Tag: Credit Guarantee

Cambodia Investment Review

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.

Read more: Give a Day on Credit Guarantee Schemes & Its role in Enterprise Development

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.

Read more: CBC and CGCC ink partnership to promote SME and women’s access to finance

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.

Credit to: Cambodia Investment Review, Published on 02 May 2023

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.

Credit to: Khmer Times, Published on 25 April 2023

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.

Credit to: The Phnom Penh Post, Published on 30 April 2023