The state-owned Small and Medium Enterprise Bank of Cambodia Plc (SME Bank) plans to waive collateral requirements for new loans to qualifying local small- and medium-sized enterprises (SME) soon, to reduce the barriers and obstacles that limit their access to the necessary cash to fund business development and growth, according to its CEO.
Lim Aun was speaking at the 8th Annual Macroeconomic Conference on “Challenges and Policy Options for SMEs Development in Cambodia” hosted by the National Bank of Cambodia (NBC) on December 22.
He noted that unsecured loans, or those that don’t require any form of collateral, are fairly uncommon on the Cambodian market, and that “most banks” simply don’t offer them.
A council under SME Bank has recommended a feasibility study on non-collateral lending be carried out, he said.
He underlined that a working group was taking preliminary steps and that the state-owned lender would “study all the conditions” that would enable it to provide unsecured loans to SMEs “as soon as possible”.
He also pointed out that the government recently set up Credit Guarantee Corporation of Cambodia Plc (CGCC) to shore up SMEs that struggle to secure loans due to a lack of adequate collateral.
Lor Sathya, deputy director-general of the General Department of Small and Medium Enterprises and Handicraft under the Ministry of Industry, Science, Technology and Innovation, highlighted that the Covid-19 crisis has severely affected SMEs, especially those in tourism and manufacturing.
“Upgrading the quality of products on the market is an essential objective that SMEs themselves must intently fixate on, and build up human resources and other capacities, research and pursue additional information, to develop their businesses,” he said.
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Author: Hom Phanet
Source: The Phnom Penh Post
Publication date: 22 December 2021