Access to finance remains a key barrier to small and medium enterprise (SME) growth in Cambodia, as many of them rely on personal finance rather than bank loans, which can affect long-term commercial and financial sustainability.

AmCham Cambodia and the Asian Vision Institute held an event last week under the theme "Supporting SMEs: Legal and Financial Insights for Sustainable Growth". It brought together experts to address the challenges encountered by SMEs in sustainably raising funds.

Rath Sophoan, CEO and Country Head of Maybank Cambodia, said that the banking industry continues to offer credit to SMEs and lessens their burden by delaying repayments and giving credit plans, even if the SME sector was severely impacted by Covid-19 and has not yet fully recovered.

“The banking industry still offers a credit scheme to small- and medium-sized businesses since it’s the backbone of Cambodian development,” he said. “We are a developing nation, so it plays an important role in developing our economy.”

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He said that bank regulations on SMEs were a timely move by the government and it encourages banks to provide credit to the priority sector in SMEs. In addition, the government established CGCC to offer credit to SMEs that are stable but lack a mortgage.

More than $130 million in credit has been provided to businesses through CGCC, particularly to SMEs, he said. Also, more than 30 banks joined the CGCC in the first half of 2023.

He added that the credit scheme provided to SMEs has a risk rating of zero, according to a National Bank of Cambodia announcement.

“It’s really important because it enables the bank to have faith in offering additional SMEs credit schemes,” he said. “In the future, I believe that more banks will provide the credit scheme to SMEs since our economy is rebounded.”

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Sophoan emphasized that as banks constantly work with SMEs now, their understanding and experience will allow financial institutions to have more faith in SMEs.

In 2022, financial services provided credit of roughly $59,000 million to SMEs in Cambodia. As the GDP in the Kingdom is around $28,000, this indicates that the nation has significantly contributed to SMEs, according to Lim Aun, CEO of SME Bank Cambodia.

“When compared to the GDP, it’s equivalent to 200 percent of GDP,” he said. “Also, there are over 3.9 million loan accounts in Cambodia. We may conclude that the country has easy access to capital.”

However, SMEs continue to face challenges. and some are unable to get credit, he said. “SMEs have been marked as a high-risk sector from the banking perspective.”

In Cambodia, the banking sector has been divided into two: commercial banks and MFIs.

He explained that commercial banks often offer credit to large or large-medium-sized corporations, MFIs offer small-scale loans of up to $10,000, and SMEs typically need financing of between $100,000 and $1 billion.

“Commercial banks offer to large corporations since they have enough documentation, but SMEs sometimes lack it,” he said. “So, SMEs are in between and no one looks at them.”

Te Taing Por, President of Fasmec Microfinance Plc, said that access to financing is not a challenge for SMEs, however, paying bank interest is since they cannot generate income.

“We do not have to complain to the bank about the interest if we can generate income,” he said. “However, we need to think about the import from other countries, around $7,000 to $8,000 million each year”

He added that he plans to raise the issue with the government in order to decrease imports and increase the recycling of agricultural products.

“In Cambodia, we first need to cut imports and boost agricultural product recycling since we have a Memorandum of Understanding with China, Korea, and Arab countries,” he said. “However, we still lack products.”