Guarantco and CGCC Sign Framework Agreement and First Transaction Together To Accelerate Sustainable Infrastructure Investment In Cambodia

Cambodia Investment Review

GuarantCo, part of the Private Infrastructure Development Group (PIDG), and the Credit Guarantee Corporation of Cambodia (CGCC) have signed a Framework Agreement as part of the PIDG Credit Enhancement Facility (CEF) initiative.

The initiative seeks to accelerate the development of domestic capital markets and enhance financial inclusion through developing onshore guarantee capability. The Framework Agreement encompasses counter- and co-guarantee support from GuarantCo and technical assistance from PIDG Technical Assistance to help boost CGCC’s capacity. The Framework Agreement is also aligned with the mandate and prioritisation from the Ministry of Economy and Finance, and the Securities and Exchange Regulator of Cambodia who are seeking to deepen the corporate and project bond market in Cambodia.

USD 7 Million Portfolio Guarantee To CGCC

The Framework was signed alongside the first transaction between GuarantCo and CGCC, wherein GuarantCo has provided a 10-year, USD 7 million portfolio guarantee to CGCC. Marking GuarantCo’s fourth investment in Cambodia, the portfolio guarantee will allow CGCC to mobilise further bank lending towards small and medium-sized enterprises (SMEs) in the country, with a focus on businesses supporting the green transition.

Read More: No Lida Appointed as CEO of Credit Guarantee Corporation of Cambodia

SME development is a high priority for Cambodia where a lack of access to formal banking services is common due to the nascency of green financing in the country.

The Framework Agreement follows a Memorandum of Understanding (MoU) signed in August 2024, which seeks to increase and upscale CGCC’s capacity through its involvement in a range of large-scale Corporate and Project finance deals. CGCC and GuarantCo will look to execute counter- and co-guarantees under the Framework, with a particular focus on catalysing sustainable infrastructure financing via the capital markets in Cambodia.

The accompanying PIDG TA grant programme will support CGCC to develop its technical capabilities in capital markets, allowing both organisations to scale their impact in Cambodia.

CGCC Is Testimony To The Market Acceleration

Denesh Srishanker, Group Head, Credit Enhancement Facilities at PIDG, said: “The signing of this Framework Agreement and completion of its first transaction less than five months after our MoU with CGCC is testimony to the market acceleration we want to achieve together. Establishing in-country credit enhancement facilities is key to support local market development and is therefore an integral part of PIDG’s 2030 Strategy to mobilise innovative infrastructure projects across Africa and Asia.”

Chinmay Naralkar, Deputy CEO at GuarantCo, said: “We are delighted to put into place this Framework Agreement with the Credit Guarantee Corporation of Cambodia and whilst cementing it with an inaugural transaction. The Framework will support CGCC’s growth in providing progressive sustainable infrastructure financing through local capital markets to support a green transition. Aligned with our strategic plans, we look forward to continuing to build our momentum in Cambodia to the benefit of the environment and local people and their livelihoods.”

No Lida, CEO of the Credit Guarantee Corporation of Cambodia, said: “We are pleased to demonstrate early progress in our collaboration with GuarantCo and PIDG with this Framework and our first international deal. This initiative aligns with CGCC’s strategy to enhance our bond guarantee capacity and support the development of SMEs in Cambodia. We seek to embed the international best practices represented by GuarantCo and PIDG as we build our capacity. This is a true cooperation in which we will learn from each other’s expertise while driving forward sustainable infrastructure for Cambodia.”

Credit to: Cambodia Investment Review, Published on 18 January 2025

 

CGCC, GuarantCo Sign MoU to Promote Bond Market in Cambodia

State-owned enterprise Credit Guarantee Corporation of Cambodia (CGCC) signed an MoU on Thursday with GuarantCo for a structured facility that enhances guarantee capacity in the bond market space.

Cambodia is unusual in that its bond market is larger than its equities market when in most countries it would be the other way around. The Cambodia Securities Exchange (CSX) has 23 listed companies – 11 offering their equity shares and 12 offering their bonds. But it’s the bond market that is set to see a boost as five more companies are expected to list, which would take the total number of listed bond players to 17 versus 11 equity players.

