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Category: Understand Credit Guarantee

Meet an Inspiring Woman Entrepreneur in the Rice Sector: Growing from Family Businesses to International Markets

Posted on by Sorn Chhorvyvatey

Mrs. Lor Sengleap is the director of Sek Meas Rice Milling and the founder of Lor Eak Heng Sek Meas Rice company. She took over the family-owned rice milling business from her father in 1994. Over the years, as she observed the industry’s potential, growing market demand, and pursued her dream of exporting rice abroad, she began developing and expanding the business in 2011.

She shared how her rice export journey began, mentioning that she used a loan as working capital to purchase rice and increase her stock. This enabled her to fulfill her dream of exporting rice for the first time in 2014. Today, her company exports rice to Europe, the United States, and mostly to the Chinese market.

She also shared that expanding the business was difficult due to limited capital and a lack of knowledge about standard machinery. However, these challenges did not stop her, as she spent time learning and raising capital to equip the business with machinery that met operational standards.

“I expand in stages. Each year, we focus on expanding specific areas. We need to have a clear goal for what we want to expand each year to produce rice.” she said.

Her business expansion continued to face capital constraints until she received information about a business loan guarantee from the Cambodia Rice Federation. She then applied for a loan as working capital to expand her business. She added, “This guaranteed loan is beneficial because we already have loans at commercial banks. Since CGCC does not require collateral, we can apply for a guaranteed loan through CGCC’s partner bank as additional working capital.”

She recalled starting the business alongside her father with just two workers. Over time, the business has grown to employ 40 workers. Today, her rice mill produces between eight and ten containers a day, with each holding 24 tons. She is also able to purchase around 600 tons of wet paddy daily, compared to less than 100 tons in the past when traditional drying methods were used.

“Before, I was only able to buy paddy rice that farmers brought in for retail. After expanding my business, I installed a paddy drying machine and began purchasing paddy delivered by truck in large volumes,” she emphasized.

Her ambition did not stop there. She wishes to expand her business and contribute to Cambodia’s rice exports, with the aim of promoting Cambodian rice products, helping rice farmers access markets, and supporting the national economy. In early 2026, Mrs. Lor Seng Leap received a certificate of appreciation and an award as a top performing beneficiary of CGCC who utilized guaranteed loans effectively. The award was presented to her by His Excellency Dr. Aun Pornmoniroth, Deputy Prime Minister and Minister of Economy and Finance.

Download PDF: Inspiring Woman Entrepreneur in the Rice Sector: Growing from Family Businesses to International Markets

 

 

Meet a Small Fisheries Enterprise with a Big Dream

Posted on by Sorn Chhorvyvatey

Siem Reap Province: My name is Kim Sophors, and I am the owner of Spotlight Foods Enterprise. I produced dried fish, fermented fish, stuffed frog, and fish processing products such as crispy fish skin and fried fish bone. This business began as a family operation passed down from my mother. In 2019, my husband and I started focusing on improving and strengthening our product standards. Today, we have 3 full-time employees and 2 part-time employees.

Starting my business wasn’t easy. I began by following the traditional methods my mother taught me, but those methods made it hard to keep up with what the market demands. Because our production depended on natural condition, we could only produce dried fish during the dry season, which limited our supply. On top of that, I didn’t have enough knowledge about food safety, product standards, or modern machinery that could streamline our production chain. At that time, my production volume was very small, and I didn’t have the confidence to accept large orders.

In 2024, I learned about the Investment Support Facility (ISF) project from a friend. I looked for more information and decided to apply.  As a result, I received support to strengthen my processing capacity to standardize and modernize the infrastructure of my production.

Through this project, I received facility support, including a solar drying house and a freezer. I also gained new knowledge through capacity-building training on production, food safety, and the Certificate of Compliance to Requirements of the Cambodia Quality Seal (CQS) facilitated by UNIDO. In addition, I secured a guaranteed loan from CGCC through one of its PFI, under the ISF project, which helped me upgrade my infrastructure to meet building standards for handicraft production and purchase additional equipment.

