A new draft agreement between the largest banks in Cambodia and South Korea aims at facilitating the flow of money transfers between the two countries, making it easier for companies that import Korean goods to settle their invoices and for migrant Cambodian workers to send money home to their families, banking officials said.

In Channy, president and group managing director of Acleda Bank, said as both the number of Cambodian workers in South Korea and Korean companies operating in Cambodia have increased, the volume of money transactions between the two countries has risen.

Recognising this growth in cross-border transactions, Acleda Bank signed a memorandum of understanding (MoU) with South Korean bank KEB Hana Bank last Wednesday to establish a framework for cooperation across a range of banking services.

“As a result of this cooperation, it will be easier for both workers and companies in both countries,” said Channy. “There are many Korean companies operating in Cambodia, and the MoU helps push transactions quicker. It helps improve both countries’ economies because banking is a backbone of the national economy.”

The majority of money transfers from South Korea to Cambodia are remittances, while the bulk of capital outflows from Cambodia to South Korea are trade payments for imported goods, according to Channy.

Data from Acleda Bank showed the bank handled $70.1 million in trade payments from Cambodia to South Korea during the first eight months of the year. Money transfers from South Korea received by the bank totalled $130.3 million during the same period.

Channy said the new framework would leverage the size of the two banking giants to improve the accessibility of workers’ remittances.

“Families of [migrant Cambodian] workers in any part of the Kingdom can easily receive the remittances,” he explained.

Acleda Bank reported $3 billion in assets last year and has a network of 256 branches across Cambodia.

KEB Hana Bank was created by the merger of Hana Bank and Korea Exchange Bank earlier this month, becoming the largest bank in South Korea by assets with the equivalent of $22 billion.

“The MoU will be a great opportunity for the Cambodia and Korea citizens to access to affordable and convenient money transfer services,” Chi Ok Kim, Global Head of Financial Institutions Department of KEB Hana Bank, said in a release published on Acleda’s website.

South Korea is one of Cambodia’s most important trade and investment partners. Bilateral trade topped $849 million last year, according to Ministry of Commerce data, while South Korea is one of the Kingdom’s top sources of foreign direct investment.

The north-Asian nation is also a primary destination for Cambodian migrant workers. Over 42,000 Cambodians have travelled to work to South Korea since 2007, according to data from the Ministry of Labour and Vocational Training.