On 05 December 2022 at 9:00am, CGCC organized the 12th Board of Directors Meeting at CGCC’s Head Office under the chairmanship of H.E. Ros Seilava, Secretary of State of the Ministry of Economy and Finance, and Chairman of CGCC’s Board of Directors, with the presence of members of the Board of Directors and the state controller.
The agendas of this 12th Board of Directors Meeting included: (1) CGCC Progress Report, (2) PFIs Application, (3) New Guarantee Scheme, (4) Bond Guarantee Framework, (5) Amendment to Articles of Incorporation, and (6) Others.
CGCC’s Board of Directors Meeting is regularly organized to review, endorse, and approve CGCC’s activities and progress, especially the credit guarantee schemes, to ensure the transparency and efficiency of CGCC.
12th Board of Directors Meeting of Credit Guarantee Corporation of Cambodia (CGCC)12th Board of Directors Meeting of Credit Guarantee Corporation of Cambodia (CGCC)12th Board of Directors Meeting of Credit Guarantee Corporation of Cambodia (CGCC)12th Board of Directors Meeting of Credit Guarantee Corporation of Cambodia (CGCC)12th Board of Directors Meeting of Credit Guarantee Corporation of Cambodia (CGCC)
Maybank Cambodia in collaboration with the Credit Guarantee Corporation Cambodia (CGCC) organised two workshops over the last two months to strengthen the capacity and capabilities of over 100 SMEs and financial advisors by providing business insights and knowledge as well as imparting new skills, techniques and technologies to improve their business operations.
The SME Building Capacity & Capability workshops, which were held at the Maybank Tower, provided a platform for networking, giving SMEs opportunities to connect with like-minded peers across industries to develop new insights into building and strengthening their businesses.
Rath Sophoan, CEO of Maybank Cambodia said that the bank understands that SMEs are confronted with increasing difficulties and challenges post-pandemic and have limited access to timely and accurate information as well as the necessary skills to meet the rapidly evolving market to remain competitive and resilient.
“We have introduced a comprehensive programme to help SMEs, which is a strategic and collective initiative that the Bank commits, in addition to the continuous efforts to support them gain access to financial assistance. In line with our mission to Humanise Financial Services and upon the success of our workshops, we plan to organise several more in the future as we see this being beneficial not only to the SMEs but also towards boosting the economy as SMEs are the backbone of the country,” he added.
All entrepreneurs were exposed to various topics including business registration in Cambodia, the importance of financial discipline, branding and digital marketing, as well as the aspects of managing human resources, presented by subject-matter-experts and professionals by law firms, business consultants, advertising agencies and financial institutions.
Wong Keet Loong, Chief Executive Officer of CGCC, said, “Our partnership with Maybank has enabled both parties to help improve financial literacy to build SMEs’ business operations and provide upskilling and growth opportunities to all the participants. These workshops aim to serve as a platform to fuel the SME growth further in Cambodia.”
He further added that Maybank and CGCC will continue to support local SMEs through various means, including financing facilities, business support instruments and technical advisory based on best practices to support SME growth, productivity and innovation, as well as enhance the competitiveness of SMEs.
On 22 November 2022, the training on “Procedure of Debt Securities Issuance” was held at the CGCC’s head office, highly presided by H.E. SOU Socheat, Delegate of the Royal Government of Cambodia in charge as the Director General of Securities and Exchange Regulator of Cambodia (SERC), participated by CGCC’s managements and related staffs, led by Mr. Wong Keet Loong, CGCC’s CEO.
This training aims to provide the General regulations and the Procedure of Debt Securities Issuance to CGCC, which CGCC will contribute to the development of the bond market by providing bonds guarantee as a part of debt securities.
Training on “Procedure of Debt Securities Issuance” for CGCC Provided by SERCTraining on “Procedure of Debt Securities Issuance” for CGCC Provided by SERCTraining on “Procedure of Debt Securities Issuance” for CGCC Provided by SERCTraining on “Procedure of Debt Securities Issuance” for CGCC Provided by SERCTraining on “Procedure of Debt Securities Issuance” for CGCC Provided by SERC
Maybank Cambodia in collaboration with the Credit Guarantee Corporation Cambodia (CGCC) organised two workshops held over the last two months in efforts to strengthen the capacity and capabilities of around 100 SMEs and financial advisors by providing business insights and knowledge as well as new skills, techniques and technologies to improve their business operations.