Since receiving support from the project and the guaranteed loan from CGCC, my business has become about 20 percent more profitable. Before, I could only produce between 20 and 30 kilograms of fresh fish per day. Now, I can produce between 100 and 150 kilograms per day or even more depending on the orders I receive. On average, I produce between 50 and 70 kilograms of dried fish per day. Previously, I could produce less than 10 kilograms of dried fish.

I am really proud of this growth because it has not only increased my business revenue, but it has also created jobs for my team, boosted the income of fishermen and fish farmers, and local grocery sellers.

In addition, I feel even more confident in my products now because my dried fish has passed laboratory testing and is officially registered. Today, my products are sold in markets around Siem Reap and are distributed by traders to retails shops in the provinces and to restaurants. Also, I am currently working closely with AEON Malls  and Chip Mong Supermarkets to bring my products on their shelves, and I’m hopeful that they will be available there in early 2026. Looking ahead, I truly believe that within the next two years, Spotlight Foods Enterprise will reach international markets.

Download PDF: Meet a Small Fisheries Enterprise with a Big Dream

 

Understanding CGCC Bond Guarantee Process

Posted on by Sorn Chhorvyvatey

CGCC Bond Guarantee Process: Simple Steps for Issuers

Issuing a bond may sound complex, but with the support of the Credit Guarantee Corporation of Cambodia (CGCC), the process is well structured, and more convenient than many expect. CGCC’s bond guarantee helps issuers strengthen investor confidence, enhance their credit profile, and access capital on better terms.

The application journey has been designed to guide issuers step by step — from the expression of interest to the official guarantee. Each stage is transparent, where CGCC works closely alongside with issuers to ensure they are well prepared.

Step 1: Letter of Intent

It all begins with a simple Letter of Intent (LOI). By sharing basic company details, historical financial statements, bond issuing information, list of potential investors, corporate governance information and engagement letter with underwriter, issuers open the door for CGCC to check initial eligibility. This step is quick and straightforward.

Step 2: Full Application

Once the preliminary eligibility check is completed, issuers are invited to submit a full guarantee application. This typically includes the CGCC Bond Guarantee Application Form, a detailed business or budget plan with cash flow projections, constitutional and corporate approval documents, credit rating, and all relevant regulatory licenses and permits. In addition, issuers are expected to provide commercial and legal due diligence reports covering financial, operational, legal, social and environmental aspects. Security documents, key contracts with related parties, and any other supporting materials may also be required where necessary.

Step 3: Assessment

At the Assessment Stage (Desk Assessment), CGCC reviews the bond application to evaluate the issuer’s financial soundness, creditworthiness, and project viability. This includes analysis of audited financial statements, cash flow projections, governance, and key risks to ensure the bond meets CGCC’s eligibility and risk criteria before moving to due diligence stage.

Step 4: Approval in Principle (AIP)

After the desk assessment, CGCC may issue an Approval in Principle (AIP) indicating preliminary approval to proceed. The AIP confirms the issuer meets initial eligibility and risk criteria and sets conditions for the next stage of due diligence before final approval.

Step 5: Due Diligence

After receiving Approval in Principle (AIP), CGCC conducts a comprehensive due diligence process covering financial, legal, operational, environmental and social impact aspects of the issuer. This includes site visits, management interviews, and verification of key documents and reports, such as financial and legal due diligence findings, to confirm the issuer’s overall credibility, governance, and capacity before final approval.

Step 6: Effective Approval & Guarantee Issuance

After completing due diligence, the process advances to the Effective Approval stage or the final step before finalizing the guarantee. At this stage, all assessments, terms and conditions are confirmed to be satisfactory prior to the issuance of the Guarantee Agreement and the formal execution of the bond guarantee.

Recommendations to Potential Issuers

Potential bond issuers are encouraged to engage early in the process and prepare key documents such as audited financial statements, business projection, due diligence report and especially credit ratings in advance. Early preparation helps streamline the assessment which leads to smoother and faster approval.

Ready to Start Your Bond Guarantee Journey?