CGCC said it has a total guarantee capacity of $200 million. “CGCC had an unusual beginning in that it started right in the middle of Covid. We started guaranteeing loans to SMEs. Today we’ve guaranteed loans amounting to $164 million to 1,928 micro, small and medium enterprises (MSMEs) as we mark three years of operation. But our vision has expanded now and we’ve also set up a Sustainable Green Financing Facility and this bond guarantee scheme for which we hope we’ll have a valuable partner in GuarantCo,” said KL Wong, CEO, CGCC. He added that it would be reassuring to prospective bond investors that their partner GuarantCo is a Fitch “stable” and “AA” rated entity.

With the partnership, speakers at the events said that CGCC would get technical assistance from GuarantCo on navigating the bond issuances and the bond market. GuarantCo could potentially combine its resources with CGCC to enhance its combined bond guarantee capacity. Also present at the event were Hong Sok Hour, the Royal Government Delegate in Charge as CEO of Cambodia Securities Exchange (CSX) and Seang Thirith, Deputy Director General of Securities and Exchange Regulator of Cambodia (SERC).

“At GuarantCo we are keen on enabling sustainable infrastructure in Africa and Asia. So far we’ve encouraged infrastructure development in low-income countries through the provision of credit guarantees that enable infrastructure projects,” said Nishant Kumar, Managing Director (Asia) of GuarantCo, part of the Private Infrastructure Development Group (PIDG).

“And in many countries we work like Nigeria and Pakistan we’ve had to set up a credit guarantee facility from scratch. But, Cambodia already has a credit guarantor in CGCC. An extremely innovative approach by the government that I’m not sure I’ve seen replicated anywhere else in this region,” said Denesh Srishanker, Credit Enhancement Facility Director, PIDG. “We’re more keen on local solutions to help local markets. And we do want to close the infrastructure funding gap in countries like Cambodia,” he added.

Innovation in funding is something the UK Government is keen on, said Dominic Williams, British Ambassador to Cambodia, while citing Britain’s role as Cambodia’s long-term development partner. “Cambodia has traditionally had a model of relying on the government budget and its external/international development partners. But, guaranteeing bonds for investor confidence could ensure the country gets other sources of funding too for its critical infrastructure projects,” said Williams.

GuarantCo Managing Director Kumar also talked about other projects they have done in the country, including providing a $70 million bond guarantee to CamGSM (popularly known as Cellcard) to finance its telecom infrastructure; its $24 million bond guarantee to Royal Railway Cambodia to invest in the national railway system; and $7 million in debt financing to MFI First Finance for building affordable housing for low-and-middle income groups in Cambodia.

“We are keen on credit enhancement, providing technical assistance to CGCC and creating viable opportunities for private investors in frontier markets,” said Philippe Valahu, CEO, PIDG.

On the timeframe of execution, CGCC CEO Wong said that they (CGCC and GuarantCo) are hoping to do their first combined bond guarantee this year. “On tax incentives, we are not the authority to comment. But I can tell you that we have approached the General Department of Taxation (GDT) and made a representation asking if it would be possible for the government to give some sort of tax incentives for bond investors and those keen on green financing,” said Wong.

New Project Boosts 100 Fisheries Enterprises

A new scheme by the EU-funded CAPFISH-Capture programme aims to support the Kingdom’s post-harvest fisheries sector by improving access to capital.

Through CAPFISH, the Fisheries Administration (FiA), the UN Industrial Development Organization (UNIDO) and the Credit Guarantee Corporation of Cambodia (CGCC) will work together to launch an investment support facility (ISF) scheme.

Building on the success of its current investment support of 50 small enterprises, the ISF scheme will provide technical support and guaranteed business loans to 100 additional businesses.

The funding will allow the small enterprises to overcome challenges such as inadequate fish-processing technologies and limited value addition, as well as food safety concerns which impact consumer trust and the sector’s competitiveness on a global scale, according to a joint statement from the CAPFISH and its partner organisations.

The scheme blends co-financing from the enterprises’ own resources, guaranteed business loans distributed by the local financial institutions and grant support from the project itself. It is co-funded by the EU.

“The ISF will play a pivotal role in enhancing Cambodia’s fisheries sector. Through it, eligible enterprises will be able to access technical support, capacity building, and financial assistance, including grants and loans with favourable conditions,” Mey Vann, member of the CGCC board of directors, was quoted as saying in the statement.

