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New tourism-recovery loans slowing: SME Bank

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The total volume of loans provided under the TRCS as of April 30 stood at 35.64 per cent of the $150 million allocated for the tourism co-financing scheme. Hong Menea

New tourism-recovery loans slowing: SME Bank

A total of $53.46 million in loans have been disbursed to 346 tourism-linked businesses through state-owned Small and Medium Enterprise Bank of Cambodia Plc’s (SME Bank) $150 million Tourism Recovery Co-Financing Scheme (TRCS) as of April 30, since the loans began to be offered in July.

These numbers had been $41 million and 288 businesses as of December 27, according to SME Bank CEO Lim Aun, which respectively account for more than three-quarters and 83 per cent of the April 30 total.

Explaining the slower pace of new TRCS loans in an interview with The Post on May 14, Aun suggested that business owners have been more hesitant to take out loans amid uncertainty in the sector given the current international context, despite the recent tourisms gains registered by the Kingdom.

“They [business owners] understand that although the sector has seen improvements, it is chiefly supported by local visitors – strong recovery momentum would only be possible with a large influx of international tourists,” he said.

Aun pointed out that the total loan volume as of April 30 reached 35.64 per cent of the $150 million allocated for the TRCS. Broken down by category, hotels accounted for the most funds, at 29 per cent, followed by guesthouses (25%), restaurants (31%) and other businesses (15%), he noted, adding that 41 per cent of the businesses are women-owned.

SME Bank was established in February 2020, and lends directly and through co-financing schemes with a range of participating financial institutions (PFI).

One of these schemes is the TRCS, which was rolled out on May 17, 2022 to provide a lifeline for tourism-linked businesses – including those involved in associated value chains – that are deemed to have been significantly impacted by the Covid-19 crisis.

The scheme’s lending rules and procedures were formally established on July 1, which opened the door for loan applications.

It was financed by a counterpart fund between the government and the PFIs, with $75 million of the national budget to be disbursed in the form of loans issued by the SME Bank, and the other $75 million through loans made via the partner lenders, which comprise commercial banks and microfinance institutions (MFI).

Key offerings of the TRCS include a maximum interest rate of 6.5 per cent per annum, a 24-month grace period on principal payments, loan term of up to eight years, loan amount of up to $600,000, and the option of receiving funds in either riel or US dollars, as Aun reported to The Post on October 9, noting that some of these limits had only been changed recently.

Royal Academy of Cambodia economics researcher Ky Sereyvath hailed SME Bank as an “active” contribution by the government to build up local SMEs and promote sustainability among these smaller businesses.

He added that the state-owned enterprise not only provides vital financing, but also facilitates access to business-specific technologies and technical knowledge, as well as analyses that could help “our SMEs to grow even better”.

Earlier this year, Aun revealed that SME Bank had prepared an additional sum of more than $220 million to loan to the Kingdom’s SMEs, with a focus on women-owned businesses as well as priority sectors like manufacturing, processing, agriculture and industry.

Meanwhile, the Ministry of Tourism reported 837,446 international visitors to Cambodia in the first two months of the year, equivalent to a 778.6 per cent rise on the corresponding period last year, but a 32.72 per cent dip compared to the same time in 2019.

Thailand accounted for the majority of these visitors, at 274,950 or 32.8 per cent, which was up 950.7 per cent year-on-year, followed by Vietnam (131,196; 15.7%; up 396.4%), mainland China (79,435; 9.5%; up 1347.2%) and Laos (41,040; 4.9%; up 16719.7%).

Historically, January and February have collectively accounted for an average of 18.7313 per cent of the full-year total of visitors – using the 2004-2019 period as the reference point – offering a rough estimate of 4.471 million for the full-year 2023 figure, which would exceed the ministry’s forecast of four million.

It should be noted that this estimate does not take into account any of the anticipated boosts from post-Covid recovery, the “Visit Cambodia Year 2023” campaign, or the Southeast Asian (SEA) Games and associated events scheduled for May and June, which when combined may very well bring that number across the 4.5 million line.

In 2022, Cambodia received 2.277 million international visitors, up 1,059 per cent compared to 196,495 in 2021, but still down 65.56 per cent from the record-breaking 6.611 million logged in 2019.

A visitor in the context of these statistics is a person travelling to the Kingdom, “staying at least overnight and not exceeding a specific period for leisure, recreation, business and other legal tourism purposes; and not relevant to the purpose of permanent residence or any remunerated activities”, as defined by the ministry.


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