The SME Building Capacity & Capability workshops, which were held at the Maybank Tower, provided a platform for networking, giving SMEs in attendance opportunities to connect with like-minded peers across industries to develop new insights into building and strengthening their business.
Maybank and CGCC Organise Capacity Building and Capability Workshops for Around 100 SMEs in CambodiaMaybank and CGCC Organise Capacity Building and Capability Workshops for Around 100 SMEs in Cambodia
Mr. Rath Sophoan, CEO of Maybank Cambodia said that the Bank understands that SMEs are confronted with increasing difficulties and challenges post pandemic and have limited access to timely and accurate information as well as the necessary skills to meet the rapidly evolving market to remain competitive and resilient.
“As such, we have introduced a comprehensive programme to help SMEs, which is a strategic and collective initiative that the Bank commits, in addition to the continuous efforts to support them gain access to financial assistance. In line with our mission to Humanise Financial Services and upon the success of our workshops, we plan to organise several more in the future as we see this being beneficial not only to the SMEs but also towards boosting the economy as SMEs are the backbone of the country,” he added.
All entrepreneurs were exposed to various topics including business registration in Cambodia, the importance of financial discipline, branding and digital marketing, as well as the aspects of managing human resources, presented by subject-matter-experts and professionals by law firms, business consultants, advertising agencies and financial institutions.
Mr. Wong Keet Loong, Chief Executive Officer of CGCC, said, “Our partnership with Maybank has enabled both parties to help improve financial literacy to build SMEs’ business operations and provide upskilling and growth opportunities to all the participants. These workshops aim to serve as a platform to fuel the SME growth further in Cambodia.”
He further added that Maybank and CGCC will continue to support local SMEs through various means, including financing facilities, business support instruments and technical advisory based on best practices to support SME growth, productivity and innovation, as well as enhance the competitiveness of SMEs.
Maybank and CGCC Organise Capacity Building and Capability Workshops for Around 100 SMEs in Cambodia
Credit guarantee aims to support businesses, especially SMEs, access to formal loans. Under CGCC’s current schemes, CGCC provides credit guarantees on loans disbursed by banks and microfinance institutions that are the participating financial institutions (PFIs) to the borrowers. To reap the benefits of credit guarantees, the borrowers must be ready to apply for loans from the PFIs in the first place. Understanding how the PFIs assess the borrower’s creditworthiness helps the borrower better prepare to get the guaranteed loans.
Conditions
5 important things SMEs should understand to apply for guaranteed loans!
Before approving a loan, the bank must be convinced about the loan purpose and the appropriate loan amount for such purpose. How can the borrowers convince the bank? A reliable business plan and financial statement are good testimony to justify the loan purpose and amount. A proper business plan and financial records not only make it easier to borrow but also allow borrowers to critically examine the current business condition and plan better for success. Precisely, they help gauge the appropriate loan amount and repayment capacity. Indeed, borrowing the right amount matters. A surplus borrowing costs unnecessary accumulated interest, fees, and prepayment penalties, while inadequate borrowing may hinder potential business growth. This is called “condition,” one of the 5 Cs that banks use to evaluate borrowers’ creditworthiness.
Collateral
5 important things SMEs should understand to apply for guaranteed loans!
Given that the condition is satisfied, banks also require “collateral” to protect themselves against loan default. The banks typically provide loans worth about 70% of the borrower’s collateral value. The collateral requirement is one of the main challenges for borrowers’ access to loans from banks. According to IFC, of all small and medium enterprises that approached banks for loans, 66% were rejected because of lacking collateral requirements. This is why CGCC comes in. CGCC provides credit guarantees to banks to act as collateral on behalf of the borrowers. CGCC’s PFIs can assess the borrower’s creditworthiness by treating the credit guarantee as the borrower’s collateral. This reduces the collateral burden for the borrowers when applying for loans.
Capacity
5 important things SMEs should understand to apply for guaranteed loans!
The ability to repay the loan is the fundamental requirement for the bank to approve a loan. Regardless of satisfactory conditions and collateral or CGCC’s guarantees, the banks would not lend, and CGCC cannot guarantee if the borrowers cannot prove that they can repay the loans. So how can the borrower justify the “capacity” to repay? Again, this is when a reliable business plan and financial record can come into play. A proper financial statement tells the borrower’s assets, liabilities, equity, income, and cash flow which are reliable sources to evaluate the repayment capacity. Plus, the business plan describes the future business trajectory in which future income can also be used to justify the repayment capacity.
Capital
5 important things SMEs should understand to apply for guaranteed loans!
