The local arm of Malaysian lender Maybank has signed a Credit Guarantee Agreement with the Credit Guarantee Corporation of Cambodia (CGCC) to make it easier for small and medium enterprises (SMEs) to get loans.
The two will work together under the Business Recovery Guarantee Scheme (BRGS), a program to support loan growth through credit guarantees. They will also collaborate on a Building Capacity and Capability program to increase financial literacy and support the growth, productivity, innovation, and competitiveness of SMEs.
“SMEs have stood out as a key driver behind the economic development of Cambodia,” said Rath Sophoan, Deputy Chief Executive Officer and Head of Community Financial Services at Maybank Cambodia. “We have noticed that our government has put increasing focus on the support and facilitation of this segment particularly as we prepare ourselves for recovery from the challenging period caused by the Covid-19 pandemic.”
He added that Maybank’s support to SMEs is in line with its mission of Humanising Financial Services, to ensure SME players remain competitive and continuously appraised of their growth opportunities.
Credit Guarantee Corporation of Cambodia Chief Executive Officer Wong Keet Loong said the CGCC has been in operation for a year but has only given out 150 credit guarantees totaling just over $17 million. He says the reason for the low uptake is that few Cambodians understand what a credit guarantee is.
“The credit guarantee is a financial tool to help banks to be able to lend to SMEs, especially where they have difficulty providing collateral and also for SMEs who are unable to provide a good financial track record, especially during this pandemic,” Wong said, adding that the credit guarantees would not only help companies borrow from banks and microfinance institutions but also give lenders added security.
He said the CGCC and Maybank Cambodia also plan to educate business owners and build long-term competitive advantages through the Building Capacity & Capability program.
“Financing is not the only challenge SMEs face in Cambodia, improvement in financial literacy is something that Cambodian businesses need to have as well,” Wong said. “I hear from banks and MFIs [microfinance institutions] that SMEs do not have proper records. As the country progresses it’s important that they improve their financial literacy so that they can progress and the SME segment will be able to grow. SMEs are the backbone of the economy and as they grow, I believe the country’s economy will also grow.”
Maybank Cambodia Chief Executive Officer Hanif Suadi said the lender would continue to give SMEs the tools that will help them prosper in the ‘New Normal’.
“Getting a business to run is even more challenging during these critical times. We understand the difficulties faced by SMEs and it is crucial that we support them during these times by offering financial solutions as a much-needed stimulus in sustaining their businesses thereby contributing to strengthening the economy of the country”.
Maybank and the CGCC were joined at the Credit Guarantee Agreement signing ceremony by representatives of the Finance Ministry and central bank.
“SMEs in Cambodia play an important role as the backbone of the economy,” said Ney Sakal, Deputy Director-General, Trust Regulator at the Ministry of Economy and Finance. “A lot of SMEs aren’t official. They are not registered. Registration is not related to tax collection, it formalizes the SME. It is the birth certificate of the SME. We need more SMEs to register,” he said.
Overall credit growth in Cambodia slowed to 17 percent last year due to the Coronavirus pandemic, according to Heng Bomakara, Deputy Director-General, Banking Supervision at the National Bank of Cambodia. It has recovered since then, he said, increasing 22 percent in the third quarter of this year, quarter on quarter. Data from the National Bank of Cambodia shows that 68 percent of consumer loans actually go to fund small businesses.
