Credit Guarantee SOE, Top Trade Body in MSME Tie-up
May 2, 2023Latest News
State-owned Credit Guarantee Corporation of Cambodia Plc (CGCC) and Cambodia Chamber of Commerce (CCC) are joining forces to foster better access to guaranteed loans for the development of the Kingdomâs micro-, small- and medium-sized enterprises (MSME), and to provide support to these smaller businesses, âmainly CCC membersâ, according to a statement.
A memorandum of understanding (MoU) was signed to this effect between CGCC CEO Wong Keet Loong and Nguon Meng Tech, director-general of the CCC â the Kingdomâs apex trade body, at a ceremony last week, the statement noted.
âThis cooperation will provide support to MSMEs â mainly CCC members â for greater access to finance despite collateral challenges, and to promote financial literacy, including credit guarantees to CCC members across the country,â it said.
Meng Tech underlined the damage wrought by the Covid-19 crisis on regional and global economies, especially how MSMEs have struggled to procure sufficient funds to keep their doors open.
âThe MSMEs play significant roles in economic development. However, they face a lot of challenges, particularly financial constraints. In this regard, the MoU signing [by] CCC and CGCC today aimed specifically to promote access to guaranteed loans for the development of MSMEs.
âThe MoU signing is also a positive sign that will help strengthen and deepen the cooperation between the two institutions,â he said in the statement.
The CGCCâs Wong added in the statement: âThis MoU signing with the [CCC] is an important milestone for CGCC, as it enables CGCC to reach out to the members of CCC across the country.
âCCC, being an established business chamber with many SME [small- and medium-sized enterprises] members, will be a key partner to CGCC in promoting the understanding of the benefits of the credit guarantee,â the Malaysian said.
âTogether with CCC, we can support the development of SMEs in Cambodia by improving financial inclusion and financial literacy,â he added.
The statement lauded the CGCC-CCC partnership as a demonstration of âa shared commitment to promoting economic growth and developmentâ in the Kingdom. âBy working together, the two organisations will help SMEs overcome financing challenges and unlock their potential to drive economic growth in the country,â it said.
Cambodia Post Bank Plc (CPBank) CEO Toch Chaochek commented to The Post on April 30 that the CGCCâs credit guarantees have played an âimportant roleâ, as collateral for loans, in ensuring access to formal finance among MSMEs.
âWith the CGCCâs support, our MSMEs have been able to access more funds to support their businesses after being hit so hard by the Covid-19 pandemic over the past two years,â he said.
Incorporated in November 2020, the CGCC is run under the Ministry of Economy and Financeâs technical and financial assistance. The state-owned enterpriseâs (SOE) central mission is âto provide credit guarantees to lenders on loans made to businesses based on international standards to share the risk with lenders and to improve financial inclusionâ, its website says.
The CGCC was established by Sub-Decree No 140/ANKR/BK on September 1, 2020, and its $200 million Business Recovery Guarantee Scheme (BRGS) was launched on March 29, 2021 in a bid to widen access to formal loans from participating financial institutions (PFI) for working capital, investment and business expansions.
The enterprise announced that it had issued a total of 1,275 Letters of Guarantee (LG) for loans worth $113.6 million equivalent as of March 31 â up eight per cent from end-February and up 258 per cent year-on-year, in terms of value. MSMEs accounted for 1,173 â or 92 per cent â of the LGs.
As of March 31, the outstanding guaranteed amount was $65.4 million out of the $90.7 million worth of loans covered by the LGs, as noted by the CGCC, remaining in the 70-80 per cent target range at just over 72 per cent.