Tag: Micro-Finance

The Credit Guarantee Corporation of Cambodia (CGCC) unveiled the Portfolio Guarantee Scheme (PGS) at the CGCC annual seminar on the ‘Role of Credit Guarantee Schemes in SMEs Development in Cambodia and ASEAN’, here on Tuesday. The scheme was launched by Mey Vann, high representative of Aun Pornmoniroth, Deputy Prime Minister and Minister of Economy and Finance, who also presided over the event.

The PGS will enable Participating Financial Institutions (PFIs) to customize guaranteed loans for their targeted borrowers and allow quick, efficient, and flexible disbursement of guaranteed loans.

Speaking at the seminar, Vann, said, “SMEs (small and medium enterprises) are the indispensable driving force to ensure Cambodia’s sustainable, inclusive and resilient economic growth. SMEs have played important roles in supporting Cambodia’s socioeconomic development and contributed significantly to poverty reduction from 50.2 percent in 2003 to 17.8 percent in 2020 through job creation and income growth.”

He also provided five points of guidance to continue to develop the credit guarantee system in Cambodia, which included strengthening CGCC’s institutional capacity, balancing between expanding outreach and setting specific target businesses for guaranteed loans, expanding cooperation with stakeholders, and encouraging financial institutions to use credit guarantees to disburse more loans without collaterals.

On the new scheme, K L Wong, Chief Executive Officer of the CGCC, told Khmer Times, “The PGS will very much be a targeted scheme for FIs (financial institutions) if they want to customize the guarantee for loans they want to provide. For the banks and the PFIs who have specific target segments among SMEs, we can customize the portfolio, especially for them so that they can give out the loans.”

Elaborating upon the scheme, the CEO said, “It will be very much customized for specific FIs. Because the individual guarantee scheme that we have is a general scheme for every FIs. The PGS is very much targeted. So, let us say, if the Canadia Bank wants to do it for certain sectors, a certain industry, we can do … specifically for them. So, we (will) focus specifically on what they want and customize the guarantee.”

On the leading banks for the scheme, Wong said, for “the new scheme that we have just launched, we are going to be working with Canadia Bank and Sathapana Bank, and, of course, other FIs who are interested as well. Right now, we are in discussion with Canadia Bank and Sathapana Bank.”

On the previous scheme, he said, “The reason why we started off with the individual guarantees was that we wanted to give time to the FIs to understand how they can structure the loans with guarantees. Now, the FIs have been more mature and ready.”

The new scheme would be able to address high volumes of loans with a guarantee. It’s meant to simplify the process, speed up and end up doing high volumes, he added.

Thus, the scheme is customized for the FIs where the FI and the CGCC would mutually agree on the credit criteria for the loans to be offered to MSMEs, is structured to target certain sectors or types of borrowers on which the FIs want to focus for lending, and will enable the FIs to have a faster turnaround time for guarantees and higher volumes of submissions, the CEO said.

SMEs can get quicker access to guaranteed loans, and easier loan approvals as the criteria will be transparent to the borrowers. As long as SMEs are able to meet the criteria, they will be able to get their guaranteed loans, he added.

In his concluding remarks, Deputy CEO of CGCC No Lida said, “The core mission of CGCC is to help businesses access to finance to support Cambodia’s economic growth. Imagine, if businesses with growth potential can get all the necessary capital to support the growth of their full potential, how would this help Cambodia’s economic growth?”

The seminar, jointly organised by the MEF and the CGCC, was attended by over 150 participants, including high-level officials of the MEF, the National Bank of Cambodia, the Ministry of Women’s Affairs, the Ministry of Industry, Science, Technology, and Innovation; national and international development partners, banks and financial institutions and associations.

The seminar’s aims were to review CGCC’s annual guarantee progress, discuss the challenges and solutions on the implementation of credit guarantee schemes, share views on it in the development of SMEs as well as study the experiences of credit guarantee schemes in Malaysia and Thailand.

The MEF Secretary of State also awarded five PFIs of CGCC – Canadia Bank, Sathapana Bank, AMK Microfinance, ABA Bank, and LOLC Microfinance – for their excellent performance in 2022.

Credit to: Khmer Times, Publish on January 18, 2023

Credit Guarantee Corporation of Cambodia Plc (CGCC) has issued a total of 985 Letters of Guarantee (LG) for loans worth $92.7 million as of December 31 after more than two years of operation, as part of its mission to support post-Covid-19 economic recovery, especially among small- and medium-sized enterprises (SME).

These numbers were disclosed by CGCC CEO Wong Keet Loong on January 17 at the state-owned enterprise’s annual seminar on the “Role of Credit Guarantee Schemes in SMEs Development in Cambodia and ASEAN”.

The Malaysian shared that, as of November 30, the outstanding guaranteed amount was $51.2 million out of the $70.9 million worth of loans covered by the LGs – remaining in the target 70-80 per cent range at just over 72 per cent.

