The Small and Medium Enterprise (SME) Bank of Cambodia Plc – initiated by Prime Minister Hun Sen – was launched in 2020, coming at a crucial time to enhance lending to a sector of huge importance, one which often lacks adequate access to finance.

According to a Ministry of Industry, Science, Technology and Innovation 2018 report, SMEs play a significant role in Cambodia’s economy, providing 70 per cent of employment and 99.85 per cent of companies, and contributing 58 per cent of the nation’s GDP.

The key objectives of the SME Bank, which was incorporated in February, are to provide accessible, affordable financing and market access, as well as develop entrepreneurial skills and supply technical support.

The bank, along with participating financial institutions, launched the $100 million “SME Co-Financing Scheme” (SCFS) in April to support SMEs during the Covid-19 pandemic.

“As a state-owned commercial bank, the SME Bank of Cambodia has a social mandate to align itself with the Royal Government of Cambodia.

“Its objective is to provide financing and commercial banking services in an effective and sustainable manner to support local SMEs in increasing economic diversification and expanding export volumes,” said HE Dr Pan Phalla, Secretary of State at the Ministry of Economy and Finance, is chairman of the SME Bank of Cambodia.

The SME Bank, with guidance from Ministry of Economy and Finance, collaborated with 33 participating financial institutions to roll out the SCFS prior to the launch of full operations in November.

In developing economies, SMEs remain a key driver of economic growth, stimulating job creation and poverty reduction, bringing social stability and contributing to the growth of a dynamic private sector.

They also contribute to the development of entrepreneurship and innovation in the domestic economy.

“The SCFS was a successful scheme that has benefited 752 SMEs across Cambodia. The financing scheme was launched on April 1 and was fully subscribed by October 16,” said Phalla.

The SME Bank differs from other commercial banks as it focuses on the SME sector to enable better access to affordable financing, provide technical assistance to SMEs to enhance their productivity and efficiency, improve business advisory support and ease access to regional markets.

As set out in the Cambodia Industrial Development Policy 2015-2025, the bank focuses its lending on key priority sectors such as food manufacturing and processing, the manufacturing of local consumption goods and waste recycling, and the production of goods for the tourism sector.

It also targets lending for the manufacturing of finished products, spare parts or the assembling of parts to supply other manufacturers.

IT, research and development associated with IT or the supply of IT-based services and new start-ups are other areas of focus, as well as cottage industries related to production and manufacturing, and enterprises located in SME cluster zones and those developing such zones.

“The SME Bank provides a wide range of SME loan products and services. Our new Cambodia SME Scheme [CSS] loan product was introduced in November.

“The bank will in the coming months also be extending various loan schemes, such as the Cambodia Women Entrepreneurs Scheme [CWES] and the Cambodia Digital and Automation Scheme [CDAS].

“In addition to such products and services offered to SMEs, the SME Bank provides other banking services, such as savings accounts, junior saver accounts, retirement accounts, current accounts and term deposit accounts,” said Phalla.

Moving forward, he said the SME Bank will be expanding its digital capabilities to provide enhanced services to SMEs by developing digital channels, while strengthening operating efficiency and effectiveness.

“We will also be strengthening our risk management systems, credit underwriting processes and capacity building in the areas of risk, business development and operations.

“We will continue to collaborate and engage with the various ministries, agencies and other relevant stakeholders to support SME development and provide affordable and accessible financing,” he said.