The head of the National Bank of Cambodia said Cambodia’s SMEs face a string of challenges, adding a scheme is available to offer financial support to those struggling to access credit.
The Director General of the National Bank of Cambodia, Chea Serey, said on Thursday that Cambodian SMEs face a number of challenges that range from a lack of human resources and market capitalization, to access to credit.
“There is a lot of SME competition, especially in Cambodia. If our SMEs are small, it will be difficult to compete in ASEAN,” Serey said at a conference to raise awareness of the importance of credit guarantees in assisting banks to make more loans to businesses, particularly those without collateral.
“So, if we do not fortify ourselves in Cambodia when the border opens, it will be easier to transport goods to and from each other, making our goods difficult to sell,” Serey said.
She added that in recognition of the importance of SMEs in the economy and their challenges in access to finance from banking and financial institutions, the government established Credit Guarantee Schemes to ensure SMEs receive credit.
“I think it is a good solution. Also, it is a short-term solution for SMEs that have not been recognized or registered,” she said. “This solution is critical and timely for SMEs in the context of Covid-19.”
The conference was hosted by the Ministry of Economy and Finance under the theme, “Credit Guarantee Schemes’ Potential to Strengthen SME’s Financial Inclusion in Cambodia”.
During the conference, Ros Seilava, Secretary of State at the Ministry of Economy and Finance, said the forum is important for raising awareness of the credit guarantees through discussion and experience sharing among relevant stakeholders. More than one year ago, the government launched the public credit guarantee scheme by establishing CGCC.
“As of July 2022, the CGCC had supported the disbursement of approximately $57 million in new loans, with credit guarantees to businesses lacking collateral via the Participating Financial Institutions (PFIs),” he said.
“Even though $57 million is a small sum, it marks the beginning of new lending practices in Cambodia’s credit market that do not rely on collateral,” Seilava said.
Meanwhile, Wong Keet Loong, Chief Executive Officer of CGCC, said that as of the beginning of Q3 2022, CGCC has expanded its guaranteed coverages to include all provinces, including remote provinces.
“However, more still needs to be done to improve financial inclusion for various groups of businesses in other parts of the country,” he said.
The conference included representatives from the government, development partners, financial institutions, business associations, and business owners, particularly SMEs.
Small and medium-sized enterprise (SME) development is a crucial priority in ASEAN countries’ strategies, including Cambodia. SMEs are critical to Cambodia’s economy, accounting for 70 percent of employment, 99.8 percent of businesses, and contributing 58 percent of the GDP.
SMEs are often regarded as the backbone of Cambodia’s economy and engine of economic development.
Credit to: kiripost, August 18, 2022
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