Posts Tagged ‘financial crisis’

Central Bank spent $6 million to stabilize riel value

Posted by admin on September 23rd, 2009

In a bid to stop dropping the devaluation of Cambodia’s national currency, the National Bank of Cambodia (NBC) sold US$6 million to make the value of the riel stable and wanted to retain riel value at about 4,000 riel to every dollar.

The National Bank of Cambodia is the Central Bank which is an autonomous public entity of a commercial and industrial nature. Its principal mission is to determine and direct the monetary policy aimed at maintaining price stability in order to facilitate economic development within the framework of the Kingdom’s economic and financial policy.

The lack of US dollars flowing through the Cambodian market is because of a major decline in the garment sector, tourism industries and limited agriculture production.

Therefore, commercial banks, licensed money changers and listed businesses would be able to buy dollars from NBC.

In early August, the NBC bought US$2 million worth of riels daily for five days after the local currency hit a low of 4,191 against the greenback during the first week of the month. It is necessary for the Central Bank’s policy to inject foreign currency into the market to stop the devaluation of national currency. (more…)

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Draft law on financial lease passed

Posted by admin on July 5th, 2009

On Wednesday, May 27, 2009, the National Assembly passed unanimously the draft law on financial lease that is allow banks to issue leases for equipment, machinery and vehicles to business and enterprises in the wake of the global financial crisis. This law does not apply to land or real estate.

Chea Chanto, governor of the National Bank of Cambodia, was quoted by the Phnom Penh Post as saying that “Currently, banks in Cambodia dare not grant long-term (five- or 10-year) loans to businesses because they are worried about losing their money, and this is an impediment for entrepreneurs to expand businesses and-small-and-medium enterprises (SMEs),” adding that “the draft law on financial leases will enable businesses and SMEs in Cambodia to obtain a long-term source of capital from the banking and financial system with limited collateral.”

Stephen Higgins, CEO of ANZ Royal Bank, said that the banking structure in Cambodia leaves too much risk for banks to handle a large lease portfolio, reported the Cambodia Daily.

Chea Chanto explained that financial leases refer to the leases of assets and properties over the long term, between a lessor (a licensed bank or lease company) and a lessee (a developer, manufacturer or other customer). He added that financial leases could include properties such as machinery and all kinds of equipment, but excluded land and buildings, reported the Phnom Penh Post.

Jim Swander, an independent financial consultant, said that the new leasing law will not help as many small and medium enterprises as some might think, reported the daily.

“In some ways it’s a good move, but it isn’t going to help the people it was designed to help,” said he. He added that leases can be more risky for banks because leased items can be moved or stolen, unlike real estate, which is often used as collateral in loans.

Yim Sovann, Sam Rainsy Party parliamentarian, said he supported the law. “I appreciate the government for creating this law, as the country is suffering from the global financial crunch,” he said. “It will help develop Cambodia’s SMEs, which contribute about 65 percent to GDP and employ 85 percent of the entire workforce,” reported the phnom penh post.

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ADB granted $59.4 m in loans to Cambodia

Posted by admin on July 5th, 2009

In response to fight against the global financial crisis, the amount of $59.4 million in concessional loans has been granted to Cambodia by Asian Development Bank (ADB).

The money has been made available through the bank’s Asian Development Fund (ADF), which received a $400 million boost Tuesday as part of a much broader $3.4 billion fiscal spending package approved by the bank’s directors, the Phnom Penh reported.

According to the Phnom Penh Post, The ADF resources are intended to finance key development investments in those low-income countries that are among the most fiscally constrained in responding to the crisis.

ADB Country Director for Cambodia Arjun Goswami was quoted but the Phnom Pen Post as saying that the Cambodian government was currently determining which sectors most needed the additional economic stimulus to offset the impact of the economic crunch. “We haven’t gone through the list yet to nail down exactly which ones.”

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Lending loan available for American businessmen

Posted by admin on July 3rd, 2009

Despite the global financial crisis, US president Barak Obama issued a new release on June 13, 2009 from Washington D.C to decide to make business loan available for American investors who are making investment in Cambodia. It is expected that this decision is to encourage more private companies from America to ask for commercial loans to do business in Cambodia.

Khieu Kanharith, Minister of Information and Government’s spokesman, said that he welcomes this decision and regards it as a way to encourage more commercial businessmen from United States of America to invest in Cambodia since America is a major partner of Cambodia, reported Khmer-language newspaper, Rasmei Kampuchea.

Chheang Von, lawmakers and chairperson of the Commission of Foreign Affairs of the National Assembly, said that America’s decision is a big encouragement for Cambodia and facilitation for trade and investment related to international cooperation between Cambodia and other countries, especially United States of America, which is the powerful country of the world, continued newspapers.

Khieu Kanharith added that though the funding aid from America to Cambodia is a small amount, but it has assisted Cambodia a lot in different international institutions. In addition, Obama’s decision is another step in order to push for more American businessmen in Cambodia, reported paper.

Lending loan to American investors to do business in Cambodia is because that Cambodia is no longer “a Marxist-Leninist country” under the terms spelled out in the Export-Import Bank Act of 1945, which established the government agency charged with promoting the export of American goods and services.. So far, there are six countries that the United States of America still does not offer commercial loans for investment, including Burma, Cuba, Iran, North Korea, Sudan and Syra.

The US Export-Import Bank authorized US$243.74 million to ASEAN last year in loans, guarantees and insurance, most of which – $234.73 million – went to Singapore.

“I think that President Barack Obama removed our country from his trade blacklist because he recognised our development, and this will pave the way for businesspersons to get loans from American banks to do business here,” Cheam Yeap said, quoted by the Phnom Penh Post as saying.

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