With CGCC’s support, the bond guarantee process is not only manageable but also a valuable step toward market success. Our team is here to guide you from the very first inquiry to the final guarantee.

To explore how CGCC’s bond guarantee can support your bond issuance, we encourage you to reach out to our team for more information.

Download PDF: Understanding CGCC Bond Guarantee Process

 

Meet a Female Entrepreneur Who Recycles Horn Waste into Ornaments and Jewelry

Posted on by Sorn Chhorvyvatey

My name is Kuon Chenda, and I am the owner of Somornea Horn Handicrafts. I have been running my business since 2003 with the aim of addressing horn wastes problem in my neighborhood. Starting this business was far from easy. I faced social pressure, financial instability, and the challenge of finding a product-market. At one point, I even gave up the business. However, because of my husband’s passion and skills, we moved to Phnom Penh in 2015 to restart and strengthen our business.

Presently, my business has 5 employees, including my husband, who serves as a craftsman and designer. He also trains apprentices. I am the general manager of this business, managing sales and marketing. Initially, we focused on home decoration products, such as statues, which we exported abroad. At that time, there was an association that supported finding international customers for us. However, due to the challenge with transportation and products breakage, we shifted our focus to ornaments and jewelry, such as necklaces, rings, and bracelets.

Unfortunately, the association was closed down, which caused our orders to drop significantly. We lost some overseas customers, leading to a decline in our business during the COVID pandemic. During this period, we closed our shop and shifted to selling through social media. Sales were promising at first, but they eventually decreased. As the situation improved, we began selling at exhibitions. Currently, I sell my products in two locations: at Chip Mong 271 supermarket and on weekends at the Riverside Walk Street.

As a business owner, I believe capacity development is vital for business owners. It is an opportunity to gain new knowledge to strengthen and grow a business. I often take time to participate in capacity-building sessions offered by associations, institutions, and other relevant stakeholders. For instance, when I attended EPIC training, I  learnt about creating a business plan, which inspired me to critically assess my business and identify my shortcomings. At the same time, I also learned about business loans, tips for sourcing capital, and setting clear goals for an effective business plan.

Based on my business experience, I encourage all business owners to remain flexible in their business operations, especially by listening to customers’ needs and feedback, and strengthening marketing strategies and methods to ensure customers are aware of the quality and products you offer.

Download PDF: A Female Entrepreneur Who Recycles Horn Waste into Ornaments and Jewelry

Meet a Business Owner Who Received a Loan Guaranteed by CGCC under Post-Harvest Fisheries

Posted on by Sorn Chhorvyvatey

The Fisheries sector is one of the key drivers in sustaining and promoting Cambodia’s economic growth. Beyond that, this sector plays a significant role in ensuring sustainable food security, source of income, and providing employment opportunities for Cambodian people.

My name is Chav Soursdey, and I am the owner of Fisheries Processing Handicraft Chav Soursdey. My business started operating in 2022 as a family business, following a decade of my work with a private company in the agricultural sector, with a focus on aquaculture. This business was initiated from my dream and passion for food processing, particularly driven by the experience, knowledge, and skills I gained in the aquaculture sector. Initially, my first operation consisted of four part-time employees; by 2024, this number had expanded to eight employees. Starting from 2023, my products were distributed and supplied to 25 provinces/cities to various restaurants. Furthermore, in 2025, I scaled up production and processed more products, including Prahok Mondul, Prama Fish Mundul Powder, and Fish Mondul Powder.

As a business owner, accessing finance and raising funds to expand and develop my business was challenging because I lacked collateral to apply for a business loan. I had failed to obtain a business loan due to insufficient collateral and inadequate documentation. However, in 2024, I learned about the Investment Support Facility (ISF) project through the Post-Harvest Fisheries

Development Project (CAPFISH-CAPTURE), aiming to increase productivity and expand my business. With this favorable situation and the support of the project and CGCC as the fund manager, I seized the opportunity to explore applying for guaranteed loans. Then, Maybank, a Participating Financial Institution of CGCC, provided consultation to me on the guaranteed loan application.

