Prime Minister Hun Sen yesterday lashed out at the opposition party’s concerns over the interest rates charged by commercial banks to farmers.
SRP lawmaker Yim Sovann said commercial banks in Cambodia charge customers very high interest rates, and said it is much higher than in other countries.... continue
A new microfinance institution (MFI), ORO Financecorp Plc, is set to open in Cambodia, according to the director-general of the National Bank of Cambodia (NBC). …
Cambodia already has 35 registered MFIs, according to a recent report by the Cambodia Microfinance Association (CMA). …
Last week, the Post reported that the loan portfolios of the 35 registered MFIs and four NGOs that are members of the CMA reached $1 billion at the end of March, a 41 per cent increase from the same time last year. …
More economic activity and a better understanding of using formal financial services among rural residents are leading to good loan performance rates and increases in savings deposits in Cambodia’s microfinance industry, according to industry sources.
The loan portfolios of the 35 registered microfinance institutions (MFI) and four NGOs that are members of the Cambodia Microfinance Association (CMA) reached $1 billion at the end of March, a 41 per cent increase from a year earlier, according to recent figures from the CMA.
Deposits made at seven microfinance institutions that are licensed to take deposits (MDIs) reached $346 million, a 145 per cent increase over the past 12 months. …
The World Bank has warned that the rapid growth of lending by Cambodia’s Banks is still a concern, despite a recent slow-down in credit disbursals.
“Credit growth, which has been driven largely by wholesale and retail financing, and starting in 2011 agriculture financing, has eased to 29.2 percent (year on year) in January 2013,” the bank said in an economic update sent out on Friday.
The annualized rate of lending growth was 34 percent in December and as high as 34.6 percent in January 2012, the bank said.
The high rate of growth had raised concerns of overheating from international financial institutions, and led the National Bank of Cambodia to raise the reserve requirement imposed on Banks from 12 to 12.5 percent in September. …
[The World Bank] also noted that Cambodia’s trade deficit in 2012 was 11.5 percent, up from 8.7 percent in 2001, due to rising fuel imports and construction materials being brought in for large hydropower projects.
However, this was cancelled out by a jump in foreign direct investment, which reached $1.5 billion last year.
Cambodia’s banking industry recorded a slight increase in lending in the first two months of this year after a sharp rise last year, according to a consolidated data provided by the National Bank of Cambodia (NBC) on Saturday.
The data showed that the kingdom’s 33 commercial banks had lent a total of 5.99 billion U.S. dollars to customers by the end of February this year, up 1.7 percent from 5.89 billion U.S. dollars at the end of December last year, the report said.
It added that 32 percent of the loans went to wholesale and retail trade, 10 percent to agriculture, 9 percent to manufacturing, 8 percent to construction, 6 percent to hotels and restaurants, 6 percent to mortgages and the remaining percentage went to financial institutions, real estate and personal borrowing. …
By the end of February this year, the NBC said that the banks received 6.25 billion U.S. dollars, up 1 percent from 6.19 billion U.S. dollars at the end of last year.
Cambodia has the population of about 14.5 million. Its banking sector has been serving about 1.6 million borrowers and 1.9 million depositors, according to the NBC.
