Bank Closures Tie Up Squatter Relocation Loans

Um Kosal said she wasn’t too upset about losing her job at a garment factory, her friends and the house where she had long lived with her aging father to make way for a government-planned riverfront garden and road along the Bassac River.

She said she looked forward to a better life at a new municipal development community near the Prey Sor prison, about 17 km southwest of the capital, where she moved 10 days ago.

But now all she has at the Tuol Rokakos development is a tiny income—usually less than 2,000 riel per day—from selling sugar cane juice and an empty 120-square-meter plot. She lives under a plastic sheet and sleeps on a cot on the ground.

“I joined a seminar organized by the municipality, and I was told that I would get a $400 loan for housing,” Um Kosal said. “But I have heard nothing about when I can get that loan…I can do nothing if they don’t lend me money.”

Um Kosal is one of the first group of 296 Bassac River squatter families who were selected for a relocation program set up by the city and the UN Center for Human Settlement. Upon relocation, the families were slated to receive a housing loan of up to $400 each from the Urban Poor Development Fund, established by the city, NGOs, squatter communities and international donors to help the city’s 170,000 squatters.

To receive the loans, each family is required to pay a 10 percent deposit to the development fund. But those deposits are being kept at the Agriculture and Commercial Bank, which closed Dec 9. Withdrawals have been impossible since the bank’s closure.

“Unless people pay the deposit, they are not eligible to receive the housing loans,” said Man Chamnan, director of the self-help group Solidarity for the Urban Poor Federation, which processed the loans for the poor. “But how we can pay the deposit when we cannot withdraw our money from the Commercial Bank?”

He said nearly $22,000 was deposited at the Agriculture and Commercial Bank. It was collected from hundreds of families at 159 squatter communities, including $1,150 in deposits from the 296 Bassac River families.

Municipal cabinet chief Man Chhoun, who is also the fund’s chairman, said Wednesday the money from the fund was going to be put at the Foreign Trade Bank and was safe, but he recognized that squatters are in trouble with the commercial bank’s sudden closure.

“Now we have some problems with the relocation project,” he admitted.

According to the UN Center for Human Settlement, the relocation program has resettled more than 440 squatter families to three other new development communities on the outskirts of Phnom Penh since its start in 1998.

While under the program the municipality buys land for the relocating families and gives them initial safety nets a like a communal water tank, rice and plastic sheeting, the center develops infrastructure within the relocation communities, including roads, drainage, pump wells, toilets and electricity.

NGOs also provide health and other support services for the squatters, including small-scale loans and savings plans. All the resettling people need to do is to build their own houses with a help of loans, said Chap Sanoeun, the center’s community facilitator.

“We never, ever, had this kind of problem before,” he said of the sudden stall in funds caused by the bank closures. “We’ve been talking about how to find a way to solve the problem….I think no more [squatter] community people would trust our savings and development idea.”

The Agriculture and Commercial Bank is one of 11 banks that the National Bank of Cambodia closed early this month after assessing banks’ financial situations and management structures. Officials of the central bank have said that all the 11 banks failed to meet requirements set by the new Banking Law, the major one being to increase minimum capital from $5 million to $13 million.

Panicked customers have since flocked to the bank’s compound to demand their money back, but no management officials have appeared at the bank.

Moreover, the central bank repeatedly has said the law states that repaying the deposits is the responsibility of a liquidator to be appointed for the commercial bank, meaning a possible delay of months before depositors will begin seeing money.

With plans to develop a riverfront park and a road along the Bassac River from Monivong Bridge to Hotel Sofitel Cambodiana, the municipality still intended to relocate the second group of the 296 families to the Tuol Rokakos community on Wednesday, despite the problems with the bank.

Municipality officials have discussed the issues with squatter community representatives, Man Chhoun said.

“We, the municipality, have decided to report the issue to the Council of Ministers and the National Bank to help our poor people,” he said.




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