CGCC’s guarantee significantly supports me to obtain a business loan. Most individuals and business owners like me already have collateral pledged at previous bank loans, making it less likely for us to seek additional financing. With this guaranteed loan and the fund support from the ISF, I gained the opportunity to expand my business operations, upgrade my infrastructure, and purchase equipment, which significantly boosted efficiency and productivity. As a result, I plan to release three product packaging sizes: 10g, 100g, and 200g portions. I hope to export my products to the internal market by 2026, as I now have sufficient equipment to produce in large quantities and ensure timely supply.

To successfully secure a business loan, I believe every business owner must demonstrate a strong commitment to preparing a comprehensive business plan, be aware of their business’s shortcomings, and necessary support mechanisms. More importantly, they should set clear business goals and plan the expenses based on the defined business plan, especially, maintaining financial records including monthly and annual income, expenses, profits, and losses.

Download PDF: Business Owner Who Received a Loan Guaranteed by CGCC under Post-Harvest Fisheries

 

Understanding Bond Ratings

Posted on by Sorn Chhorvyvatey

As Cambodia’s bond market continues to develop, credit ratings are playing an increasingly important role for issuers, investors, regulators, and guarantors. They serve as a standardized measure of credit risk, bringing greater transparency and confidence to the market while enabling consistent comparisons across different borrowers. Such ratings help guide bond pricing, assess creditworthiness, and support compliance with regulatory or investment policy requirements. A deeper understanding of rating methodologies enables market participants to make better-informed decisions, foster investor confidence, and enhance the credibility and efficiency of Cambodia’s capital market.

What Are Bond Ratings?

A bond rating is an independent opinion issued by credit rating agencies on a bond issuer’s creditworthiness. It evaluates the bond issuer’s financial strengths and the capacity to repay the bond principal and interest according to contract. These ratings are published by international credit rating agencies such as Standard & Poor’s (S&P), Moody’s, and Fitch Ratings, as well as local institution like the Rating Agency of Cambodia (RAC).

While each agency applies its own rating scale, all systems broadly categorize bonds based on credit quality and risk level, typically classifying them as “investment grade,” “non-investment grade”, or “unrated”. Investment-grade bonds are generally viewed as having low risks of default and stable but tend to offer lower returns. In contrast, non-investment grade bonds, also known as speculative, high-yield, or junk bonds—carry higher credit risk but offer investors the potential for higher returns. For example, investment-grade bonds, as shown in the table below, are rated Baa3/BBB– or higher. The highest rating is Aaa/AAA, indicating the strongest credit quality, while the lowest is D, representing default. Modifiers such as plus or minus signs are used to provide finer distinctions within each rating category.

Credit rating symbols are consistent across industries. For example, a BBB rating assigned to a borrower in the service sector carries the same probability of default (PD) as a BBB rating in the manufacturing sector. However, these ratings reflect the overall creditworthiness of the borrower and do not capture the specific risk of individual debt facilities. In contrast, facility ratings assess the credit risk of specific loans or debt instruments by considering factors such as collateral type, seniority, and recovery prospects. For instance, a loan secured by real estate or fixed deposits may receive a higher facility rating than an unsecured loan from the same BBB-rated issuer, due to the lower expected loss in the event of default.

How Are Bonds Rated?

Credit rating agencies apply a combination of quantitative and qualitative analysis to assess a bond issuer’s credit risk. Quantitative factors include financial performance indicators such as cash flow, leverage, liquidity, and capital structure. Qualitative factors cover industry risk, country risk, business position, management and governance quality, and regulatory environment. After evaluating the issuer’s overall creditworthiness, the rating agency reviews the specific bond’s features—such as seniority, collateral, and credit enhancements. The rating reflects the relative likelihood of default and is assigned through a committee process. It is also monitored regularly for potential changes.

Bond ratings are forward-looking and typically reflect the rating agency’s opinion of credit risk over a horizon of 6 months to 2 years, depending on the credit quality and volatility of the issuer. This outlook considers the potential impact of foreseeable events on the bond’s ability to meet its financial obligations, but it is not a guarantee of future performance. While credit ratings are a valuable tool for assessing bond risk, investors are encouraged not to rely solely on ratings when making investment decisions. Therefore, investors should use credit ratings alongside their own due diligences such as reviewing financials, understanding bond terms, and analyzing market conditions to make a well-informed decision.

