French Financial Institution Bullish on Cambodia

For Claude Periou, CEO of the French financial institution Proparco, the economic situation in Cambodia bodes well.

“It’s a country in the process of turning things around,” he said at a press conference on Friday in Phnom Penh.

“When we look at the growth rate of 7.4 percent, at the slow but gradual improvement of people’s individual income, at the still modest but significant development in the export sector, the growth in tourism…I say that Cambodia is making progress on the road to economic growth…although the gap with some of its neighbors remains wide.”

This is why Proparco would be open to increasing its involvement in Cambodia if appropriate projects in infrastructure or other sectors came along, Mr. Periou added.

Proparco is a public-private fund operating in 60 countries, providing loans for projects of France’s French Development Agency [FDA], especially in the business and banking sectors.

Since 1996, Proparco has lent $87 million in Cambodia, of which $54 million remains to be reimbursed. Those loans come with strict accounting control and reporting requirements, which are mandatory for all loan recipients, Mr. Periou said after the press conference. Projects have included loans to help the development of microfinance institutions such as Acleda, which has since become a bank.

In the mid-2000s, Proparco contributed to the expansion of the international airports in Phnom Penh and Siem Reap City in partnership with Cambodia Airports.  Earlier this year, it lent $10 million to Golden Rice—the country’s leading jasmine rice exporter—as part of the FDA’s rice marketing program.

Although Proparco is an investment fund, its goal is not high return but “high impact,” Pierre-Alain Pacaud, Proparco’s manager for North and Southeast Asia, said at the press conference. “We have very good impact with small loans. In microfinance, $3 to $6 million can make a world of difference…the size of a [loan] does not always reflect its impact.

“In the coming years, our objective will be [to lend] between $15 and $20 million” in Cambodia, Mr. Pacaud said. Proparco is now looking into projects in the garment sector, he added.

The FDA has long been involved in the garment sector, according to Andre Pouilles-Duplaix, FDA director for Cambodia and Laos. For instance, FDA funded the Health Insurance Project, which has led to more than 6,000 garment workers having insurance coverage on a volunteer basis. And today, a center is being built to train Cambodian employees for management positions, Mr. Pouilles-Duplaix said. The project is implemented by the Garment Manufacturers Association in Cambodia through an FDA loan.

This year, the FDA has invested $67.5 million in projects in Cambodia, Mr. Pouilles-Duplaix said. There are plans to spend between $67 million and $108 million in the country per year over the next two years, he added.

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