveness of Cambodia’s rice industry and boost rice exports in line with the Royal Government of Cambodia’s policy on agriculture.

CGCC launched the $30 million REGS as a portfolio guarantee scheme, with seven financial institutions participating, including AMK Microfinance Institution, Canadia Bank, Foreign Trade Bank of Cambodia (FTB), Maybank (Cambodia), Prince Bank, Sathapana Bank, and Wing Bank (Cambodia).

Speaking at the ceremony, Ros Seilava said that the launch of the $30 million REGS project reflects the Royal Government’s strong commitment to supporting Cambodian rice production and exports through the public credit guarantee scheme, of which CGCC is the operator. The scheme provides guarantee coverage of 80 percent on the maximum loan of up to $3 million.

“The REGS will support the financing need of rice exporters and rice millers to purchase paddy from farmers to produce rice for exports in line with the Royal Government of Cambodia’s policy to increase rice production and exports,” he said.

Chan Sokheang, President of CRF said the rice credit guarantee package will help millers expand their scope to stockpile rice for milling, processing, exporting, and increasing local value-added products derived from its by-products milling all rice to other sectors such as aquaculture, livestock farming.

According to Wong Keet Loong, CEO of CGCC, the scheme comes with special features – lower guarantee fees, higher guarantee covers and loan interest rate not exceeding 11 percent p.a.

“We are supporting the aspirations of the Royal Government of Cambodia to export 1 million tonnes of rice by 2025,” Wang said.

CGCC is a state-owned enterprise under the financial and technical guidance of the Ministry of Economy and Finance with a main mission to provide credit guarantees to improve financial inclusion and support the development of small and medium enterprises. AKP

Credit to: Khmer Times, Published on 11 May 2024

CGCC Provides $17M Credit Guarantees to MSMEs in Q1

Posted on by Sorn Chhorvyvatey

The Credit Guarantee Corporation of Cambodia (CGCC) provided credit guarantees of nearly $17 million in the first quarter of this year to 49 micro, small and medium-sized enterprises (MSMEs) as their working capital for expansion.

“In the first quarter of January to March, we saw a positive trend in the issuance of guarantees. We recorded a 30 percent increase in guarantees issued from 166 (4th quarter of 2023) to 215 with the amount of guaranteed loans increasing by 8.5 percent to $ 16.8 million,” a CGCC report issued recently showed.

The first quarter figure brought total credit guarantees to $181 million as of the end of March, supporting 2,143 MSMEs since its service launched in 2021, read the report.

As of March, the outstanding guaranteed loan was US$121.32 million while the outstanding guaranteed amount was $87.63 million.

There are 1,988 micro, small and medium enterprises (MSMEs) and 155 large businesses in Cambodia, the report said, adding that 881 of the businesses were women-owned.

2024 marks the 4th year of operations for CGCC. CGCC is optimistic that the credit guarantee will continue its momentum to increase annually, its CEO KL Wang said.

“Our participating FIs are beginning to find importance in the guarantees as a form of risk sharing for supporting their loans to MSMEs. Also, with the recognition of guaranteed loans to be zero-risk weighted, it will improve the FIs capital adequacy ratios,” Wang said.

The CGCC scheme involves 28 participating financial institutions (PFIs) to extend credit as working capital investment and business expansion to SMEs.

Established in November 2020 with a state budget of $200 million, the CGCC is the preferred credit guarantee institution in Cambodia set up to improve financial inclusion and develop the growth of SMEs.

CGCC, operated under the technical and financial guidance of the Ministry of Economy and Finance, launched the first guarantee scheme on 29 March 2021.

CGCC’s credit guarantee is instrumental in aiding MSMEs to obtain sufficient financing, enabling the enterprises to capitalize on investment opportunities, boost employment and increase income.

In January this year, CGCC launched its guarantee for corporate bonds listed on the Cambodian Stock Exchange. This marks the diversification of our guarantees beyond bank loans to guarantee corporate bonds issued by larger-sized SMEs.

Credit to: Khmer Times, Published on 10 May 2024

The Business Owner Who Received a Loan Guaranteed by CGCC

Posted on by Sorn Chhorvyvatey

Agriculture is a key sector in supporting the national economic growth. Rice market also plays an important role in promoting agriculture. Chhun Thom Rice Mill was established in 1997, initially as a family business. After years of operation, customers know the brand and begin to trust our products. I have seen opportunities to expand this business, especially on technologies such as the purchase of additional rice mills and the expansion of the location of the mill.