“Ultimately, these efforts will contribute to the government’s overarching goal of securing food supplies and elevating the standard of living for the Cambodian people,” he added.

Dejene Tezera, UNIDO director of agri-business​​ and infrastructure development, expressed his pride in the introduction of the scheme.

“Through investments in innovation and capacity building, we are paving the way for a future where Cambodian fisheries stand tall on the world stage, delivering excellence, reliability, and prosperity to local communities and beyond,” he said.

“The ISF will not only help boost competitiveness and sustainability but also underpin economic expansion, public health safeguards and local job creation. I am optimistic that its success will inspire replication and scale up in other agricultural sub-sectors,” added EU ambassador Igor Driesmans.

In the statement, Dith Tina, Minister of Agriculture, Forestry and Fisheries, acknowledged the invaluable support of the EU and UNIDO.

“This is a great initiative and will support current collaborations between the ministry’s FiA, UNIDO and the private sector,” he was quoted as saying.

“I am positive that this project, which will be implemented by the CAPFISH-Capture programme, will raise the standards and quality of post-harvest fishery products, providing economic benefits to fishermen and the owners and employees of processing enterprises,” he added.

Credit to: The Phnom Penh Post, Published on 29 May 2024

CGCC Participating in the 47th Association of Development Financing Institutions in Asia and the Pacific (ADFIAP)

Mr. Wong Keet Loong, CEO of CGCC, led the CGCC’s team to participate in the 47th ADFIAP Annual Meeting from 15 to 17 May 2024, at Sofitel Phnom Penh, hosted by the Agricultural and Rural Development Bank (ARDB) of Cambodia.

The 47th ADFIAP Annual Meetings is attended by more than 400 participants from more than 40 countries who are ADFIAP members, representatives from developing partners, representatives from the private sector, and other relevant stakeholders to share experiences from the countries in the Asia Pacific under the topic “DFIs’ Role in Sustainable Finance Ecosystem: Cultivating a climate-smart and sustainable future”. CGCC also submitted an application to be a member of ADFIAP through this annual meeting as well.

 

$30M Credit Guarantee Scheme for Rice Inked

The state-owned Credit Guarantee Corporation of Cambodia (CGCC), Cambodia Rice Federation (CRF) and participating financial institutions (PFIs) signed an agreement on the $30 million Rice Export Guarantee Scheme (REGS) to help millers stockpile rice for milling, processing, exporting and making local value-added products.

The signing ceremony was held last Friday in the presence of Ros Seilava, Secretary of State of the Ministry of Economy and Finance, the Board of Directors of the CGCC and the management and members of CRF, PFIs and CGCC.

The official cooperation by the three parties on REGS is aimed at increasing the productivity and competitiveness of Cambodia’s rice industry and boosting rice exports in line with the Royal Government of Cambodia’s policy on agriculture.

CGCC launched REGS as a portfolio guarantee scheme, having seven financial institutions participating including AMK Microfinance Institution, Canadia Bank, Foreign Trade Bank of Cambodia (FTB), Maybank (Cambodia), Prince Bank, Sathapana Bank, and Wing Bank (Cambodia).

The scheme will address the financing needs of rice exporters and millers having no collateral to avail of loans from financial institutions, especially during the harvest season.

At the ceremony, Ros Seilava said that the launch of the project is a reflection of the government’s strong commitment to support Cambodian rice production and rice exports through the public credit guarantee scheme, of which CGCC is the operator, by providing guarantee coverage of 80 percent with a maximum loan of up to $3 million.

“The REGS will support the financing needs of rice exporters and rice millers to purchase paddy from farmers to produce rice for exports in line with the government’s policy to increase rice production and exports,” he said.

Chan Sokheang, President of CRF said the rice credit guarantee package will help millers expand their businesses and use the by-products to other sectors such as aquaculture and livestock farming.

“The guarantee package is also an additional incentive for expanding exports to one million tonne per year as set by the rice production policy of the Royal Government, and we believe that this plan will be achieved by 2025,” he added.

Wong Keet Loong, CEO of CGCC, said that the scheme comes with special features – lower guarantee fees, higher guarantee covers and loan interest rate not exceeding 11 percent a year.