Cambodians, particularly young adults, are more often turning to banks to help them buy their homes, according to figures obtained from the National Bank of Cambodia (NBC) yesterday. …
From $179 million in 2008, the total sum lent out to those buyers fell to $94.5 million in 2009, the figures show. But in 2012, home loan lending reached $329.5 million – a 20 percent increase on the previous year – and by February it was at $344.5 million, according to the NBC. …
Acleda, the country’s biggest lender, has seen the number of borrowers getting home loans increase from 2,422 in 2010 to more than 4,550 in March, with the value of the bank’s outstanding home loans reaching $97 million. …
As rising economic growth spurred demand for personal loans, Prasac, Cambodia’s biggest microfinance institution (MFI), provided $106 million in loans between March, 2012 and March, 2013, an increase of 66 per cent compared with the corresponding period a year earlier. …
“Loans [were] mainly used for service and trade activities, representing 44 per cent; followed by agriculture, [accounting for] 30 per cent; and personal loans, [accounting for] 23 percent,” [Prasac president and chief executive Sim Senacheert] said. …
According to a study released this month on micro-finance borrowing in Cambodia, “The sharp growth of the sector has resulted in substantial competition, and there have been concerns that it may be leading to cross-lending and, possibly, over-indebtedness of borrowers.”…
If you’ve applied for a mortgage recently, you know how hard it can be. The bank demands all kinds of obscure documents and wants proof of almost every asset you own. But an innovative mortgage program halfway around the world will evaluate your application without any extra documentation — and if you’re approved, it will give you a 15-year fixed-rate mortgage. There’s just one catch: The mortgages are only for low-income people in Cambodia. The program is a throwback to the days when bankers got to know their customers — and trusted them. …
Keng and her husband both work. She makes and then sells rice soup at a street stall, while her husband sells clothes at another stall. But they don’t meet one of the crucial requirements for getting a mortgage: They don’t receive salary slips or other financial documents, so they don’t have what bankers call “verifiable income.” …
Late last year, Keng heard about an unusual bank called First Finance, which was designed specifically to give mortgages to low-income people like her. She and her family could already imagine the new home they wanted to buy: a two-story house with indoor plumbing. It would cost about $20,000. …
The First Finance mortgage program in Cambodia was the brainchild of Talmage Payne …
Microfinance, he says, was not the solution. People needed much bigger, long-term loans to buy homes. Payne also says he realized something else that contradicts traditional banking assumptions: Low-income families make great mortgage customers.
Just about everybody in a typical Cambodian family works. The wife might run a market stall, while the husband does day labor.
“Grandma sells peanuts, the kids work,” Payne says.
As a result, many of the families are financially resilient. If one person has to stop working, the others can chip in.
“You’re giving somebody something that they never thought they could have. So no matter what the hardship is, what’s the one bill they’re not going to miss? They’re not going to miss the mortgage,” Payne says. …
Cambodia’s financial system appears to be shifting to excessive credit growth. …
The credit-to-GDP ratio has reached 37 percent, well above the low-income economies (LTCs). If credit growth were to continue at the current pace, by mid-2013 the ratio would exceed even the median for more advanced emerging market economies (EM). …
In considering macroprudential measures, the NBC must strike a balance between choosing an instrument that is simple to implement, effective in lowing credit growth, and causes the leas distortions to the credit market. …
Debt levels among the more than 1,000 families being evicted by a $142.6 million railway project bankrolled by Australia and the Asia Development Bank (ADB) have reached “crisis” proportions and require major intervention, according to a U.S resettlement expert who was hired by the ADB to study the impact of the project. …
In his recommendations, Mr. Cernea, said that evicted families were in many cases at risk of losing their new government-issued plots of land to moneylenders and that families falling into debt was “the single most dangerous risk” facing the resettled families. …
Among his recommendations was an immediate stop to evictees being able to swap their new land for loans, a thorough census of the families and their debts, and that the ADB and Ausaid work with the government on a “full, project-scale” solution.
He also questioned whether it was legal for the money lenders to take the families’ new plots of land as collateral and urged the partners in the project to see what they could do to nullify the loan deals or at least punish the lenders. …
Nhean Leang, who sits on the government’s resettlement committee, claimed that of the more than 4,000 families affected by the rail project, only 25 were actually being hurt and shifted any blame to the ADB and the families themselves.
“You should ask the ADB about the design, how they designed it. We just follow the designs of the Ministry of Transportation and the ADB,” he said. …
A lack of trade financing – the loans and guarantees needed to support import and export transactions – for international deals within developing Asian countries such as Cambodia is restricting opportunities for growth, a survey by the Asia Development Bank (ADB) has found.
Of 106 banks surveyed, those within developing Asian economies had rejected $425 billion of a potential $2.1 trillion requested in trade finance in 2011. …
ADB deputy country director Peter Brimble said trade finance is critical in supporting the export transactions of Cambodian small and medium-sized enterprises (SMEs), which do not have access to financing from parent companies abroad. …
Cambodian-based SME-development consultant Lun Yeng said that SMEs would need support from government and multi-national development banks to assist with the capital needed to acquire funding. …
Brimble said Cambodian exporters are not used to accessing trade finance, while Cambodian banks often perceive it as too risky to lend.
