Workers around the country are struggling to pay back loans amidst Covid-19 layoffs.
Fourteen trade unions submitted a petition to the Council of Ministers and the Prime Minister’s Cabinet on Wednesday, requesting all banks and microfinance institutions (MFIs) to temporarily suspend repayments, including interest, for workers suffering financially during the Covid-19 pandemic.
The petition states: “Due to the spread of Covid-19, labour has been suspended in garment factories, hotels, clubs, entertainment services, the transport industry, construction, agriculture and other sectors in Cambodia, causing workers to lose their daily income.”
Cambodian Labour Confederation (CLC) president Ath Thorn told The Post that the unions submitted the letter because out-of-work employees are unable to pay their debt during the spread of Covid-19.
“They will face increased loan repayments to banks and microfinance institutions from April onwards, and those working in factories and hotels have complained they cannot afford to pay the bank,” he said.
Acleda Bank Plc president and group managing director In Channy told The Post on Wednesday that all banks in Cambodia are following the directive of the National Bank of Cambodia (NBC) for settling debts, which includes not seizing workers’ assets during the pandemic.
The NBC also instructed banks and MFIs to implement “credit restructuring” measures to ease the burden on borrowers in the face of income losses.
Besides, the NBC recently issued a prakas on easing the reserve requirement ratios of banks to provide sufficient resources to support credit growth.
Channy said: “The above-mentioned measures are adequate. I don’t think there is a need to send any petition to Prime Minister Hun Sen because we are following the NBC’s directive.”
He said Acleda Bank has provided 295 loans to workers and their families worth more than $1 million, and that families which took agricultural loans should have no repayment problems.
“Their business is still operating as usual because it hasn’t been affected by the spread of Covid-19,” he said.
Vithey Microfinance Plc CEO Bun Mony told The Post that MFIs will also be taking part in the implementation of the NBC’s measures to deal with favourable debt repayments during the period.
However, he said, MFIs have a heavy burden of debt repayment to creditors because their capital investments are financed by loan repayments.
“Of course, the money we lend to the borrower, we borrow from others. So far, no one has applied for a deferred payment because their business hasn’t been affected yet. Most of our loans are in the agricultural sector,” he said.
In the garment industry, temporarily laid-off workers suffered another financial hit on Tuesday when Hun Sen said instead of earning 60 per cent of the minimum wage per month, they will now receive a flat amount of $70 monthly.
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