Implications for Bond Market in Cambodia

Both local and international credit ratings play an essential role in improving transparency, pricing accuracy, and investor confidence in Cambodia’s growing bond market. They provide a standardized assessment of credit risk, support regulatory oversight, and help attract long-term institutional investors.

As the national credit guarantee institution, the Credit Guarantee Corporation of Cambodia (CGCC) plays a strategic role in supporting the development of the bond market, particularly through its guarantees on Khmer Riel-denominated bonds listed on the Cambodia Securities Exchange (CSX). By enhancing the credit profile of local issuers, CGCC’s bond guarantees help reduce perceived default risk, improve access to capital, and expand investor participation—thereby contributing to the deepening and credibility of Cambodia’s capital market.

List of Reference

Corporate Finance Institute. (n.d.). Bond Ratings.

Fidelity. (n.d.). Bond Ratings: What they are and how they work.

S&P Global Ratings. (2022). Guide to credit rating essentials: What are credit ratings and how do they work?

Credit Guarantee Corporation of Cambodia (CGCC). (n.d.). Bond Guarantee.

Yog INFRA (2025) Credit Risk Assessment – CGCC Training 2025. Phnom Penh: Credit Guarantee Corporation of Cambodia.

 

Download in PDF: Understanding Bond Ratings

 

Why is Kaizen Essential for Both Individuals and Organizations around the World?

Posted on by Sorn Chhorvyvatey

Kaizen is a Japanese term meaning “continuous improvement.” It focuses on making small, consistent changes over time to improve processes, eliminate waste, and enhance productivity and efficiency—often without the need for additional resources.Kaizen also promotes greater employee engagement, better teamwork, lower costs, standardized best practices, and long-term growth. It supports innovation, quality improvement, and customer satisfaction by empowering employees at all levels. By encouraging the active involvement of everyone from top management to frontline staff.  Kaizen fosters a culture of ongoing improvement and sustainable success.

To fully understand the concept of Kaizen, the following example is provided:

After having implemented Kaizen, the Bank reduces loan processing time from 7 days to 3 days with the same resources. A cross-functional team identified bottlenecks such as repetitive tasks and communication delays. The bank implemented a shared digital platform, standardized checklists, improved communication, and introduced brief daily meetings. These changes resulted in faster processing, increased customer satisfaction, enhanced teamwork, and increased productivity.

In accordance with consistently continuous improvement, the 5S of Kaizen are a set of principles used to create an organized, efficient, and effective work environment. They are:

1. Sort: Eliminate unnecessary items from the workspace. Keep only what is essential to the work process and remove anything that isn’t needed. For example, an office had cluttered desks, making it hard for employees to find important items and stay focused. However, after employees reviewed their desks, removed outdated documents, unnecessary supplies, and personal items. Only essential tools and materials were kept. As a result, the workspace became organized, making it easier to find items, reducing distractions, and boosting productivity and healthiness.

2. Set in Order: Arrange and organize tools, materials, and equipment so that they are easy to access and use. Everything should have its place. Example, the disorganized warehouse was causing delays in order fulfillment. After items were labeled and organized by usage frequency, and a color-coding system along with a digital inventory system were introduced, it resulted in faster item location, reduced search time, improved order fulfillment speed, and increased customer satisfaction.

3. Shine: Clean workspace and equipment regularly. Keeping the area tidy not only improves safety but also helps identify potential problems before they escalate. Example, dirty work area caused hidden equipment issues, decreased efficiency, and low workplace moral and discipline. By implementing daily cleaning, these issues are reduced, making it easier to detect problems early and maintain a productive, safe environment.

