Posts Tagged ‘lending loan’

ADB grants $10 M loan for financial system reform

Posted by admin on December 9th, 2009

According to the Asian Development Bank (ADB)’s announcement, it would be granting a US$10 million soft loan to develop and reform the Cambodian government’s financial system such as the establishment of a financial intelligence unit at the National Bank of Cambodia to combat money laundering, strengthening of supervision of the banking sector, installation of an IT system for central bank operation, and the development of a mechanism to resolve commercial disputes.

The latest reforms are part of the ongoing ADB second sector program support – which began in 2007 – to assist Cambodia to further develop its financial system.

In statement, Samiuela Tukuafu, Senior Financial Sector Specialist in ADB’s Southeast Asia Department said that “Cambodia has taken many positive steps to develop its financial sector since the instability of the 1970’s and 1980’s, but still faces policy gaps, capacity constraints and other challenges,”

“The ongoing program builds on earlier actions to improve the legal and regulatory environment, to boost sector capacity, to improve disclosure standards and financial transparency, and to build up infrastructure,” he added.

According to the statement, ADB’s loan from its concessional Asian Development Fund has a 24-year term, including a grace period of eight years, with an interest rate of 1% per year during the grace period and 1.5% for the rest of the term. The National Bank of Cambodia is the executing agency for the current program phase which runs from January 2009 to December 2009.

With the achievement of all reform milestones in the third subprogram, a fourth round of measures will be implemented starting in January next year, with the full sector program due for completion in December 2010, read statement.

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ADB gave $24.5 million for labor skill improvement

Posted by admin on November 18th, 2009

Given the lack of skilled labor and investment in vocational training in Cambodia, The Asian Development Bank approved a US$24.5 million grant for Ministry of Labor to improve the government’s technical and vocational education training (TVET) system.

According to the bank’s statement, this grant will initially fund training in mechanics, construction, business services and information and communication technology in the government’s technical and Vocational Education Training Program before moving onto other industries.

The global financial crisis has underscored the vulnerability of Cambodia’s industrial sectors. Agriculture, manufacturing and the services industry account for 85 percent of country’s employment and 92 percent of its gross domestic product (GDP).

Wendy Duncan, the principal education specialist in ADB’s Southeast Asia Department, said in statement that “the government recognizes that the issue of productivity must be addressed, as must the need to attract new industries to increase the diversification of the economy.”

According to ADB, Cambodia’s government will contribute US$3 million toward the project’s total cost of $27.52 million.

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MFIs loan increased 5.46 percent Q3

Posted by admin on November 18th, 2009

Cambodian Microfinance Association (CMA) released its figures that during the third quarter of this year, Cambodia’s microfinance institutions (MFIs), which included 21 MFIs and small loans from ACLEDA Bank, increased 5.46 percent to 448.1 million, following a 2.7 percent drop in outstanding loans in the second quarter.

According to CMA’s data, non-performing loans (NPLs) declined 1.9 percent over the period to 1.48 percent, or US$8.7 million.

“We have seen the economic situation begin to recover, and people have begun to expand their businesses, so they need capital again,” Hout Ieng Tong, CMA President, was quoted by the Post as saying.

“The slash of interest rates of between 0.2 and 0.5 percentage points by MFIs in early September was also a factor,” said he. He added that interest rates are currently between 1.5 and 2.8 percent per month at MFIs.

During this period, the total loans increased but the number of borrowers was down 14.7 percent to 883,087 down from more than 1 million three months earlier, according to the report.

The report show that CLEDA bank’s outstanding portfolio of small loans was up 5.49 percent to US$172.2 million, while the drop of its NPL ration was from 1.63 percent in 2nd quarter to zero at the end of the September of 2009.

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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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