Swedfund International AB on March 27 announced that it has committed $10 million to ASEAN Frontier Markets Fund LP (AFMF) to shore up smaller businesses, job creation and development, as well as to promote high ESG (environmental, social and governance) standards, financial inclusion, gender equality and climate resilience in Cambodia and Laos.

A deal to this effect had been signed on December 20, the limited liability company (AB) wholly owned by the Swedish government recapped in a press release.

“This is Swedfund’s first investment in a fund focusing on Cambodia and Laos. AFMF will be managed by Emerging Markets Investment Advisers [EMIA], a Singapore-regulated fund manager focused on frontier ASEAN.

“One of Swedfund’s goals is to invest in the most vulnerable and poorest countries, according to the OECD’s [Organisation for Economic Co-operation and Development] definition.

“Cambodia and Laos are examples of countries in Southeast Asia that, according to the OECD/DAC [Development Assistance Committee] list, are in the category of least developed countries.

“AFMF provides capital to strengthen and scale up regional growth-oriented SMEs [small and medium-sized enterprises] that are key players in the private sector, to contribute to economic development,” it said.

Swedfund head of Sustainable Enterprises Sofia Gedeon says the investment will build engagement with AFMF-supported SMEs and improve their business and encourage job creation.

“The investment in AFMF is a way for us to reach more small companies that can invest and create jobs that are so important in developing countries. It is a challenging context that means that both countries are characterised by high poverty and a great need for investments to create jobs with decent working conditions,” the release quoted her as saying.

The release noted that the Kingdom had been one of the world’s fastest growing economies prior to the Covid-19 crisis – with high single-digit annual nominal GDP (gross domestic product) growth averaging seven per cent over two decades.

“However, the country was hit hard by the pandemic and economic growth stalled, with the potential to reverse recent improvements in poverty.

“The country has emerged well from the Covid period and although still a challenging environment including the human rights situation, forecast resumed growth provides new opportunities for the fund and its companies to address poverty and contribute to equitable development,” it said.

And as the Covid storm raged, the Cambodian government established the Small and Medium Enterprise Bank of Cambodia Plc (SME Bank) in February 2020 as a lifeline for SMEs to navigate the economic challenges of the pandemic.

The state-owned enterprise lends directly and through co-financing schemes with participating financial institutions (PFI).

As of December 27, SME Bank had disbursed more than $432 million in loans to at least 3,260 SMEs, to keep them from going under during the height of the Covid-19 crisis, and subsequently to help them reopen and expand post-pandemic, its CEO Lim Aun told The Post at the time.

SME Bank had directly lent $51.31 million to 227 enterprises, while $381 million was provided through PFIs – which numbered 33 at the time – to 3,033 others.

Aun also reported that a total of $41 million in loans had been disbursed to 288 tourism-related enterprises under the $150 million Tourism Recovery Co-Financing Scheme (TRCS) to date since loans began to be offered in July.

The manufacturing and processing industries, as priority areas determined by the SME Bank in line with government policy, accounted for “more than 50” of the loans, he shared.

The overall financing project, “which is implemented by SME Bank with the participation of PFIs, has been a real support for Cambodia’s SMEs, as well as tourism businesses”, he said.

“Benefactors have had the ability to reopen, maintain, and expand their businesses, especially those hamstrung by the Covid-19 crisis,” Aun added.