Commercial banks are playing an important role in providing loans for Cambodia’s small and medium enterprises to drive the economic growth, but small enterprises lack the formal financial support to expand their business, it is because the banking and financing sector do not access the remote rural areas. According to studies, there are around 64,000 SMEs in Cambodia. And only 80 percent don’t grant loans from banks and microfinance, informal loans lead to financial problem.

Recently, two local Cambodian banks- Cambodia Public Bank and ANZ Royal- have been chosen to provide loans to small and medium business through a program, titled “Access for Finance for SMEs”, with the United Nation Development Program (UNDP) and International Trade Center (ITC). And the loans will be granted to 100 agricultural-related businesses by starting from October 2009.

During the implementation of 18-month-program, the UNDP is working with the International Trade Center to give technical support to banks and business. The Agence France de Development (AFD) will provide credit guarantees for two partner banks.

UNDP Assistant Country Director Wisal Hin said that “It is very important for SMEs to get formal loans from commercial banks to extend their growth,” adding that “To support policy development, we need to promote formal access to credit,” VOA news reported.

There are 96 percent of Cambodian business were micro-enterprises, but that the number of business with between 10 to 20 employees has been nearly doubled over the past two year, while those with over 20 employees increased by almost 200 percent, according to survey released in April by the International Finance Corporation and the Asia Foundation.

Financial management training and guidance to enterprises will be provided by two bankers, and they will be able to evaluate strength and weakness of the business.

Stephen Higgens, chief executive officer of ANZ Royal said that more and more customers will seek a loan from a bank rather than other sources, he added that “we make money, and they make money,” reported VOA.

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, continued newspapers.

“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.”

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