If banks provide business loans, they want to know how much own “capital” the borrower put into the business. This matters because it shows the borrower’s commitment to the company where the loan proceeds will be used. It shows “skin in the game.” How can the borrower master this? The proper financial record should show the owner’s equity in the business. Official supporting documents such as partnership agreement and company registration are valid evidence of the borrower’s investment in the company. Usually, banks find it more challenging to assess informal or unregistered businesses because they lack reliable sources of the document to validate their creditworthiness. That is why businesses are encouraged to register to improve their access to finance.
Character
5 important things SMEs should understand to apply for guaranteed loans!
Another criterion to prove the repayment capacity is the “Character” of the borrower. Notably, banks investigate the borrower’s credit records, including loan repayment history, number of loans, and current loan outstanding, etc. The primary purpose is to assess the borrower’s trustworthiness. Currently, Cambodia Credit Bureau (CBC) provides comprehensive credit reporting on individuals and businesses, which is helpful for banks to evaluate the borrower’s character. However, in some instances, if your credit records are not favorable, you need to strengthen other Cs to convince the banks. For example, during the COVID-19 Pandemic, many businesses face challenges leading to late debt repayment and loan default, adversely impacting their “Character” and “Capital.” In this case, to get loans, the borrowers need to demonstrate a solid business plan which can improve “Condition” and “Capacity” and utilize CGCC’s credit guarantees which can improve “Collateral.”
As we can see, the 5Cs – condition, collateral, capacity, capital, and character – are important factors that banks evaluate the borrowers before deciding to lend. Improving the 5Cs increases the chance of getting loans from banks. A reliable financial statement and business plan can be used to validate every Cs, while a credit guarantee can help address the “Collateral” issue.
Lack of collateral is the main challenge for businesses in Cambodia to get loans. The Royal Government of Cambodia established the Credit Guarantee Corporation of Cambodia (CGCC) to address this challenge. With credit guarantees, borrowing without collateral is no longer impossible. For CGCC to yield the benefits requires a good understanding from relevant stakeholders about how it works.
Simply put, CGCC provides credit guarantees to share the credit risk with the banks on loans made to businesses. In other words, the banks can claim from CGCC if the guaranteed loan defaults. There are two main types of credit guarantee – individual guarantee whereby the guarantee covers individual loans and portfolio guarantee whereby the guarantee covers a portfolio consisting of multiple loans. Since CGCC itself is not a lending institution, it currently collaborates with banks and micro-finance institutions (MFIs) that are the participating financial institutions (PFIs) to provide guaranteed loans to businesses. As a government-backed institution with adequate capital in its account, CGCC is set to provide a wide range of guarantees on loans disbursed to Cambodian-owned businesses across the country.
Why should the lender need the credit guarantee?
Give Non-Collateral a chance! Credit Guarantee Mechanisms and Benefits for Banks, MFIs and Businesses
When lending, banks normally protect themselves by requiring collateral from the borrowers. When the borrower cannot repay the loan, the banks liquidate the collaterals to cover the loss. If the required collateral is not sufficient, the bank is unlikely to lend. The collateral requirement becomes more stringent, especially during times of uncertainty such as the COVID-19 Pandemic, because businesses are perceived to be riskier, and banks become more risk-averse. Now with CGCC, the banks can protect themselves with the credit guarantee instead of the collaterals. Currently, CGCC provides credit guarantees up to 80% of the outstanding loan principal which means that the bank bears the remaining 20% of the loss if the loan defaults. The credit guarantee empowers banks to remain competitive in the market and to lend out more to underserved borrowers who lack collaterals, what is referred to as “credit additionality.”
Why should the borrower need the credit guarantee?
Give Non-Collateral a chance! Credit Guarantee Mechanisms and Benefits for Banks, MFIs and Businesses
Credit guarantees increase the borrowing capacity. CGCC provides guarantees that act as collateral on the borrower’s behalf. Needless to say, CGCC cannot be beneficial for every business. By all means, if the business has sufficient collateral and the ability to repay the loan, the chance is that such a business does not need a credit guarantee, and the bank would also be happy to lend even without CGCC’s guarantee. However, it is common that a potential business with the ability to repay the loan is unable to borrow because of insufficient collateral. Businesses simply cannot pledge the collateral on every loan they wish to borrow. The collateral is limited. This is a huge loss to the business and the economy as a whole. With the required loan, the business could have generated more income, employed more workers, and produced goods or services that contribute to the economic growth of the country. When CGCC provides guarantees to the banks, the borrowers now have easier access to loans from the banks because the banks are willing to lend more with less collateral requirement.
