Logo of Phnom Penh Post newspaper Phnom Penh Post - Gov’t CGC scheme to boost business loans

Gov’t CGC scheme to boost business loans

Content image - Phnom Penh Post
Minister of Economy and Finance Aun Pornmoniroth (left) told a ministerial meeting that the initiative aims to enhance control over the pandemic’s impact on key economic sectors and help revive the economy post-Covid-19. FINANCE MINISTRY

Gov’t CGC scheme to boost business loans

The government plans to establish a Credit Guarantee in Cambodia (CGC) scheme to serve as a risk-sharing tool for financial institutions to disburse more loans to businesses impacted by Covid-19.

Minister of Economy and Finance Aun Pornmoniroth told a ministerial meeting on Tuesday that the initiative aims to enhance control over the pandemic’s impact on key economic sectors and help revive the economy post-Covid-19.

The ministry said in a statement: “The CSG is to provide loans to companies and businesses in the priority sectors severely affected by Covid-19 to build their financial resilience.

“The loans will serve as working capital for them to ensure sustainability,” it said, noting that a timeframe will be determined soon.

Ministry spokesman Meas Soksensan told The Post that the CGC will be a vital tool in propping up businesses that seek funds from financial institutions which are guaranteed by the government through the initiative.

“The government will help bear risk-sharing with businesses to encourage the financial sector to disburse more loans,” he said.

Shin Chang-moo, the president of South Korea-owned Phnom Penh Commercial Bank Plc (PPCBank), told The Post that the ministry has been sharing ideas and seeking input from lending institutions on “credit guarantee” initiatives at several hearing sessions.

He said credit guarantee schemes (CGS) have been a popular means to ease funding hurdles for small and medium-sized enterprises (SMEs) in many countries.

In South Korea, the government has been running a partial 90 per cent CGS for SMEs damaged by Covid-19, he added.

“PPCBank has been also deploying a partial guarantee scheme called ‘Risk Sharing Facility’ since 2019 under the sponsorship of the [World Bank Group member] International Finance Corporation.

“The ministry’s CGS will help SMEs access credit that is limited due to a lack of collateral and mitigate risk of credit loss for lenders.

In the longer term, lenders should develop credit-assessment skills based more on business and financial feasibilities than collateral value to minimise avoidable loss from loans. Otherwise, CGSs won’t be a sustainable solution for SME financing promotion,” Shin said.

According to Shin, PPCBank’s loan portfolio grew more than five per cent from the beginning of the year and continues to disburse loans.

“I believe CGS will ease the dilemma of lenders between public and private value propositions,” he said.

Prasac Microfinance Institution Ltd senior vice-president Say Sony lauded the new initiative, noting its significant role in fuelling the economy.

“It’s splendid that we have this safety net now, but as a priority, financial institutions must ensure that clients are able to repay bearing in mind that we work with all kinds of clients and businesses.

“If these schemes target micro, small and medium-sized enterprises it would help microfinance institutions and their clients,” he said.

In the first half of this year, Prasac’s gross loans grew 6.6 per cent from $2.501 billion to $2.665 billion and deposits grew about eight per cent from $1.788 billion to 1.931 billion, respectively. Total assets increased to $3.383 billion by the end of last month, Sony said.

The National Bank of Cambodia noted in its Semi-Annual Report 2020 that the tourism sector, which has been hardest hit by coronavirus saw revenue drop 55 per cent.

The manufacturing sector also shrunk by 11 per cent year-on-year due to disruptions tightening basic raw material supply, the NBC said.

MOST VIEWED

  • Hun Sen: Full country reopening to be decided in two weeks

    Prime Minister Hun Sen has announced that if the Covid-19 situation remains stable for 15 consecutive days from the end of the October 5-7 Pchum Ben public holiday, Cambodia will reopen fully, albeit in the context of Covid-19 whereby people have to adjust their lives to

  • Phnom Penh governor: Show Covid-19 vaccination cards, or else

    Phnom Penh municipal governor Khuong Sreng late on October 5 issued a directive requiring all people aged 18 and over and the parents of children aged 6-17 to produce Covid-19 vaccination cards when entering schools, markets, malls, marts, eateries and other business establishments that have been permitted

  • Cambodia seeks probe into 'false reports' on Hun Sen's alleged Cypriot passport

    Minister of Justice Koeut Rith on September 6 wrote a letter to his Cypriot counterpart Stephie Dracos requesting cooperation in investigating and providing the truth in relation to the "exaggerative and false allegations" that Prime Minister Hun Sen holds a Cypriot passport. In his letter, the

  • 'Pandora Papers' expose leaders' offshore millions

    More than a dozen heads of state and government, from Jordan to Azerbaijan, Kenya and the Czech Republic, have used offshore tax havens to hide assets worth hundreds of millions of dollars, according to a far-reaching new investigation by the International Consortium of Investigative Journalists (

  • Cambodia voted ‘world’s friendliest country’ in Rough Guides reader poll

    Cambodia ranked number one among the “World’s Friendliest Countries”, according to a reader poll conducted by London-based international website “Rough Guides”. Taking submissions through Twitter and Facebook, “Rough Guides”, a well-known travel agency and publisher of guidebooks, said the Kingdom “was by far the

  • Two major S’ville events could jumpstart international tourism: insiders

    Preah Sihanouk province is set to host two major international tourism-related events in late 2021 and early 2022, which insiders expect to ignite new interest among new and repeat foreign holidaymakers into visiting the Kingdom and significantly raise tourist arrivals from near zero in the Covid era.