Financing options for small and medium-sized enterprises (SMEs) in Cambodia just expanded, with the government announcing on Friday a new SME-specialised bank that will be set up with initial capital of $100 million.
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The new banking institution, the first of its kind in the kingdom, aims to help local companies grow and seeks to bolster domestic production to reduce Cambodia’s reliance on imports.
Prime Minister Hun Sen gave his approval to the new bank on Friday during a cabinet meeting, where he also announced the formation of three joint working groups to help steer the establishment and work of the new bank.
He also explained that the new bank is an important part of the government’s Industrial Development Policy 2015-2025, whose priorities are to boost the local SME sector and diversify exports.
“We need to speed up work to improve our economic situation by reducing our reliance on foreign partners,” he said.
“The new bank will help SMEs and this, in turn, will help us reduce our dependency on exports by replacing foreign products with locally made ones, particularly for vegetables and meats.”
Te Taing Por, the president of the Federation of Association for Small and Medium-Sized Enterprises of Cambodia (Fasmec), told Khmer Times that the government’s new initiative was key for Cambodia’s industrialisation plans.
“We need this bank. SMEs are the backbone of the country’s economic growth but they often lack the access to finance they need to expand,” he said.
“This bank will support the government’s industrial policy which aims to boost the SME sector,” he said. “The initial capital is $100 million, which is not a lot of money, but at least is a start.”
Mr Taing Por urged the government to speed up work to finish the drafting of its SMEs policy, which, he believes, will be an invaluable tool to help the sector.
“We need an SME policy in place to give us a roadmap for the development of the sector,” he said. “Everyone needs to come together and prioritise this.”
In Channy, the CEO of Acleda Bank, also welcomed the move.
“We have a lot of banks and microfinance institutions in Cambodia, but most of them are not ideal when it comes to working with SMEs,” he said.
“An SME-specialised bank will offer better conditions for lending to smaller enterprises, including longer repayment and grace periods.”
According to official figures, as of March 2014, there were nearly 514,000 SMEs in the country, and 97 percent of them were micro-establishments – employing less than 10 people.