I was introduced by ABA Bank staff about the loan guaranteed by CGCC which can provide me additional capital even without collateral. Thanks to the credit guarantee from CGCC, I was able to get more capital to expand my rice mill business.

I strongly believe that the CGCC’s credit guarantee really support my business, as well as other potential SMEs that lack collateral to get necessary capital from banks or microfinance institutions for their business expansion.

Read more: Meet the Business Owner Who Received a Loan Guaranteed by CGCC

Understanding Credit Guarantee-Interview with Participating Financial Institution (Acleda Bank)

Posted on by Sorn Chhorvyvatey

Read and Download in PDF: Interview with Participating Financial Institution (ACLEDA Bank)

 

1. What is ACLEDA Bank’s perspective towards the credit guarantee schemes and why does your bank partner with CGCC?

Credit guarantee schemes of Credit Guarantee Corporation of Cambodia “CGCC” are good and essential schemes contributing to the development of the country’s national economy by providing credit guarantees to Small-sized and Medium-sized Enterprises (SMEs), and Large Enterprises which are financially viable but with insufficient or no collateral to enable them to get official loans from ACLEDA Bank as well as other PFIs. Through the credit guarantee from CGCC, the Bank could expand credit market, promote financial inclusion and manage credit risks effectively.

ACLEDA Bank has joined and become one of the participating financial institutions (PFIs) for the following main reasons:

  • Participate with the Royal Government’s initiatives and schemes to support the country’s socio-economic development.
  • Support and encourage SMEs and Large Firms to obtain formal loans from the licensed financial institutions for both working capital and business expansion.
  • Contribute to creating employment opportunities for people through the growth of businesses obtaining the formal loans under CGCC’s credit guarantee.

 

2. How do the credit guarantee schemes benefit ACLEDA Bank and your customers?

The credit guarantee schemes offer many benefits to both ACLEDA Bank and the customers as follows:

  • For ACLEDA Bank:
    • Diversify the credit products in line with the Bank’s strategic plan.
    • Manage credit risks effectively.
    • Maintain the existing customers and attract new potential ones.

  • For the customers:

    • Offer choices to the customers and be able to get formal loans for the expansion of their business activities.
    • Improve their living conditions through the growth of businesses.
    • Have a chance to create employment opportunities for their communities and promote innovation in their products and services.

3. So far, which type of loans does ACLEDA Bank use the credit guarantees to support SMEs?

So far, ACLEDA Bank uses the credit guarantees to provide business loans, revolving facility, and overdraft facility to our customers as SMEs and Large Enterprises in both priority and non-priority sectors to meet their business needs.

 

4. How should the borrowers prepare themselves to get guaranteed loans from ACLEDA Bank?

To obtain the guaranteed loans from ACLEDA Bank, the borrowers both individuals and legal entities shall meet the following criteria:

  • Business activities operate in Cambodia and majority Cambodian-owned businesses (shareholding of more than 50%)
  • Business registration issued by the appropriate government authorities
  • Financially viable businesses and accurate financial statements
  • Have owner equity and specific business plan
  • Loan utilization in accordance with the purposes as mentioned in the credit proposal
  • Willingness to comply with the loan obligations etc.

 

5. What is the ACLEDA Bank’s strategy/plan to further expand the disbursement of guaranteed loans in 2024?

ACLEDA Bank still continues to stimulate the disbursement of guaranteed loans in 2024 through promoting credit guarantees to both existing and new customers who need financing as well as  providing the trainings and refresher courses on the knowledge of credit guarantees to all the credit-related staffs of all branches nationwide, providing technical support for credit guarantees, especially having a good collaboration with CGCC to support and enhance the growth of guaranteed loans in a sustainable manner.

 

Understanding Non-Performing Loan

Posted on by Sorn Chhorvyvatey

Never before in the last fifteen years has the banking sector in Cambodia experienced a high non-performance loan (NPL) ratio. At the end of 2023, the NPL ratio stood at 5.4% and 6.5% in the banking and microfinance sectors, respectively, compared to an average NPL ratio of 2.18% between 2009 and 2022 (Chart 1). At the same time, as of February 2024, 133 of 2,070 accounts guaranteed by CGCC have become NPL, amounting to USD 9.76 million. The percentage of cumulative non-performing guaranteed amount over the guaranteed amount is 8.02%. Despite the challenging environment, NPL is manageable, and Cambodia’s banking sector remains resilient. Understanding NPL is critical to mitigating adverse impacts on borrowers, lenders, and the economy.

