SMEs Have Difficulty Obtaining Credit

Small- and medium-sized enterprises often struggle to obtain loans needed for expansion, as such businesses frequently lack accepted collateral and quality bookkeeping and are discouraged by unofficial payments to government officials that are needed to certify loan documents, participants at a conference on SMEs and loans said yesterday.

The government, businesses and banks need to improve procedures to create more credit opportunities for businesses, which frequently find their growth restricted, said Te Taingpor, co-chair of a government-private sector working group on SME policy.

“SMEs still have not used their full substantial economic potential to contribute to developing the national economy,” Mr Taingpor said at the conference held in Phnom Penh.

He said that about 80 percent of the country’s approximately 320,000 small-to-medium enterprises employed 1 to 10 people, while about 3.5 percent employed between 10 and 100.

The businesses, frequently in the agriculture sector, often need to acquire new machinery to improve quality and expand to new markets but lack the capital to do so, he said.

He said that banks must reduce service fees, provide more information on loans and increase options for collateral beyond land. The government needs to simplify its procedures that help certify documents, and allow SMEs to register.

Matt Gamser of the International Finance Corporation told the conference that SMEs made up 90 percent of the private sector and often had to wait years to save capital to build their businesses.

“This means that companies are not growing fast enough to provide the jobs critically needed for Cambodia’s rapidly expanding labor force” said Mr Gamser, principal of advisory services at the IFC’s East Asia and Pacific department.

So Phonnary, executive vice president of Acleda Bank, said businesses frequently lacked the bookkeeping skills to garner the confidence of banks, while businesses were often discouraged by high unofficial fees charged by local authorities to certify loan documents and land titles needed for collateral.

“They don’t want to borrow the money and go through the bureaucracy,” she said, adding that poor access to loans by SMEs had been an issue for years and would take years to fix.


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