In partnership with ACLEDA Bank, the ADB fills trade finance gaps by providing guarantees or loans themselves.
The Ministry of Commerce and bank officials announced yesterday that they will hold a meeting next month aimed at better facilitating rice millers’ access to credit.
The move is part of the Asian Development Bank’s Climate Resilient Rice Commercialization Sector Development program to address food security and rice commercialisation, funded with a US$55,000 Asian Development Fund loan.
Mao Thora, secretary of state at the Ministry of Commerce, told the Post millers will see additional loans if they can demonstrate a sufficient level of stocked paddy rice. …
ADB plans to strengthen the rice value chain, improve legal and regulatory framework in agricultural land management, and enhance paddy production through improved irrigation efficiency as well as establishing post-harvesting facilities and crop insurance pilots.
Cambodia economic growth was 7.3 percent in 2012. …
Agriculture grew by 4.3 percent, crops by 4.9 percent, fisheries by 6.7 percent, industry by 9.2 percent, garment [sector] by 6.9 percent and the service industry by 8.1 percent, said Dr Hang Chuon Naron, Secretary of State for the Ministry of Finance of Cambodia. …
Moreover, gross domestic product per capita increased from 760 US dollars in 2008 to nearly 1,000 US dollars in 2012, with a projection of $1080 in 2013, he stresses [sic]. …
Cambodia’s rice export reached almost 180,000 tons in 2011 and 187,000 tons in 2012 of which more than 8 percent was exported to the EU. …
During the first 11 months of 2012, rubber exports increased by 23.9 percent … although value decreased by 19 percent down from a total of $181.1 million to $146.7 million.
In 2012, tourist arrivals increased by 24.4 percent to reach over 3.5 million from 2.88 million in 2011. …
Garment exports increased by 17.4 percent from $4.2 billion in 2011 to $5 billion in 2012. …
In 2012 … some 1980 construction projects worth $1.6 billion were approved. … The increase in the number of projects [displays] a steady recovery of the real estate sector, Mr Naron adds.
He also said [tax revenue] is estimated to increase by 27 percent to 2, 5 01 reil ($625 million) in 2012. …
Microfinance has experienced rapid growth over the last five years, reaching 1.3 million borrowers and 1.1 savers in 24 provinces. …
Cambodia’s trade volume reached $12.4 billion in 2012 while Cambodia’s export was worth 5.58 billion in 2012 [Dr. Hang Chuon Naron stated].
According to the [inter]national Monetary Fund (IMF), at the end of 2011, the stock of Cambodia’s external public debt, including arrears, stood at around US 3.8 billion or 30 percent of GDP (24 percent in NPV terms). …
China remains the largest bilateral creditor, contributing to 40 percent of the total bilateral debt stock and 80 percent of bilateral debt disbursement during the past two years. In 1995, Cambodia concluded Paris Club agreements with France, Germany, Italy and Japan.
However, Cambodia remains in arrears to the Russian Federation and the United States (about 20 percent of total debt or 6 percent of GDP) and the status of negotiations of these negotiations of these arrears has remained unchanged since the last DSA. …
Cambodia has virtually no domestic public debt.
In early 2012, Cambodia adopted a new debt management strategy, aimed at managing debt risk, coordinating and implementing debt management policies, and developing debt management capacity. …
Despite the recent increase in global food prices, inflation would stay at 3-4 percent during 2012-13. …
The current account deficit including official transfers is projected to peak at 10 percent of GDP in 2012, reflecting moderating exports and large imports related to the power generation projects, but this deficit remains fully financed by FDI and official loans. …
The authorities also reiterated that new borrowing would be prioritized for investment sectors with high growth and social impact (e.g., roads bridges, ports and irrigation), and they would continue to monitor the concessionality of new loans.
US-BASED Overseas Private Investment Corporation (OPIC) yesterday signed a deal to provide a $5 million long-term loan to Thaneakea Phum (Cambodia) Ltd (TPC), a local microfinance institution (MFI), to support TPC’s expansion of its home improvement loans for low-income Cambodians.
