Credit where credit is due
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The government officially issued a sub-decree to establish the Credit Guarantee Corp Cambodia (CGCC) under the technical and financial support of the Ministry of Economy and Finance (MEF).
The initiative behind establishing the corporation is to align with the government’s response mechanism to mitigate the impact of COVID-19 on businesses and workers in Cambodia during
the health crisis and to promote economic growth and help businesses to rebound.
The CGCC will play a role in providing a credit to companies and businesses in prioritised sectors that are severely affected by COVID-19 in order to enable them to increase the possibility of accessing finance for their working capital, ensuring a sustainable business and aligning with a new context for the business after the Coronavirus is beaten.
The sub-decree number 140, signed by Prime Minister Hun Sen, stated that the CGCC is a public enterprise and a non-banking financial institution.
Its mission is to provide professional credit guarantees with that align with international compliance to solve the issues and challenges in the credit market and bolstering financial inclusion.
The CGCC will provide a credit guarantee service (CGS), risk assessment level and risk management on the credit guarantee. The service will collaborate with banking, finance and development partners to provide a CGS, manage clients’ incomes and expenses and their operations.
It will also provide support on capacity building, consulting, technical and information backup under the credit guarantee framework and ensure the CGS is transparent and effective. Its headquarters will be in Phnom Penh and can be expanded if needed.
CGCC registered capital of $200 million. It is part of the state budget and will inject more capital if needed from the government. The fees will be generated from the incomes from the operations of the credit guarantee and the resources from the lending, issuing securities etc among other agents.
The government officially issued a sub-decree to establish the Credit Guarantee Corp Cambodia under the technical and financial support of the Ministry of Economy and Finance. KT/Chor Sokunthea
The CGS must have affordable fees, be competitive and attractive and receive support from the banking and finance and other companies and enterprises, the sub-decree said.
MEF’s Secretary of State Ros Seilava had earlier said that the government will make the CGS operational by October or November. He said the government has a reserve budget of $500 million of which $200 million is for the CGS and $300 million to allocate to the SME (small and medium enterprise) Bank of Cambodia through the SME Co-Financing Scheme.
“We have to work on some tasks to make the Credit Guarantee Corporation Cambodia operational soon because we are setting up the head of the entity, its legal framework, sub-decrees and the Credit Guarantee Scheme policy. We will think of how to make it operational soon,” Seilava said.
Seilava added that the ability to assess risk must be carried out thoroughly first to ensure the loan can be repaid. He added that Cambodia has never had any CGS in Cambodia, so there is no skill in the sector. “Therefore, we have to develop more expertise for this scheme.”
As of Oct 7, the SME Bank of Cambodia had received 592 SME Co-Financing (SCFS) applications from participating financial institutions (PFIs) totalling more than $75million of the SCFS fund size of $100 million.
The SME Bank of Cambodia has approved loans to an estimated 532 customers, totaling $67.4 million as of the end of September this year. These loans are from the SCFS. Out of the total approved loan, $63.4million has been disbursed to 508 customers.
The SCFS fund will be fully exhausted before the close of the fund date in March 31, 2021. Out of 33 PFIs, 22 have submitted loan applications, among which are 17 commercial banks, three microfinance deposit-taking institutions, one microfinance institution and one specialised bank.
Article Source:Khmer time