The Ministry of Economy and Finance on February 14 allocated $100 million to two state-owned banks to provide additional support to small- and medium-sized enterprises (SME), and the agriculture and agro-industry sectors.
The Small and Medium Enterprise Bank of Cambodia Plc (SME Bank) and Agricultural and Rural Development Bank of Cambodia (ARDB) have each received an extra $50 million, Minister of Economy and Finance Aun Pornmoniroth told the ceremony formally marking the allocation of the funds.
He said the package will support economic recovery in the post-Covid era, and help advance “The Strategic Framework and Programmes for Economic Recovery in the Context of Living with Covid-19 in a New Normal 2021-2023”, a comprehensive road map recently rolled out by the government.
Much like in every country, the Covid-19 crisis has severely affected Cambodia and dragged down socio-economic and public health development, the minister said.
And with key sectors such as tourism, construction and real estate in doldrums, the Cambodian economy contracted 3.1 per cent in 2020, he said, adding that SMEs and other enterprises engaged in services also suffered greatly.
Despite this, the agricultural sector maintained positive growth, he pointed out.
The economy is expected to have recovered slightly last year, at around three per cent, buoyed by the broad resumption of socio-economic activities in the fourth quarter, various government intervention policies and improvements in the global economy, he said.
However, a resurgence in Covid-19 transmission driven by the Omicron coronavirus variant poses fresh challenges that could impede recoveries in trade and business activities, and stoke new public fears, he added.
Pornmoniroth said the three-year comprehensive “living with Covid” road map aims to put economic growth on a more solid path in the medium term, and strengthen resilience for inclusive and sustainable socio-economic development in the long run. He said the government has introduced practical measures in many area to achieve these goals.
“Today’s $100 million will be used to boost agriculture and SMEs, which are two major drivers of the national economy, both in terms of job creation and improving the livelihoods of the people, and rehabilitating and supporting growth,” he said.
The minister said the government views backing for SMEs as a top policy priority, especially those in key sectors such as agriculture, food processing and agro-industry; tourism; and manufacturing, especially of components and parts.
This, he said, is because SMEs account for 98 per cent of businesses in Cambodia and contribute 73 per cent to employment and about 58 per cent to gross domestic product (GDP).
He went on to say that the latest $100 million in funds would support concessional interest rate loans to SMEs and agriculture-related businesses in the second phase of the underlying scheme.
He said $10 million of the funds provided to ARDB would be reserved for the rice sector, $20 million would be used in direct financing, and $20 million would be provided to businesses involved in fruits, animal husbandry, aquaculture, agricultural processing and related fields, through financial institutions participating in the cost-sharing scheme.
Finance ministry secretary of state Phan Phalla noted that Cambodian SMEs have been particularly hard hit by Covid-19, and that the government’s latest move seeks to ensure that these businesses remain afloat.
He said the government launched the first phase of the SME Co-Financing Scheme (SCFS) in 2020 initially backed by a $100 million fund provided by the government and private sector on a 50-50 matching basis. SCFS benefitted 753 SMEs, through 33 participating institutions.
As Covid-19 extended into 2021, the SME Bank added $40 million to the budget in SME Co-Financing Scheme Phase II (SCFS II), and with the latest $100 million, the total funds of associated programmes to prop up SMEs now amount to $240 million, he added.
ARDB director-general Kao Thach said the $50 million received by his bank would be disbursed with priority for rice; aquaculture; cultivation, processing and other agricultural purposes.