Fernanda Lima, director of US-based socially responsible investment management company Developing World Markets (DWM) and chair of the TPC board of directors, said this investment will increase financial access for the under-served, low-income segment of the population, while directly improving the livelihoods of rural Cambodians. She said the seven-year-term of the OPIC loan would allow TPC to create home improvement products with a longer timeframe than standard working capital loans. …
OPIC has committed over $700 million to microfinance projects, which have supported 125 MFIs in 35 countries. …
The first time Leang Horng, a resident of Kandal province’s Saang district, made use of a micro-finance institution, a loan was the only service he needed. At that time, Horng had no idea about deposits or money transfers.
But things have changed in the past few years, and his family’s standard of living is getting better.
“Besides [taking] loans, I opened a savings account at a micro-finance institution,” Horng says.
His experience reflects a trend in the Cambodian MFI industry, as players have upgraded their tactics to remain competitive in the market.
Product diversification is becoming a key strategy to satisfy MFIs’ customers.
Technologies such as mobile banking and ATM services are becoming compulsory for leading MFIs.
Insiders say this is boosting competitiveness in the industry and opening up new sources of funding for micro-finance institutions. …
Cambodia spent about $200 million on food and beverage imports to supply the domestic market last year – an increase of more than 10 per cent from the previous year, official data from the Ministry of Commerce show.
Government officials and representatives of the private sector said they were not concerned by the hike, saying the imports are needed to supply the current surge in domestic demand, as local production lacks the capacity.
The data show that the country imported over 290,000 tonnes of food and 2.82 million liters of beverages worth a combined $183.65 million in 2012 compared with 254,000 tons and about 2.27 million liters worth $161.98 million in 2011. …
[Te Taing Por] acknowledged improvements in domestic production but said, however, that domestic supply still cannot meet the market demand.
“The rise is due to a sharp growth in domestic demand. Despite our local producers producing more and more, they still can not meet the rise in demand,” he said. “I don’t think the rise of imports of food and beverage is affecting the economy or we cannot produce domestically. Our local production is improving in both quantity and quality.” …
The largest local bank, Acleda, reported that it provided $54 million to nearly 80,000 small and medium-sized enterprises last year – an increase of 4.4 per cent.
Cambodia’s largest opposition party has expressed concern that China’s investment in the country is heavily skewed towards exploiting natural resources, wreaking havoc on the environment.
China is Cambodia’s largest investor by a wide margin, having poured U.S. $9.7 billion into the country over the past 18 years, a government report said Wednesday. …
But opposition Sam Rainsy Party lawmaker Son Chhay warned that China is having excessive control over Cambodia’s natural resources as companies from the Asian giant carry out extensive mineral exploration and logging and embark on hydropower projects in the impoverished country. …
Cambodia, Beijing’s top Southeast Asian ally, has borrowed vast sums from China in recent years to finance road, hydropower and defense projects, many of which are contracted to Chinese firms.
“China gives us loans, but they allow companies to set high prices,” Son Chhay said.
Cambodia owes about U.S. $3 billion dollars in loans from China, he said, adding that the debt gives the giant neighbor too much political influence in the country. …
Loans and deposits at Cambodia’s 32 micro-finance institutions and four NGOs, as well as small loans from Acleda Bank, rose sharply last year compared with a year earlier.
Industry players say this is a result of the Kingdom’s rapid economic improvement and political stability.
Official data from the Cambodia Microfinance Association (CMA) shows the value of loans outstanding rose about 38 per cent to $890 million in 2012, compared with $644.6 million in 2011. …
In early January, the International Monetary Fund highlighted Cambodia’s high domestic credit growth, which the IMF considered a risk, but officials and industry insiders raised no concerns about it last week. …
The International Monetary Fund has warned that a credit boom in Cambodia poses a threat to economic growth.
Banks have been cutting interest rates to win customers and private sector credit has increased by almost a third in the past 12 months, the fund said.
This means that borrowing levels are now equal to 37% of the country’s total economic output, well above the median for most other low-income nations.
A similar surge in 2008 saw a real-estate boom and bust, the fund warned. …
The National Bank of Cambodia…recently raised the amount of money that banks need to hold in reserve, making it harder for them to access the cash needed to lend.
However, the IMF said that raising the reserve requirement “does not automatically mean tighter credit conditions” and further steps were needed. …
