The CGCC would be under the Ministry of Economy and Finance and is set to be launched with $200 million in registered capital from the government. Heng Chivoan
The Credit Guarantee Corporation of Cambodia (CGCC) is on track to be launched in the first half of next year, Banking Association of Cambodia (ABC) president In Channy told The Post on November 26.
The CGCC was established by Sub-Decree No 140 ANKr BK on September 1, coming under the Ministry of Economy and Finance and with $200 million in registered capital from the government.
The sub-decree said the corporation will provide loans “in a professional manner” to tackle challenges in the lending market and promote financial inclusion.
It read: “The CGCC will be tasked with providing credit services, evaluating and managing risks, cooperating with banks and financial institutions and development partners that also provide credit services, et cetera.”
The corporation sets out to increase access to financing for Covid-19-strained businesses in priority sectors and adapt to the Kingdom’s post-Covid-19 start-up landscape.
It officially registered with the Ministry of Commerce on November 13.
Channy said the CGCC will guarantee a source of capital for small- and medium-sized enterprises (SMEs) with limited collateral and provide them with collateral protection insurance.
He said the corporation would serve as a much-needed crutch for the private sector, and would particularly be able to respond to struggling SMEs’ credit needs.
“We have seen in the past that most of the SMEs that applied for loans at their banks and microfinance institutions [MFIs] did not have sufficient collateral, which made it impossible for them to fully obtain the loans that they need,” Channy said.
During a promotional programme for CGCC held at the finance ministry on November 23, senior government officials called on SMEs that have been unable to access loans during Covid-19 to apply at the corporation.
Speaking during the programme, ministry undersecretary of state Ros Seilava said the CGCC will help SMEs rehabilitate their businesses during Covid-19, and would focus chiefly on the agricultural, industrial and service sectors.
“I would like to appeal to all SMEs that have been facing difficulties in obtaining financing from commercial banks to re-apply for loans there,” he said.
He claimed that in 2021-2023, the amount that SMEs can borrow will be capped at $500,000. “Our gameplan is to help SMEs run their businesses smoothly during this health crisis,” Seilava said.
In a press release, the ministry said the CGCC will break through barriers to effective financing processes and provide new opportunities for banks and MFIs to expand their customer base.
“The CGCC will provide a substantial boon for the Cambodian economy – it will promote financial inclusion, support new growth sources and diversify the economy in line with industrial development policies, as well as offer an environment conducive to the creation of new loan products,” it said.
Through the corporation, the government will share risk with banking institutions, MFIs, as well as business owners in credit operations in order to breed credit and economic activity that would not manifest otherwise, the ministry said.
The CGCC will shield businesses from Covid-19 fallout and promote the long-term development of SMEs, it said.
According to Seilava, to rehabilitate the economy after the Covid-19 crisis, the government is seeking more funding from international financial partners, claiming that the World Bank plans to provide about $100 million in loan to government for additional capital.