He broke down the proportions of LGs by sectors and other categories: retail trade (29%), services (11.6%), industry (8.3%), agriculture (2.6%), other (48.4%); SMEs (96.45%), large firms (3.55%); unsecured (66.70%), secured (33.30%).

Speaking at the seminar, Ministry of Economy and Finance secretary of state Mey Vann hailed SMEs as drivers of employment as well as income for locals and hence key vehicles for socio-economic progress in Cambodia, largely crediting these smaller businesses for reducing the poverty rate from 50.2 per cent in 2003 to 17.8 per cent in 2020.

He highlighted SME development as a government priority, stressing that a raft of key strategies, policies and even institutions have been established to this end.

And that includes the CGCC, which was set up to share risk with financial institutions and improve the accessibility to formal loans for businesses, especially SMEs, he said.

Vann identified the “leverage effect” as a major advantage of the credit guarantee mechanism, explaining that funds from the state budget allocated to the CGCC to secure credit are only used up when borrowers default on loans.

“Therefore, $200 million budgeted by the state as capital for the CGCC will support the issuance of new guaranteed loans worth more than $200 million,” he said, adding that an underlying “countercyclical crisis tool” helps to maintain market confidence and stabilise economic activity, especially during times of crisis.

Effective policy allowed the Cambodian economy to grow by an estimated five per cent in 2022, which is expected to accelerate to about six per cent this year, reversing the 2020 contraction, according to Vann.

Nevertheless, Vann added, challenges remain that could dampen economic outlooks for the Kingdom, such as the protracted Russo-Ukrainian conflict, rising inflationary pressures and geopolitical competition in the region, which he stressed would require constant preparedness to respond in a timely and effective manner.

“In this context, SMEs are an indispensable driving force that ensures the sustainable, inclusive and resilient development of the Cambodian economy. The government will continue to implement supportive policies through credit guarantee mechanisms to ensure SME development.

“The CGCC is the first credit guarantee institution in Cambodia, which was established with a deep commitment by the government for short-term use during the Covid-19 crisis’ onslaught on Cambodia.

“[The CGCC was also] to launch a credit guarantee scheme in a timely manner to support the rehabilitation and sustainability of local businesses,” he said, commending the institution for its work over the past two years.

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 finance ministry has authorised the extension of the BRGS beyond December 31, 2022, until all funds have been utilised, the CGCC confirmed in a statement earlier this month, which noted that the terms of the scheme had also been updated, including the maximum guarantee amounts for differing categories of businesses.

The statement disclosed that loans, mostly unsecured, totalling about $89 million were guaranteed by the CGCC as of December 31 under the BRGS.

Credit to: The Phnom Penh Post, Publish on 17 January 2023

The Credit Guarantee Corporation of Cambodia (CGCC) on Tuesday announced the extension of the Business Recovery Guarantee Scheme (BRGS) from 1 January 2023 until the scheme is fully utilised.

According to the CGCC press release, the BRGS aims to support businesses, including micro, small and medium enterprises (MSMEs) and large firms, by enhancing their access to formal loans from the Participating Financial Institutions (PFIs) for working capital, investment, and business expansion.

The BRGS, with a scheme size of $200 million, was first launched for the 29 March 2021 to 31 December 2022 period. As of 31 December 2022, approximately $89 million in loans, most without collateral, were sanctioned. Loans under the BRGS are guaranteed by the CGCC.

The CGCC received approval from Deputy Prime Minister, Minister of Economy and Finance Aun Pornmoniroth for the extension of the BRGS after updating some scheme features, including the scheme period, the definition of MSMEs and large firms, and the maximum loan amount for each guarantee.

The CGCC’s credit guarantee under the BRGS will continue to act as collateral for 70-80 percent of the loan amount borrowed from the PFIs, thus, reducing the physical collateral required from borrowers.

Wong Keet Loong, CEO of the CGCC, told Khmer Times, “The maximum guaranteed loan amount has been increased to combine both priority and non-priority sectors, like $300,000 for working capital and $500,000 for investment/business expansion for MSMEs, and $500,000 and $700,000, respectively, for large firms.”

On the benefit of this extension, he said, “an additional $111 million of guaranteed loans is available until the scheme is fully utilised. In addition to the 936 MSMEs who obtained guaranteed loans, this would support more MSMEs in obtaining loans for their businesses during the economic recovery.”

“The Cambodian-owned businesses can approach our 25 PFIs for guaranteed loans. The MSMEs must meet the PFIs loan criteria to be eligible for guaranteed loans,” he remarked.

Various credit guarantee schemes have played a crucial role in strengthening entrepreneurship and enhancing financial inclusion in Cambodia, especially during the Covid-19 pandemic, through the smooth disbursal of loans.

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 (WEGS) launched in April 2022, besides the extension of the CFGS to tourism. Each scheme was specifically designed to target different market segments.

Credit to: Khmer Times, Publish on 05 January 2023