A coalition of 103 civil society organisations (CSOs) reiterated a call for the government to issue a set of guidelines for all financial institutions in Cambodia to suspend loan payments, set interest rates to zero per cent and waive accrued interest for at least three months to help borrowers during the latest Covid-19 pandemic surge.
The move would allow debtors to remain at home and stay safe during the pandemic, free of the fear of losing their land or housing over unpaid debt, according to the CSOs’ April 6 joint statement.
“We are asking the government to help millions of people by ordering the profitable financial sector to help shoulder some of the economic burden borne by borrowers,” they said.
The statement noted that loan restructuring efforts over the past year left much to be desired with just 10 per cent of microloans reportedly being restructured.
Among the signatories were Cambodian Association for Human Rights and Development (Adhoc), Cambodian League for the Promotion and Defence of Human Rights (Licadho) and Centre for Alliance of Labour and Human Rights (Central).
Cambodia Microfinance Association (CMA) Communications Department director Kaing Tongngy criticised the “impossible” demands as an ineffective way to combat the debt issue.
He told The Post: “Covid-19 has delivered a sweeping shock to the livelihoods of a considerable portion of the general population and we’ve been working to alleviate the burden of affected clients. But we in the private sector have our limits – we are also affected by Covid-19.
“At the same time, we must be committed to helping other clients, such as depositors and investors, to take out money and invest in the microfinance sector.
“Thus, a blanket suspension of payments for three months is an impossible approach, and to make such demands means suggests a muddled understanding of the financial sector in Cambodia.”
Tongngy said CMA members, which include four banks, have restructured more than $1.4 billion in loans for nearly 300,000 borrowers since the National Bank of Cambodia (NBC) on issued a circular on loan restructuring during Covid-19 back in March 27, last year.
He noted that loan restructuring could only be processed following individual requests based on conditions set in the circular.
Debtors are allowed to pay either interest or principal, he said, adding that most have requested between three and six months’ grace period and agreed to pay only interests.
“We have other mechanisms to make things easier for clients and ensure that the solutions we offer are tailored to the specific needs of each one.
“We cannot use a single solution for two million people, so the three-month across-the-board suspension is not an effective solution for the financial sector or customers,” Tongngy said.
NBC issued the circular to all financial institutions to restructure credit for loans in four priority sectors ravaged by the pandemic – transport and logistics, tourism, garments and construction.
Effective until mid-2021, the directive aims to maintain financial stability, support economic activity and ease the burden of debtors facing declining revenues during the ongoing outbreak, according to NBC.