What is a Non-Performing Loan?

A non-performing loan occurs when the borrowers cannot fulfill their repayment obligations due to financial difficulty, i.e, late payments of more than 30 days for short-term loans, or more than 89 days for long-term loans. The criteria for classifying loan status are different from country to country. In Cambodia, the NBC classifies loans into five categories based on the number of days past due, as shown in Table 1 below. Loans under Normal and Special Mention are performing, while loans that fall under the Substandard or worse are considered non-performing.

Read more: Understanding Non-Performing Loan

Meeting between CGCC, Manulife and RHB Securities to explore investment opportunities in CGCC’s guaranteed bonds.

Posted on by Sorn Chhorvyvatey

On 6th May, 2024, at CGCC Office, Mr. Wong Keet Loong, CEO of CGCC and Management and team, welcomed the management and team of Manulife and RHB Securities to discuss investment opportunities in CGCC’s guaranteed bonds.

The meeting also discussed the exchange of views between the three institutions on the study of cooperation to support the issuance of CGCC’s guaranteed bonds to support the implementation of the bond issuance of local companies as well as to support the development of the securities sector in Cambodia.

CGCC and Cambodia Chamber of Commerce (CCC) Co-organized a Workshop on “Capacity Building and Improving Financial Literacy of SMEs” in Kampot

Posted on by Sorn Chhorvyvatey

On 26th April 2024, Credit Guarantee Corporation of Cambodia (CGCC) and Cambodia Chamber of Commerce (CCC) co-organized a workshop on “Capacity Building and Improving Financial Literacy of SMEs” in Kampot province in collaboration with Kampot-Kep Chamber of Commerce with around 70 participants from Management and staff of Participating Financial Institutions (PFIs) and business owners in Kampot provincee.

The workshop was presided over by Oknha Dr. Hak Sovannarith, President of Cambodia Chamber of Commerce, chapter based in Kampot-Kep, Mr. No Lida, Deputy CEO of CGCC, Mr. Tith Kamrong, Financial Literacy Expert and Founder of Rithipul Company, and the presentations by representatives from Acleda Bank and AMK MFI as well.

Through this workshop, business owners gained more understanding of the benefits of credit guarantee and especially understand the readiness to obtain loans from banks and microfinance institutions, as well as understanding how to use loans responsibly and correctly and have the opportunity to practice and get feedback Improved feedback from trainers / experts on loan readiness.

CGCC visits PFIs provincial branches in Takeo, Kep & Kampot to Enhance Collaboration on the Credit Guarantee

Posted on by Sorn Chhorvyvatey

From 22 to 24 April 2024, CGCC team led by Ms. Pin Manika, Manager of Marketing and Business Development of CGCC, visited provincial branches of selected Participating Financial Institutions (PFIs) to discuss with the management and staff of the selected PFIs regarding the implementation of CGCC’s credit guarantee schemes and to increase more awareness of the credit guarantee. The selected PFIs in 3 provinces include:

– Takeo province:  Philip, Maybank, and Prince Bank.

– Kep province: ACLEDA Bank, ABA Bank, and Sathapana Bank

– Kampot Province: Sathapana Bank  and Canadia Bank

The discussions with CGCC PFIs’ provincial branches in these 3 potential provinces provided opportunities for both CGCC and PFIs to enhance mutual understanding of credit guarantees and opportunities for PFIs to increase lending to potential borrowers that lack collateral when requesting loans.

Extension of Request for Proposal “Legal Counsel”

Posted on by Sorn Chhorvyvatey

CGCC is a state-owned enterprise, established under the technical and financial guidance of the Ministry of Economy and Finance (MEF) to provide credit guarantees based on international standards to improve financial inclusion and support the growth of SMEs in Cambodia. CGCC obtained the accreditation from the Securities and Exchange Regulator of Cambodia (“SERC”) to become the bond guarantor on 22 August 2023 (“Bond Guarantor” or “Guarantor”).

CGCC wishes to provide guarantee on bonds to be listed on the Cambodia Securities Exchange.

CGCC is seeking to engage a Cambodian legal counsel (“Legal Counsel”) to perform the services as described in the scope of work.