Local publicly-listed ACLEDA Bank Plc has approved 43 loans totalling $6,349,000 under the Tourism Recovery Co-Financing Scheme (TRCS) as of August 15, since credit was made available under the scheme on July 1.
ACLEDA president and group managing director In Channy told reporters last week that the bank has been “actively involved” in the TRCS as a member, from discussions prior to its establishment, and remains “highly committed” to further support the scheme.
Under the TRCS, ACLEDA focuses on providing loans only to small businesses, he said, adding that the bank is committed to “working with the government” by supporting the rehabilitation of tourism businesses hit by Covid-19.
“We grow only if our clients grow … [and now] face a situation where funds are [hard] to find, and the cost of borrowing from abroad [includes] high interest rates,” Channy said. “We will continue to lend to the tourism sector as we have agreed, and the government has announced.”
The TRCS was rolled out on May 17 to provide a lifeline for businesses involved in the tourism value chain that are deemed to have been significantly impacted by the Covid-19 crisis, and is currently implemented with the support of 19 participating financial institutions (PFI). The scheme’s lending rules and procedures were officially established on July 1, opening the door for loan applications.
The scheme was financed by a counterpart fund between the government and financial institutions, with $75 million of the national budget to be disbursed in the form of loans issued by the state-run Small and Medium-sized Enterprise Bank of Cambodia Plc (SME Bank), and the other $75 million through loans made via the PFIs, which comprise commercial banks and microfinance institutions (MFI).
Key offerings of the project include a maximum interest rate of 6.5 per cent per annum, a 16-month grace period on principal payments, loan term of up to seven years, loan amount of up to $400,000, and the option of receiving funds in either riel or US dollars.
The TRCS targets four main types of businesses: hotels, guesthouses, restaurants and tourism sector suppliers.
Minister of Economy and Finance Aun Pornmoniroth highlighted at the TRCS’ launch that the co-financing project is part of the “The Strategic Framework and Programmes for Economic Recovery in the Context of Living with Covid-19 in a New Normal 2021-2023”, which began implementation in December.
“The financing of enterprises in the tourism sector is a necessary measure to help them recover and to strengthen their competitiveness as well as joining the Royal Government in making tourism more attractive and especially turning Cambodia into a major tourist destination both regionally and globally,” he said.
Minister of Tourism Thong Khon noted that the number of tourism businesses that have reopened is still low. As of March 31, 1,428 tourism businesses are still closed or suspended, while more than 20,000 sector workers are still impacted and unable to return to pre-pandemic employment arrangements.
He added that nearly 97 per cent of tourism businesses reported cash flow problems and a lack of funds for repairs and reopening, and noted that businesses that have been able to reopen are largely high-end businesses financed by overseas parent companies.