The Council of Ministers on Friday approved a draft law on leasing that would allow financial institutions to lease equipment to businesses that can’t afford the collateral needed to borrow money to purchase materials, according to officials.
If passed by the National Assembly, the law would allow small and medium-sized enterprises, or SMEs, to lease equipment directly from banks or leasing companies, National Bank of Cambodia Director Tal Nai Im said.
The law, which is expected to go before the Assembly shortly, will give businesses access to equipment they need, but are otherwise unable to afford, according to the International Finance Corporation, a private-sector wing of the World Bank.
“If passed, it will be financial leasing that will help SMEs have [access to the] means of production, machinery, movable assets,” Tal Nai Im said Monday.
“It is a long-term contract between the lessee and the lessor to develop their business,” she said, adding that the leased equipment still belongs to the leasing institution.
CPP lawmaker Cheam Yeap said that the draft law will strengthen the small business community and in turn benefit larger businesses in Cambodia.
“The macro-economy cannot be strong unless the micro-economy is strong,” Cheam Yeap said, adding that the leasing law would particularly benefit the agriculture sector, and that leasing rates will be low.