The Cambodian government had earmarked $200 million to increase ease of access to credit for companies and firms struggling as the economic effects of the COVID-19 pandemic remain.
The new scheme, called the “Business Recovery Guarantee Scheme,” will provide firms of all sizes access to loans by providing credit guarantees to loan giving institutions. The loans will be guaranteed by the Economy Ministry’s Credit Guarantee Corporation of Cambodia and will include nine commercial banks in the first phase.
Meas Soksensan, a spokesperson at the Ministry of Economy and Finance, said most SMEs had exhausted their collateral options and were finding it hard to secure loans during the pandemic.
“We are offering them an assurance to access loans from banks even they do not have enough collateral,” he said. “This is to respond to the needs of SMEs during the COVID-19 pandemic and this strategy will keep businesses afloat.”
Soksensan said the scheme will strongly focus on SMEs and will extend support to the country’s economic backbone and jobs creators.
The scheme, which starts from March 2021 until December 2022, has allocated $150 million for SMEs and another $50 million for larger firms, according to the government.
In Channy, president of ACLEDA Bank, said that the bank had reserved more than $5million for lending.
“It will help SMEs struggling during the pandemic and this credit guarantee would create millions of dollars of loans,” he said.
He said that while SMEs and large firms were facing issues because of COVID-19, but that the banking sector was also under strain.
Mao Sothea, president of new agro-firm SHE agro Trading, said firms were having cash flow issues because of the economic downturn last year, but that tax cuts would be more helpful.
“We have problems with cash flow and I think it is good the government is paying attention to help SMEs during this hard time.
“Loan may not be much effective during the COVID-19, the companies need more tax exemptions as it finds it hard to generate revenue,” she said.
Te Taing Por, president of the Federation of Association of Small and Medium Enterprises of Cambodia, said that in addition to the financial support, SMEs need market protection measures.
“Neighboring countries can export freely to Cambodia while Cambodia cannot in return,” he said. “The relevant ministries should reduce the imports of some final products which already locally produced,” he said.
“This is not against the policy of the free market, but we need to ensure that local products are protected.”
The Ministry of Economy and Finance said the government will set aside more than $800 million to support the economy in 2021, and that more than $1.14 billion, reserved for 2020, had mostly been used up.
According to the World Bank’s latest economic update for the region, Cambodia’s economy contracted by around 2 percent last year and is expected to return to positive four percent growth in 2021.