4. Standardize:  Establish procedures and standards for maintaining cleanliness and organization. This includes creating schedules and guidelines to ensure consistency. Example, family members often forgot daily tasks like taking out the trash, feeding pets, or turning off lights, leading to confusion and missed chores. However, a daily chore chart was created and displayed in a visible location. Tasks were clearly assigned to each family member with defined routines. This standardized system improved consistency, encouraged shared responsibility, and reduced missed chores.

5. Sustain: Cultivate a culture of discipline. Ensure that the 5s practices are consistently followed by all employees and continuously improved over time.  Example, the family cleaned their living room, but after a few days, things got messy again because no one kept up the habit. However, they made a rule: “Put things back after using them.” A reminder note was placed on the wall, and everyone followed the rule daily. The living room stayed clean and tidy.

These five steps are designed to establish a continuous cycle of improvement, fostering a culture where small, consistent changes are made over time. By applying these steps regularly, organizations can enhance productivity, innovation, eliminate inefficiencies, and create a more streamlined and effective work environment. This ongoing process not only leads to better results but also encourages employees to embrace innovation and actively contribute to the organization’s success.

In short, both individuals and organizations are encouraged to consistently apply Kaizen to enhance their quality of life and ensure sustainable growth. So, when will you begin implementing it?

Download in PDF: KAIZEN

 

Understanding Bond Guarantee

Posted on by Sorn Chhorvyvatey

What are bonds? What if they are guaranteed?

Bonds are debt instruments offering interest coupons with maturity date of one year or more. They are common means of financing which are categorized as Plain Bond, Secured Bond, and Guaranteed Bond. Bonds are designed to be more easily tradeable and are commonly issued by larger companies, governments, and special purpose issuers. They are also a core holding for many investors, such as insurance companies, trustees, and central banks.

While bonds are structured with various types of coupons, in Cambodia we observe that fixed-coupon and floating-rate bonds are available in the market. Fixed-coupon bonds offer periodic uniform payments usually at monthly, quarterly, semi-annual, or annual intervals. Floating-rate bonds, on the other hand, combine a market reference rate (MRR) and an issuer-specific spread referred to as the credit spread. Bonds can be issued in many currencies. Bonds that pay both interest and principal in the same currency are called single currency bonds; bonds that pay interest in one currency but principal in another currency are called dual currency bonds. In Cambodia, bonds shall be denominated in Khmer riel but are allowed to be settled in US dollar.

Guaranteed bonds have interest and principal payments promised to be paid by a third party should the issuer default. The third party, the Guarantor, could be a government, private company, insurance company, or the parent company of the issuer. The guarantor grants bond investors with guarantee for the issuer’s credit risk being the risk of economic loss resulting from issuer’s failure to meet their timely promised interest and/or principal payment obligations over the life of the bond. This compensation could boost investors’ confidence and cause the bonds to have a lower coupon rate, but the issuer is charged for guarantee, usually at a rate based on their own risk profile. With guarantee, the bond issued would receive a credit rating as high as the guarantor’s credit rating. Thus, a bond guarantee facility offers a safer investment option for investors and a more affordable borrowing to issuers.

Nevertheless, a bond guarantee would require covenants imposed on and security packages required from issuers depending on the assessment. The guarantor assesses issuer mainly on their financial health and performance, corporate governance, and future business plan, etc. The guarantor also conducts due diligence by performing onsite visits to examine in detail the company’s financial, operational, legal, tax and other areas. Upon the completion of the process, the guarantor would be able to conclude whether the guarantee facility could be offered and with what kind of covenants and security packages. Covenants are the legal terms of debt agreements that an issuer must comply with and usually involve financial restrictions which could be a limit on leverage ratios, minimum debt service coverage ratio, and prudential ratios such as liquidity ratio, solvency ratio, NPL (non-performing loan) ratio and other ratios required by the central bank in case issuers are banking and financial institution. The security packages should be the asset quality and value supporting the issuer’s indebtedness which may include bank deposits, property, personal guarantee, sinking funds, and others. Moreover, a bond guarantee also requires a set of legal documents where the terms and conditions of the guarantee and the recourse are set out.

