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Cambodia: New SME bank welcomed but potential users may await the end of pandemic
Small and medium enterprises (SMEs) are expected to apply for a loan from the newly formed SME Bank of Cambodia to expand their production lines but first they want to see the end of COVID-19, according to the vice-president of Cambodia Chamber of Commerce.
The Ministry of Economy and Finance on Friday officially launched the $100 million government’s so-called SME Co-Financing Scheme and said that the fund is now available for all prioritised SMEs. The private sector is welcome to invest in it.
Lim Heng, vice-president of Cambodia Chamber of Commerce welcomed the move, saying that it shows the government’s attention to SMEs during the hard times caused by the Coronavirus pandemic.
“With this bank, it will be good for SMEs as a whole and we hope that the bank will attract more SMEs because it has more favourable conditions compared with commercial banks,” he said, adding that $100 million is an adequate sum The National Bank of Cambodia says commercial banks need a minimum of $75 million to launch.
Lim said that during the pandemic it would be difficult for SMEs to get a loan because of the uncertainty caused by COVID-19, which has delayed or reduced production and also they may fear the commitment involved. However, when things return to normal they will be more disposed towards borrowing.
However, Te Taing Por, president of the Federation of Association for Small and Medium Enterprises of Cambodia (Fasmec) expressed more optimism. He hopes that many SMEs will apply for loans from the new bank.
“Fasmec is preparing loan applications for its 300 members to borrow money from the SME Bank,” he said.
According to Te, the $100 million fund was originally planned to launch in March, but it was delayed because of the pandemic.
“I am now working with the bank on the issue and we will know how many SMEs will apply for loans from next week,” he said. “We will also hold workshops among our members to explain to them how to get a loan.”
According to a statement from the ministry, the prioritised enterprises are engaged in the agricultural industry, food production and processing, manufacturing of local products, manufacturing of souvenirs and handicrafts for tourists, waste processing, assembling and information technology (IT) research and development (including IT management services).
TeTaing Por said that
the SME Bank will help to promote local producers rather than sending raw materials to neighbouring countries, as mostly happened up to now.
“We cannot export our raw materials anymore because it is costing us jobs. We need to urge food processing be undertaken locally,” he said.
The $100 million fund is jointly funded by the SME Bank of Cambodia and participating commercial banks and microfinance institutions.
There are 32 financial institutions (23 commercial banks, and two specialised banks, five micro-deposit institutions and two microfinance institutions – MFIs) participating in
the government’s SME Co-Financing Scheme.
Say Sony, senior vice-president and chief marketing management of PRASAC MFI, said the launch of the SME Bank will help to fulfil the financial sources for SMEs.“Because the bank is able to provide bigger loans than MFIs, I think it is good for SMEs because they could diversify their fund sources,” he said.
SMEs can borrow up to $200,000 for working capital and up to $300,000 for investment capital. The maximum interest rate is 7 percent per year and the repayment period is four years. The collateral is dependent on the criteria of participating financial institutions.
Source: https://www.khmertimeskh.com/50710318/new-sme-bank-welcomed-but-potential-users-may-await-the-end-of-pandemic/