“We are supporting the aspirations of the government to export one million tonne of rice by 2025. This is our first tranche for the scheme and we can increase the scheme size if there is higher demand,” Wang said.

Cambodia exported more than 248,000 tonnes of milled rice in the first four months of 2024, earning a total revenue of $170 million, a CRF report showed.

The exported rice varieties included fragrant rice, white rice, parboiled rice and organic rice, among others.

Credit to: Khmer Times, Published on 13 May 2024

Rice Credit Guarantee Scheme Inked to Boost Rice Productivity and Export

The state-owned Credit Guarantee Corporation of Cambodia (CGCC), Cambodia Rice Federation (CRF), and Participating Financial Institutions (PFIs) signed an agreement on the Rice Export Guarantee Scheme (REGS), which helps millers expand their scope to stockpile rice for milling, processing, exporting, and increasing local value-added products.

The signing ceremony was held on May 10 under the presidency of Ros Seilava, Secretary of State at the Ministry of Economy and Finance, with the participation of more than 70 people who are members of the CGCC Board of Directors, the management and members of CRF, the management and staff of PFIs, and CGCC.

The ceremony was held to seal the official cooperation between CGCC, CRF, and PFIs on the Rice Export Guarantee Scheme (REGS). The scheme aims to increase the productivity and competitiveness of Cambodia’s rice industry and boost rice exports in line with the Royal Government of Cambodia’s policy on agriculture.

CGCC launched the $30 million REGS as a portfolio guarantee scheme, with seven financial institutions participating, including AMK Microfinance Institution, Canadia Bank, Foreign Trade Bank of Cambodia (FTB), Maybank (Cambodia), Prince Bank, Sathapana Bank, and Wing Bank (Cambodia).

Speaking at the ceremony, Ros Seilava said that the launch of the $30 million REGS project reflects the Royal Government’s strong commitment to supporting Cambodian rice production and exports through the public credit guarantee scheme, of which CGCC is the operator. The scheme provides guarantee coverage of 80 percent on the maximum loan of up to $3 million.

“The REGS will support the financing need of rice exporters and rice millers to purchase paddy from farmers to produce rice for exports in line with the Royal Government of Cambodia’s policy to increase rice production and exports,” he said.

Chan Sokheang, President of CRF said the rice credit guarantee package will help millers expand their scope to stockpile rice for milling, processing, exporting, and increasing local value-added products derived from its by-products milling all rice to other sectors such as aquaculture, livestock farming.

According to Wong Keet Loong, CEO of CGCC, the scheme comes with special features – lower guarantee fees, higher guarantee covers and loan interest rate not exceeding 11 percent p.a.

“We are supporting the aspirations of the Royal Government of Cambodia to export 1 million tonnes of rice by 2025,” Wang said.

CGCC is a state-owned enterprise under the financial and technical guidance of the Ministry of Economy and Finance with a main mission to provide credit guarantees to improve financial inclusion and support the development of small and medium enterprises. AKP

Credit to: Khmer Times, Published on 11 May 2024

CGCC Provides $17M Credit Guarantees to MSMEs in Q1

The Credit Guarantee Corporation of Cambodia (CGCC) provided credit guarantees of nearly $17 million in the first quarter of this year to 49 micro, small and medium-sized enterprises (MSMEs) as their working capital for expansion.

“In the first quarter of January to March, we saw a positive trend in the issuance of guarantees. We recorded a 30 percent increase in guarantees issued from 166 (4th quarter of 2023) to 215 with the amount of guaranteed loans increasing by 8.5 percent to $ 16.8 million,” a CGCC report issued recently showed.

The first quarter figure brought total credit guarantees to $181 million as of the end of March, supporting 2,143 MSMEs since its service launched in 2021, read the report.

As of March, the outstanding guaranteed loan was US$121.32 million while the outstanding guaranteed amount was $87.63 million.

There are 1,988 micro, small and medium enterprises (MSMEs) and 155 large businesses in Cambodia, the report said, adding that 881 of the businesses were women-owned.

2024 marks the 4th year of operations for CGCC. CGCC is optimistic that the credit guarantee will continue its momentum to increase annually, its CEO KL Wang said.

“Our participating FIs are beginning to find importance in the guarantees as a form of risk sharing for supporting their loans to MSMEs. Also, with the recognition of guaranteed loans to be zero-risk weighted, it will improve the FIs capital adequacy ratios,” Wang said.