Whilst the bond guarantor promises to assume responsibility for a debt on behalf of the issuer, they can also seek another guarantor to split risk. This re-guarantee allows both guarantors to share part of the exposure based on their risk appetite. In Cambodia, Credit Guarantee Corporation of Cambodia (CGCC) is the first and only entity accredited by the Securities and Exchange Regulator of Cambodia (SERC) as the bond guarantor. CGCC’s bond guarantee facility includes both sole and re-guarantee. CGCC unconditionally and irrevocably guarantees 100 percent of the bond principal and interest amount on sole guarantee. In mid-2024, CGCC took an important step to foster our bond guarantee mission by initiating a strategic partnership with the Private Infrastructure and Development Group (PIDG) and their subsidiary, GuarantCo Ltd. The three institutions agreed to enter into re-guarantee transactions of bonds in Cambodia to support the local bond market development.

Since CGCC’s guarantee features extend to a minimum issue amount of only 8 billion riels (about 2 million US dollar), enterprises and corporations in need of capital could consider issuing bonds as an alternative to a bank loan. Enterprises and corporations, in consultation with their financial advisor or the underwriter, would be able to structure their bond tenor, coupon rate, repayment of principal, and other terms as per their preference. Meanwhile, CGCC does not restrict our bond guarantee to any specific sector, so application from potential issuers of any sector is openly welcomed for assessment.

Read and Download in PDF: https://www.cgcc.com.kh/wp-content/uploads/2025/06/Understanding-Bond-Guarantee.pdf

 

Meet the Business Owner Who Received a Loan Guaranteed by CGCC

Posted on by Sorn Chhorvyvatey

My dream is to invest in a business that can contribute to people’s well-being because good health and mental well-being are essential for a good quality of life. This is the main reason why my wife and I started two businesses, ADK Rice and Muny Clinic. I established ADK Rice company because I believe that rice is the a primary food for many people, and with the increasing population and decreasing agricultural land, ensuring a stable rice supply is crucial. My wife and I jointly established Muny Clinic with the vision of providing affordable and high-quality healthcare services.

Through my experience working for a large rice exporter in Cambodia, I became aware of the challenges faced by farmers in rural areas, so I decided to start retailing rice for local consumption, called Angkor Dey Khmer. In 2021, the business expanded and evolved into ADK Rice (Cambodia), a company that produces high-quality rice that complies with food safety standards and provides farmers with a sustainable market and increased their income by contract farming supply to my company. Muny Clinic is a medical care and treatment clinic that was established in 2018 by my wife and me. We are committed to providing quality and affordable healthcare services to Cambodians, with a particular focus on treating diabetes and offering regular health check-ups to prevent serious diseases.

The goal of doing business is to develop and grow. My clinic business is no different. We want to acquire modern medical equipment to enhance the clinic’s standards and grow our business. We have decided to apply for a loan from a bank to make our dreams a reality. However, we do not have enough collateral or land title to pledge with the bank. This challenge was overcome with the help of CGCC credit guarantees, which alleviated this challenge and enabled me to get a loan from Prince Bank to purchase clinical equipment.

I obtained a CGCC guarantee on my loan not by chance, but because of the knowledge I gained from participating in the CGCC Capacity Building Program called “EPIC” series 1 of 2024 in May 2024. Through EPIC, I learned about CGCC and partner banks that can provide loans to potential businesses with a clear business plan but face challenges due to  lack of collateral. After receiving the guaranteed loan, I purchased additional medical equipment for our new clinic building, which is in line with the purpose of that guaranteed loan, business plan, and investment plan. In addition, I also plan to apply for additional loans for working capital to buy paddy rice from farmers to increase the rice production of my AKD rice in the future.

As a business owner, I acknowledge that understanding financial literacy is very important because it allows us to think in detail about investing in all aspects, such as purchasing assets to generate more income rather than buying any non-income-generating assets. On the other hand, with financial literacy, we can effectively manage human resources by taking into account factors such as the number of employees, salaries, incentives, and benefits.

