Agricultural and Rural Development Bank (ARDB) director-general Kao Thach. Hong Menea
The state-owned Agricultural and Rural Development Bank (ARDB) expects to fully disburse a $50 million emergency fund for small and medium-sized enterprises (SMEs) by year’s end, its director-general Kao Thach told The Post on December 14.
He said the bank has received nearly 600 loan applications since the government launched the fund on March 16. More than $40 million in loans have been approved.
“Most animal and aquaculture farmers were able to get the loans because the import of live hogs is limited, leading to higher domestic pig prices, which has turned farmers’ attention to these loans as capital to start their businesses,” he said.
He also chalked up the surge in applications to active participation in the implementation of government policies to promote employment during Covid-19.
“I hope that by the end of this year we will be able to disburse the entire loan in line with our goals. There’s still a steady stream of new loan applications these days, mostly from small farmers,” Thach said.
Federation of Associations for Small and Medium Enterprises of Cambodia (Fasmec) president Te Taingpor said the issuance of government loans through the ARDB has served as a lifeline for many of the Kingdom’s SMEs during Covid-19.
He said: “If the loans are truly issued to help farmers, that’s great. But more important is the question of whether they actually reach the hands of the farmers or not. We want to see that the loans are provided in a transparent manner.”
According to the ARDB, the fund aims to increase production chains and maintain competitiveness in the SME sector amid Covid-19 and the partial withdrawal of the EU’s Everything But Arms (EBA) scheme.
On August 12, the European Commission (EC) officially withdrew 20 per cent of the EBA scheme from Cambodia. The suspension affects one-fifth or €1 billion ($1.22 billion) of the Kingdom’s annual exports to the 27-nation bloc.
The ARDB currently offers loans ranging between $10,000 and $300,000.
The government in May decided to cut the annual interest rates from six to five per cent for working capital and from 6.5 to 5.5 per cent for capital investment, without service charges.
It also adjusted the maximum loan term from five to seven years for capital investment while retaining a short-term maximum of two years for working capital.
Ministry of Economy and Finance undersecretary of state Ros Seilava told a news conference that the economic crisis instigated by Covid-19 had been the primary trigger for the emergency SME lending endeavours.
He said the government has allocated $500 million in loans for SMEs in “a second phase”. Of that, $300 million will be provided for financing support and $200 million will be for credit guarantee projects.
“I hope that this magnitude of funding will help sustain our economy during the health crisis and be ready for recovery when it is over,” Seilava said.
