Bank for Investment and Development of Cambodia Plc (BIDC) and Sonatra Group sign a cooperation agreement on Wednesday. SUPPLIED
Vietnamese-owned Bank for Investment and Development of Cambodia Plc (BIDC) and local Sonatra Group have teamed up to provide banking and credit services for homebuyers, in an effort to promote business activities and meet the needs of Cambodians looking for a new abode, according to a joint press release.
A cooperation agreement was signed to this end on January 5 by BIDC CEO Lam Van Hai and Sonatra Group chairman Sorn Sokna.
The agreement is expected to contribute to the development of Cambodia’s real estate and financial markets, the release said.
At the signing ceremony, both sides committed to rely on each other’s fortes and strengthen cooperative business activities towards becoming comprehensive strategic partners, and ensuring long-term and sustainable cooperation, it said.
Accepting purchase agreements as collateral, BIDC offers loans of up to $35 million for buyers of homes at the Borey Sonatra gated-community development in Koh Krabei village, Prek Thmey commune, Chbar Ampov district, Phnom Penh, it added.
It said that the loans feature fast approval times, annual interest rate from seven per cent, one-year grace period and term of 20 years.
Sonatra Group is committed to promoting the use of banking, financial and insurance services provided by BIDC and its subsidiary Cambodia Vietnam Insurance Plc, according to the release.
The local firm will facilitate consultations and guide customers on the use of banking services and securing loans from BIDC, and vows to ensure long-term benefits for homebuyers and the bank, it added.
Cambodia Real Estate Association (CREA) chairman Kheang Puthy told The Post on January 9 that people nowadays understand the risks direct instalment loans pose to real estate developers.
He said the agreement would benefit everyone involved: the developer recoups its money faster to move on to other projects, and homebuyers receive legal titles on the property and get credit at decent interest rates.
Instalment payment plans offered by developers for homes typically entail a monthly interest rate of one per cent – or about 12.7 per cent annually – which is substantially higher than the seven or eight per cent usually quoted by banks, he said.
He encouraged Cambodians to obtain a mortgage from a bank to buy a home and avoid risks, stressing that these institutions thoroughly check every aspect of the application before approving credit, including land titles, development licences and the location of developers.
Royal Academy of Cambodia economics researcher Ky Sereyvath noted that while both BIDC and Sonatra Group stand to benefit from the agreement, the real estate sector is in a rut, with sellers outstripping buyers.
“That’s why it is encouraged for those who don’t have much money to buy homes through the banks,” he told The Post on January 9, cautioning that if nothing major is done, the sector could be headed for trouble, much like during the 1998 financial crisis.
The press release noted that BIDC has charter capital of $100 million and total assets of about $850 million, with credit outstanding of more than $600 million. The bank has nine branches in key economic areas of Cambodia and Vietnam.
BIDC has always arranged and provided credit and banking services for many big projects and partners in Cambodia, the release said.
Through 13 subsidiaries, Sonatra Group operates in multiple industries, such as real estate, finance, securities, restaurants and agriculture, it added.