The CGCC scheme involves 28 participating financial institutions (PFIs) to extend credit as working capital investment and business expansion to SMEs.

Established in November 2020 with a state budget of $200 million, the CGCC is the preferred credit guarantee institution in Cambodia set up to improve financial inclusion and develop the growth of SMEs.

CGCC, operated under the technical and financial guidance of the Ministry of Economy and Finance, launched the first guarantee scheme on 29 March 2021.

CGCC’s credit guarantee is instrumental in aiding MSMEs to obtain sufficient financing, enabling the enterprises to capitalize on investment opportunities, boost employment and increase income.

In January this year, CGCC launched its guarantee for corporate bonds listed on the Cambodian Stock Exchange. This marks the diversification of our guarantees beyond bank loans to guarantee corporate bonds issued by larger-sized SMEs.

Credit to: Khmer Times, Published on 10 May 2024

Extension of Request for Proposal “Legal Counsel”

CGCC is a state-owned enterprise, established under the technical and financial guidance of the Ministry of Economy and Finance (MEF) to provide credit guarantees based on international standards to improve financial inclusion and support the growth of SMEs in Cambodia. CGCC obtained the accreditation from the Securities and Exchange Regulator of Cambodia (“SERC”) to become the bond guarantor on 22 August 2023 (“Bond Guarantor” or “Guarantor”).

CGCC wishes to provide guarantee on bonds to be listed on the Cambodia Securities Exchange.

CGCC is seeking to engage a Cambodian legal counsel (“Legal Counsel”) to perform the services as described in the scope of work.

 

High-ticket Loans of $50,000 Issued as Credit Guarantee Scheme Kicks off

To boost startups and SME entrepreneurs, more high-ticket (above $50,000) loans without property collateral are now being issued by microfinance institutions (MFIs).

The main reason behind this is the take-off of the Credit Guarantee Corporation of Cambodia (CGCC) for SMEs. Normally, MFIs would only give small-ticket loans between $1,000-$3,000 without property collateral.

In the last decade, the higher the loan amount more would be the property collateral asked for. So looking at data from the fourth quarter of 2024 from the Cambodia Microfinance Association (CMA), for tier-1 loans less than $3,000 — 85 percent of these loans were issued without property backing it as collateral. Then for tier-2 loans between $3,001-$10,000 – 22 percent of loans were issued without collateral. And for tier-3 loans between $10,001-$50,000 – only 19 percent of such loans were issued without property collateral.

So far the data is following the expected trend as in past years. But if one were to look at tier-4 loans – which are above $50,000 – as high as 40 percent of loans were issued without property collateral.

And this is primarily because the CGCC in a bid to promote new ideas and new businesses has stepped forward to guarantee loans amounting to $164 million to 1,928 micro, small and medium enterprises (MSMEs) in the last three years. CGCC CEO KL Wong told Khmer Times that guaranteeing such loans has resulted in SMEs creating jobs. “The loans we’ve guaranteed have resulted in more than 52,000 new jobs in Cambodia from the SMEs we support,” he said.

Heng Bombakara, First Deputy Director General of Banking Supervision, National Bank of Cambodia (NBC), also said that the creation of CGCC is an acknowledgement of the vital role SMEs play in the economy. “SMEs represent 70 percent of employment opportunities in the country and contribute 58 percent to our country’s GDP. And these SMEs operate in diverse fields like agriculture, industry and services; and CGCC has been created to give a boost to this sector,” he said at a recent event.

Mindful of the diversity of SMEs in the country, CGCC guaranteed as much as 50 percent of loans for SMEs in services and trade, 3 percent from agriculture, 7 percent from industry and the remaining 40 percent to other miscellaneous SMEs.

CMA said that many of its members, including LOLC Microfinance and AMK Microfinance are participating financial institutions in the CGCC’s scheme. CGCC saw its highest loan guarantee activity in March 2022 – when it guaranteed as much as 91 businesses for $8.3 million in loan.

CGCC CEO Wong said that this pace of lending was maintained in 2023 where the state-owned enterprise guaranteed $72 million in loan amount for 943 accounts.

Credit to: Khmer Times, Published on 24 April 2024

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