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PPCBank and IFC team up to help SMEs

Chhut Bunthoeun / Khmer Times Share:
Vivek Pathak (left), IFC regional director for East Asia and the Pacific, and Shin Chang Moo, PPCBank president. KT/Siv Channa

South Korea-based PPCBank on Friday entered into an agreement with the International Finance Corporation (IFC) to foster the growth of small businesses in Cambodia.

According to a press release, the new collaboration is part of the bank’s strategy to enhance financial inclusion in Cambodia, facilitate growth, and create jobs.

Under the new partnership, PPCBank will use IFC’s risk-sharing facility to help small and medium enterprises (SMEs).

Through the risk-sharing facility, PPCBank will be able to provide a more inclusive service to existing customers, particularly SMEs and women-owned enterprises, the company said.

The facility will be used to cover loans extended to SMEs, reducing the risk while, at the same time, allowing PPCBank to serve more customers and support their business growth, it added.

In addition to sharing the risk on the covered portfolios, IFC will provide advisory services designed to expand PPCBank’s capacity to confidently extend more loans to more growing enterprises.

“These business segments have been underserved because there is very little historical loan performance data, which would otherwise be used to make responsible lending decisions, which further constrained these businesses’ capacity to grow,” said Shin Chang Moo, PPCBank president.

“These entrepreneurs have real potential to impact Cambodia’s future growth. At the same time, PPCBank is committed to providing them with the right financial and funding solutions to empower and enable them to grow their businesses,” he said.

Mr Shin noted that expanding financial inclusion and opening opportunities for small businesses helps people prosper and build financially secure and stable lives for themselves and their families.

“We are proud to have the opportunity to serve this market and excited to see the progress and contributions they make,” Mr Shin added.

Vivek Pathak, IFC regional director for East Asia and the Pacific, said SMEs drive growth and employment in lower-income economies, but they struggle to attract financing because of their size and limited experience, among other factors.

“This risk-sharing facility will help PPCBank serve the needs of this segment that is so critical to Cambodia’s economy and demonstrate the ‘bankability’ of this client segment to other market players,” he said.

IFC, a sister organization of the World Bank, is the largest global development institution focused on the private sector in emerging markets. In 2018, IFC delivered about $23 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity.

Dr. Eng Lykoung, president of the Cambodia Women Entrepreneurs Association, welcomed the partnership and said that it will help female entrepreneurs. She said women-owned SMEs often struggle securing access to finance.

“Women entrepreneurs face a number of critical challenges, including access to loans because they lack collateral.

“Despite this, the local SME sector is booming. There is a growing number of women doing business in Cambodia and their income increases every year,” she said.

There are about 50,000 SMEs in Cambodia, 97 percent of which have fewer than 10 employees and are thus classified as micro-enterprises.

Ky Seng Hoir, deputy director of the SME department, recently said that SMEs make a significant contribution to the country’s development, generating about 70 percent of jobs.

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