Credit guarantees are used by many countries as a policy tool to improve access to finance and financial inclusion. However, never before has a credit guarantee corporation been incorporated in Cambodia. According to the World Bank, “Public credit guarantee schemes (CGSs) are a common form of government intervention to unlock finance for small and medium enterprises (SMEs). More than half of all countries in the world have a CGS for SMEs and the number is growing.” While many credit guarantee schemes have proved successful in supporting the SMEs, many have also failed.
It is still early to assess how far and how fast CGCC can support the businesses. CGCC must continue to strengthen credibility, efficiency, and transparency and adhere to the best practices including the World Bank’s principles for public credit guarantee schemes for SMEs to gain trust and support from all relevant stakeholders. What is also important at this stage is that all the players understand and start to utilize the credit guarantees for the right purposes.
On 09 November 2022 in Daegu, Republic of Korea, with the approval of H.E. Akka Pundit Sopheacha Deputy Prime Minister, Minister of Economy and Finance Guarantee Corporation Cambodia (CGCC) and Korea Credit Guarantee Fund (KODIT) signed a Memorandum of Understanding (MoU) agreeing on a collaboration to support the development of credit guarantee system for the growth of small and medium enterprises (SMEs) of the Kingdom of Cambodia and the Republic of Korea.
The MoU was signed by Mr. Wong Keet Loong, Chief Executive Officer of CGCC, and Mr. Choi Won Mok, Chairman and CEO of KODIT, and witnessed by H.E. Dr. Mey Vann, Secretary of State of the Ministry of Economy and Finance and Chairman of the Board’s Risk Management Committee of CGCC.
The MoU will enable CGCC and KODIT to collaborate on the exchange of information, policy consultation, and assistance with regard to credit guarantee services.
“CGCC and Korea Credit Guarantee Fund Signed a MOU to Enhance the Development of Credit Guarantee and Financial Support for Asian’s SMEs”“CGCC and Korea Credit Guarantee Fund Signed a MOU to Enhance the Development of Credit Guarantee and Financial Support for Asian’s SMEs”
CGCC was pleased to co-sponsor the FinTech Stage of Cambodia Tech Expo 2022 and would like to congratulate the success of this EXPO which was held on 11-13 November 2022 at The Koh Pich Convention and Exhibition Center, with the participation of many national and international guests. “Cambodia Tech Expo 2022” is the first and largest Tech Expo in Cambodia which was held as an official sideline event of the ASEAN 40th and 41st Summit hosted by Cambodia.
The “FinTech Stage” was co-organized by Ministry of Economy and Finance (MEF), Digital Economy and Business Committee (DEBC), Techo Startup Center (TSC), and Cambodian Association of Finance & Technology (CAFT) under 3 major topics: (1) FinTech Development, (2) Banking and Non-Banking, (3) Cyber Security and DeFi.
“CGCC raising awareness on credit guarantee at FinTech Stage of Cambodia Tech Expo 2022”
During this event, CGCC displayed CGCC’s guarantee schemes to raise awareness of the financing support policy, particularly the credit guarantees on business loans that lack collateral, an initiative of the Royal Government of Cambodia to support the development of SMEs.
“CGCC raising awareness on credit guarantee at FinTech Stage of Cambodia Tech Expo 2022”“CGCC raising awareness on credit guarantee at FinTech Stage of Cambodia Tech Expo 2022”
On 28 October 2022, CGCC has the honor to join the CMA’s Annual Conference on “Strengthening Responsible Growth in the context of post-COVID-19 Economic Recovery’’ at Sokha Hotel, Siem Reap Resort & Convention Center, presided over by H.E. Rath Sovannorak, Assistant Governor and Director of Banking Supervision of National Bank of Cambodia (NBC) and H.E. Dr. Huot Pum, Under the Secretary of State of the Ministry of Economic and Finance (MEF) along with the presence of other MFIs in Cambodia.
Through this conference, Mr. No Lida, DCEO of CGCC, also attended as a panelist in the panel discussion on “Best practices and lesson learned on supporting MSME”. He had raised about CGCC’s credit guarantee experience to support MSMEs, and the benefits of using formal loans, in response to the lack of collateral when applying for loans with CGCC’s PFIs under CGCC’s guarantee schemes to improve and recover their business impacted by the COVID-19 pandemic.
