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Cambodia: Riel circulation in provincial economies on the rise
A majority of population in provinces in which National Bank of Cambodia (NBC) had organised riel promotion events have started using the national currency in their daily economic activities compared to the usage of foreign currencies, said a senior NBC official.
Last year Chea Serey, NBC’s Deputy Governor, spearheaded a team to promote riel usage in Kampong Cham, Battambang, Kampong Thom and Kampot that are potential in agriculture, agro-industry, tourism and trade with financial support provided by provincial and district branches of private banks. The events were attended by large numbers of senior provincial officials, representatives of financial institutions, students and others.
Serey said at least 79 percent of the total population in these provinces have used riel approximately 80 percent of all their daily spending on necessary items for economic activities. Further she said based on survey data that operating revenues and expenses in riel at branches of banks and financial institutions operating in some of those provinces have increased remarkably in the last year compared to the same period five years ago and its pace was faster than that of US dollar.
“The central bank prints riel only, while the dollar is printed by the US. So, we have only influence on loans in riel, but when we release loans in riel, banks or financial institutions say consumers need loans in dollars, which means imposing policies is like not imposing… Currently we also provide loans in riel but the power of riel in the market is still very limited as usage of riel plays a small part,” Serey said.
“It means that when we use foreign currencies very much, we would lose our ownership,” said Serey, adding that usage of riel covers about 20 percent of the economy as a whole, while the dollar covers approximately 80 percent. “I support… saying that riel is our national currency. Using riel is like protecting economic sovereignty … economic development,” she said.
Serey pointed out that the survey data shows that 79 percent of the total population—1.15 million people with $1.679 GDP per capita each—in Kampong Cham Province use the national currency riel more than 80 percent of all their daily spending and economic activities such as farming in the provincial economy.
The survey also indicates that 79 percent of Battambang’s population use riel at least 80 percent of all their daily spending, while operating revenues and expenses in riel at banks and financial institutions in Battambang had increased 281 percent in the first six months of 2022 compared to the same period of five years ago, which was far higher than the growth rate of that in US dollar that had risen 61 percent, according to the central bank’s official. In Kampong Thom, 80 percent of its total population uses riel at least 80 percent of all their daily spending in the provincial economy, while operating revenues and expenses in riel at banks and financial institutions in this province had increased 176 percent in the first six months of 2022 compared to the same period of five years ago, which was far higher than the growth rate of that in US dollar that had risen 12 percent, according to the data cited by Serey.
Ly Sararith, Kampong Cham’s Deputy Provincial Governor, said most of over 1.15 million population in the province is geographically located near Mekong River with productive soil and sufficient water do economic activities in agriculture and crops such as rubber, cashew, bananas and cassavas to supply in the domestic and overseas markets.’
Sararith also said during the riel promotion event in Kampong Cham Province that there are currently 47 provincial branches and 145 district branches of banks and financial institutions to provide financial services and products to owners of businesses, small and medium enterprises and people in the province.
“In our province, people generally use riel in its very large circulation as they give high value to the usage of riel that is our national currency … Our people and the private sector continue using riel more and more and we will continue raising more awareness and promotion of using our national currency,” said Sararith.
Uy Sotheavy, Deputy Governor of Battambang Province, said 54 provincial branches and 165 district branches of banks and financial institutions have been operated to serve business owners who are among the 1.3 million population who live in the province with border with Thailand where they can trade with the people of the neighbouring country. “The province’s economy would not be developed if there is no presence of the national currency… I have seen that our people using riel on a large scale for daily economic activities like buying food, clothes and travel even though there is also an inflow of foreign currencies through international tourists who visit this province,” said Sotheavy, appealing to local business owners to use more riel instead of foreign currencies as it is Cambodia’s national currency.
Lum Kuntheary, Deputy Governor of Kampong Thom Province, said during another event organised by NBC to promote the usage of riel that the province has 0.84 million population who mostly do activities in agriculture in rice paddy, fisheries, crop plantations such as rubber, cashew and cassava, and tourism with cultural and historical spots to support their standard of living. Kuntheary also pointed out that 258 irrigation systems—three major ones for more than 5000 hectares of land, 161 medium-scale ones for 200-5000 hectares and 94 small ones for 200 hectares—have been installed to support the agricultural systems in the province where there are currently 127 branches of banks and financial institutions—28 provincial branches and 99 district branches.
Serey said in the post-Pol Pot regime, the circulation of riel has increased remarkably, especially in the rural economy as the government has unleashed and implemented necessary measures to promote the usage of riel. The measures taken by the government include payment of civil servants’ salaries, utilities and taxes in riel, and a regulation requiring all vendors to label the prices of products and services in riel. Besides, NBC in the later stages has developed electronic payment systems to make usage of riel safer, more convenient and more efficient, according to Serey, adding that payment system can be used as a tool of campaign to promote the use of riel in provinces. Among the payment systems, Bakong, a payment system employing Blockchain, the latest technology, was officially released for use in October 2020.
She pointed out that old or torn riel banknotes are regularly collected and exchanged for new ones free of charge. The 50,000 riel banknote was awarded the bronze medal for quality and appearance from the International Monetary Institute based in United Kingdom and the 15,000 riel banknote was awarded as the best Regional Banknote of the Year 2019 in the Asia Pacific from Reconnaissance International, also based in the United Kingdom, for the modern and safe technology in printing the banknotes.
NBC also has supported the government in issuing government bonds in riel and banking and financial institutions in issuing corporate bonds in riel and requires them to have loan portfolio in riel at least 10 percent of the total loans. NBC also supplies riel to banking and financial institutions who are short in local currency and based on their necessary and actual needs to reduce lending rate in riel in the market.
Serey pointed out that all of these measures have contributed to the payment and savings in riel everywhere in the country. For over the last two decades, the riel in circulation has risen by 16 percent, 29 percent for deposits in riel and 38 percent for loan in riel on average per year. Over the last 42 years, riel has actively contributed to rebuilding and restoring the sovereignty, economy and society through its functions as the unit of account, medium of payment or exchange and store of value.
Source: https://www.khmertimeskh.com/501268687/riel-circulation-in-provincial-economies-on-the-rise-2/