Tag: Loan

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

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

To boost startups and SME entrepreneurs, more high-ticket (above $50,000) loans without property collateral are now being issued by microfinance institutions (MFIs).

The main reason behind this is the take-off of the Credit Guarantee Corporation of Cambodia (CGCC) for SMEs. Normally, MFIs would only give small-ticket loans between $1,000-$3,000 without property collateral.

In the last decade, the higher the loan amount more would be the property collateral asked for. So looking at data from the fourth quarter of 2024 from the Cambodia Microfinance Association (CMA), for tier-1 loans less than $3,000 — 85 percent of these loans were issued without property backing it as collateral. Then for tier-2 loans between $3,001-$10,000 – 22 percent of loans were issued without collateral. And for tier-3 loans between $10,001-$50,000 – only 19 percent of such loans were issued without property collateral.

So far the data is following the expected trend as in past years. But if one were to look at tier-4 loans – which are above $50,000 – as high as 40 percent of loans were issued without property collateral.

And this is primarily because the CGCC in a bid to promote new ideas and new businesses has stepped forward to guarantee loans amounting to $164 million to 1,928 micro, small and medium enterprises (MSMEs) in the last three years. CGCC CEO KL Wong told Khmer Times that guaranteeing such loans has resulted in SMEs creating jobs. “The loans we’ve guaranteed have resulted in more than 52,000 new jobs in Cambodia from the SMEs we support,” he said.

Heng Bombakara, First Deputy Director General of Banking Supervision, National Bank of Cambodia (NBC), also said that the creation of CGCC is an acknowledgement of the vital role SMEs play in the economy. “SMEs represent 70 percent of employment opportunities in the country and contribute 58 percent to our country’s GDP. And these SMEs operate in diverse fields like agriculture, industry and services; and CGCC has been created to give a boost to this sector,” he said at a recent event.

Mindful of the diversity of SMEs in the country, CGCC guaranteed as much as 50 percent of loans for SMEs in services and trade, 3 percent from agriculture, 7 percent from industry and the remaining 40 percent to other miscellaneous SMEs.

CMA said that many of its members, including LOLC Microfinance and AMK Microfinance are participating financial institutions in the CGCC’s scheme. CGCC saw its highest loan guarantee activity in March 2022 – when it guaranteed as much as 91 businesses for $8.3 million in loan.

CGCC CEO Wong said that this pace of lending was maintained in 2023 where the state-owned enterprise guaranteed $72 million in loan amount for 943 accounts.

Credit to: Khmer Times, Published on 24 April 2024