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SME bank is considering unsecured loans for SMEs

The state-run Small and Medium Enterprise Bank of Cambodia Plc (SME Bank) plans to soon waive the collateral requirements for new loans to qualified local small and medium-sized enterprises (SMEs) in order to remove the barriers and obstacles their access to, according to its CEO has the cash to fund business development and growth.

Lim Aun spoke at the 8th Annual Macroeconomic Conference on “Challenges and Policy Options for SME Development in Cambodia” hosted on December 22nd by the National Bank of Cambodia (NBC).

He pointed out that unsecured loans or those that do not require collateral are quite rare in the Cambodian market and that “most banks” simply do not offer them.

A council from SME Bank has recommended a feasibility study of lending without collateral, he said.

He stressed that a working group was taking preliminary steps and that the state lender would “examine any conditions” that would enable it to provide unsecured loans to SMEs “as soon as possible”.

He also noted that the government recently set up the Credit Guarantee Corporation of Cambodia Plc (CGCC) to help SMEs struggling to obtain credit due to a lack of adequate collateral.

Lor Sathya, Deputy General Director of the General Department for Small and Medium-sized Enterprises and Crafts in the Ministry of Industry, Science, Technology and Innovation, emphasized that the Covid-19 crisis has hit SMEs, especially in tourism and manufacturing, hard.

“Improving product quality in the marketplace is an essential goal that SMEs themselves need to focus on and develop, research, and pursue additional information in human and other capacity in order to develop their business,” he said.

NBC Deputy Governor Chea Serey stressed that when doing their business, Cambodian SMEs juggle a variety of challenges that seriously hamper sustainable development.

“These challenges include a lack of management skills and skilled workers, a lack of capital and access to public finance, a lack of market-related information at national and international levels, competition from large companies and from imported goods,” she said.

Given that most of the SMEs hardest hit by the Covid-related economic downturn are in the informal sector, managing data to formulate strategies to best support SME development is a grueling task for the government, she communicated.

“The Covid-19 crisis had accelerated changes in the structure of the economy and forms of communication, including the increasingly ubiquitous use of technology in manufacturing and commerce, which required SMEs to strengthen their technological capabilities in order to respond to the new situation,” said Serey .

In October, the Department of Industry launched the KhmerSME website to provide micro, small and medium-sized enterprises (MSMEs) with access to comprehensive business information, as well as ASEAN and global markets.

This covers a wide range of topics such as laws and regulations; technical training; Science, technology and innovation transfer; Access to finance and markets; open a business; as well as incentives and mechanisms to foster more strategic, greener and more inclusive business practices, increase efficiency and create a competitive advantage.

The Department of Economy and Finance recently announced that the government has allocated $ 250 million in direct loans to the SME Bank and the Bank for Agricultural and Rural Development of Cambodia (ARDB) in support of SMEs over the next year.


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Richard Dement

The author Richard Dement