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Major Banks To Provide Loans for Smaller Enterprises

Cambodia Public Bank and ANZ Royal will provide loans to small and medium businesses, through a program with the UNDP and International Trade Center.

The loans will be available from October 2009 and will focus on 100 agricultural-related businesses. The two banks were selected from some other banks that had an interest in offering loans to small and medium enterprises, said Hin Wisal, UNDP assistant country director.

The UNDP is working with the International Trade Center to provide technical support to banks and businesses for the 18-month project. The Agence France de Development will provide credit guarantees for two partner banks.

“It is very important for SMEs to get formal loans from commercial banks to extend their growth,” Wisal told VOA Khmer. “To support policy development, we need to promote formal access to credit.”

Trade experts and economists say Cambodia’s small and medium enterprises are currently driving the economy. But these businesses lack the formal financial support they need to expand, because banking and finance in rural areas are not fully developed.

Studies show that of around 64,000 small and medium enterprises in Cambodia, 80 percent don't get loans from banks. Informal loans, meanwhile, lead to financial problems down the road.

The bank-loan project will provide financial management training and guidance to enterprises. Under the project, the two banks will be able to evaluate strength and weakness of the businesses.

“More and more customers will seek a loan from a bank rather than other sources,” Stephen Higgins, chief executive officer of ANZ Royal said. “We make money, and they make money.”

Robert van Zwieten, director of capital markets and the financial sector for the Asian Development Bank, encouraged more banks to turn their eyes to small and medium businesses.

“It’s going to be far more interesting when you provide loans to SMEs, because they grow quicker, and SMEs are seen as the biggest generators of jobs,” he told VOA Khmer by phone from Singapore. “As a bank, if you have done a great service to your respective customer then you will have a long relationship for a long time to come and hopefully a profitable one. It will be beneficial for the country.”