Read and Download in PDF: Meet the Business Owner Who Received a Loan Guaranteed by CGCC

 

Understanding Market Structure

Posted on by Sorn Chhorvyvatey

What products or services are your business offering? Who else in the market is offering similar products or services? What is your business strategy to stay ahead of the competition? The answers to these questions relate to the market structure in which your business operates. Market structure refers to the characteristics of a market, including the number of firms, the nature of products and services, freedom of entry and exit, and so on. Market structure plays a pivotal role in the strategic decision-making of a business – how to operate and compete.

Perfect Competition

In Phnom Penh, if you wish to purchase a pure drinking water bottle to satisfy your thirst on a hot day, you have many options like Vital, Angkor Puro, Dasani, Oral, Hi-Tech, Aruna, Cambodia, etc. Despite the different branding, these products share a very similar taste and are generally priced at approximately 0.25 cents per bottle, representing the equilibrium price in this market. If sold at the same place and in the same setting, any products priced above this equilibrium price will eventually be out of the market. The customer is indifferent to switching between these products for the lowest cost. This market of pure drinking water can be a close example of perfect competition.

Perfect competition is a market structure where numerous firms offer identical products or services, and no single firm has the power to set the price. Buyers have complete information about the products and services, and the price is determined by supply and demand. Entry and exit into this market are extremely easy. The key to competing in this market is to set the price equal to the marginal cost, an additional cost for an additional output. 

It is indeed rare, if not impossible, to find perfect competition in real life. The conditions for perfect competition, where many firms offer the same products or services, buyers have all the information, and entry and exit are easy, are seldom met. However, perfect competition serves as a theoretical benchmark that helps us understand the dynamics of real-life markets.

Monopoly

When I rejoined the Ministry of Economy and Finance in 2010, I was involved in the first-ever Initial Public Offering (IPO) on the Cambodia Securities Exchange. As the first IPO in Cambodia, the listing process of Phnom Penh Water Supply (PPWSA) was challenging and time-consuming. PPSWA was eventually listed successfully in April 2012, raising around USD 20 million. Equity investment in PPWSA is considered safe because PPSWA is the only licensed water supply operator in Phnom Penh and Ta Khmao. PPWSA offers an indispensable service (clean water supply) and has no competitors in its authorized areas. PPWSA can set the price without worrying about losing customers. In other words, PPSWA is a monopoly.

Monopoly is the opposite of perfect competition. In a monopoly, there is only one seller of a particular product and many buyers. There are barriers to entry. A monopoly maximizes profit by producing outputs when the marginal revenue (an additional earning from selling one extra unit) equals the marginal cost, and by charging the maximum price consumers are willing to pay for that output. However, the pricing strategy of monopolies is usually under strict government regulation to ensure social welfare. Other firms operating in Cambodia that can be considered monopolies include Electricity of Cambodia (EDC), NagaCorp, CINTRI, and the company I am serving, Credit Guarantee Corporation of Cambodia (CGCC).

Oligopoly

If you ask Cambodian people which mobile network service they are subscribed to, chances are they are using either Cellcard, Smart, or Metfone. These are the three leading players in this industry, holding more than 90% of the market share. Cellcard, Smart, and Metfone fiercely compete with one another on all fronts—price, product innovation, and advertising. Several mobile network companies have tried entering the Cambodian market to compete with these players. Most of them withdrew, such as Beelines and QB. The mobile network industry is an oligopoly.

An oligopoly is a market in which a small number of firms dominate and compete. This industry is highly competitive, and entering it is extremely difficult. The strategy of one firm can influence the strategies of other firms. Because there are only a few players, they often cooperate to limit output and charge higher prices to maximize their shared profits. This behavior is called collusion, which refers to the cooperation among firms in an oligopoly to make joint decisions and act as if they were a monopoly.

Other oligopoly industries include grocery store chains (Lucky Supermarket, AEON Supermarket, and CHIP MONG Supermarket), the retailed petroleum industry (TOTAL, TELA, and CALTEX), and movie cinemas (Legends and Major Cineplex).

Firms operating in different market structures require different strategies to compete and operate. So, which market structure is the best? It depends. Each market structure has its pros and cons depending on the industry and the Government’s policy toward the industry.

Summary of Market Structure

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