Tag: Micro-Finance

Phnom Penh Post: March 29, 2021

The Ministry of Economy and Finance on March 29 launched a $200 million credit guarantee scheme to provide small and medium-sized enterprises (SME) with larger loans and easier application procedures to ensure their businesses remain afloat during the ongoing Covid-19 crisis.

The Business Recovery Guarantee Scheme (BRGS), under the ministry’s Credit Guarantee Corporation of Cambodia Plc (CGCC), will widen access to formal loans from participating financial institutions (PFI) for working capital, investment and business expansions, the ministry said in a press release.

Applicants must be majority Cambodian-owned to qualify for loans under BRGS, it said, noting that the initiative is consistent with government policy that addresses crisis survival and recovery support for the economy during the pandemic.

CGCC is the Kingdom’s first credit guarantee corporation, established by sub-decree No 140 ANKr BK on September 1 as a state-owned enterprise under the ministry’s technical and financial direction.

The ministry noted that CGCC’s primary mission is to provide credit guarantees to PFIs to support and assist financially-viable businesses that lack collateral to secure loans.

CGCC’s guarantee will act as collateral or security for 70-80 percent of the loan amount borrowed from PFIs and hence reduce the physical collateral required from borrowers, it said.

Ministry secretary of state and CGCC chairman Ros Seilava said the instrument comes at a timely moment to support businesses that plan to borrow from the PFIs during the pandemic.

“This milestone supports the government’s policy to maintain sustainable and inclusive economic growth and [is] in line with the Industrial Development Policy 2015-2025,” he said, calling for financial institutions to join the roster of PFIs and “ensure good credit governance”.

In Channy, president and group managing directors of ACLEDA Bank Plc, one of the PFIs, lauded the move as a step forward to increasing the supply of loans to the SME sector.

“The credit guarantee is crucial, especially for those customers who have distinguished business plans, but don’t have enough collateral for the full amount of loans that they may need.

“This kind of scheme is long overdue since it will help customers, borrowers and entrepreneurs grow their businesses [by giving them] loan security.”

He explained that customers who wish to apply for loans under the scheme only need to follow the standard procedures at PFIs.

As of March 26, the outstanding loan balance had risen six percent from end-2020 to $4.559 billion and money in savings and deposit accounts had shot up nine percent to $4.839 billion, he said.

Toch Chaochek, CEO of Cambodia Post Bank Plc, another PFI, said BRGS will prove a lifeline for SMEs with limited productive resources and budgets that had traditionally been unattractive to lenders and financiers.

“It is an admirable step by the government and will afford our SMEs an increased ability to secure larger loans through the scheme despite not having enough collateral, which is their key concern. And this stellar scheme comes bang on time given the current situation,” he said.

The ministry listed the PFIs as ACLEDA Bank, Cambodia Post Bank, Asia Pacific Development Bank, AMK MFI, Canadia Bank, Phillip Bank and Prince Bank, noting that other institutions are in the process of joining.

Read more: CGCC extends credit guarantee to more financial institutions

Khmer Times: July 24, 2020

MINISTER of Economy and Finance Aun Pornmoniroth approved in principle the concept of the strategic framework for establishing the Credit Guarantee Corp Cambodia, according to a statement from the Ministry of Economy and Finance (MEF).

MEF’s statement read that the initiative of the establishing corporation is to align with the government’s response mechanism for the fourth-round measures to mitigate the impact of COVID-19 on businesses and workers in Cambodia during the health crisis and to promote economic growth and help businesses rebound.

It said that the Credit Guarantee Corp Cambodia will play a role in providing a credit guarantee scheme (CGS) to companies and businesses in prioritized sectors that are severely affected by COVID-19 in order to enable them to increase the possibility of accessing financing for their working capital, ensuring a sustainable business and aligning with a new context for the business after coronavirus is beaten.

A meeting on the subject discussed the purpose of the establishment of the corporation. It noted challenges are expected to happen during its operation and an action plan to implement the project was prepared.

“The meeting has agreed in principle on the concept of the strategic framework for establishing the Credit Guarantee Corporation Cambodia. For the next step, the MEF will proceed with the procedure for the regulation framework, deliver relevant documents, and cooperate with relevant stakeholders in order to make the Credit Guarantee Corporation Cambodia operational soon,” the statement read. “To ensure that the Credit Guarantee Corporation of Cambodia provides credit guarantees for the right targets and efficiency in the urgent stage of COVID-19, the MEF will set up a policy to provide the credit guarantees by determining the sectors, sorts of company, types of businesses that are potential for getting a credit guarantee from the  Credit Guarantee Corporation of Cambodia,” said the MEF.

MEF spokesman Meas Soksensan told the Khmer Times that the ministry continues working on the criteria and procedures on how to guarantee it gets to the next working phase, but we have reserved the budget to support this scheme.

“We [the government] have the initiative to help the private sector and facilitate the private sector. However, we have to make sure that the money is not lost. It is risk-sharing with the private financial sector,” he added.

“We have to be careful with this because we cannot just give guarantees, but we have to ensure it is not run at a loss because it is a lot of money.”

He said that the credit-guarantee scheme will guarantee loans that are drawn down from the SME Co-Financing Scheme.

On May 26, the government rolled out the fourth-round measures aimed at mitigating the impact of COVID-19 on businesses and workers in Cambodia. These latest measures consist of a combination of new measures and an extension of those measures already in place.

In addition to providing relief to businesses and workers amid the Covid-19 outbreak, this round of measures is also intended to promote economic growth and help businesses rebound after the COVID-19 crisis.

Additionally, the MEF will establish a $200 million credit guarantee fund to provide loan guarantees to ease the cash flow and working capital pressures of businesses in all sectors, which is expected to generate liquidity of at least $2,000 million.

The MEF will also provide additional financing of up to $300 million to promote growth in key sectors during and after the Covid-19 crisis.