Low-rate travel-sector loan scheme set for June
Low-rate travel-sector loan scheme set for June
State-owned SME Bank has announced that it will launch the Tourism Recovery Co-Financing Scheme (TRCS) with capital funding of $150 million to provide the embattled industry with low interest rate loans to speed up its recovery from the Covid-19 crisis, with the scheme expected to launch in June.
The Small and Medium-sized Enterprise Bank of Cambodia Plc, or SME Bank, held a meeting about TRCS on April 20 with financial sector stakeholders and Ministry of Economy and Finance officials to discuss ways to accelerate the launch of the project.
Cambodia Microfinance Association (CMA) Communications Department director Kaing Tongngy noted that the scheme’s framework and terms are similar to the earlier-launched SME Co-Finance Scheme, but has been tailored specifically for tourism-related businesses such as hotels, food and beverage suppliers and related service-based industries who continue to be affected by Covid-19 and the relative lack of visitors to the Kingdom.
The TRCS will kick off with $150 million in funding, half of which has been supplied by the government, with the other half from participating banks and microfinance institutions.
A May 6 deadline has been set for institutions who meet the criteria to apply to the scheme.
Tongngy said that, while it is not yet possible to estimate the impact of the TRCS, “SME Bank has had quite good experience [administering] previous co-financing schemes.
“Leveraging its current experience, expertise and relationships with existing banks and microfinance institutions will be crucial to ensure quick [economic] recovery by providing struggling tourism businesses with access to financing.”
Sok Voeun, CEO of microfinance institution LOLC (Cambodia) Plc, which has joined the co-financing scheme with the SME bank, said that the institution will submit an application to join the TRCS “in contribution to the recovery of the tourism sector”, despite the “uncertainty” remaining over the Covid-19 pandemic.
“I think that the initiative is very helpful for the tourism sector to survive and maintain their businesses. At the same time, it will also benefit other related sectors and create jobs for the people,” he said.
Pacific Asia Travel Association Cambodia chapter chairman Thourn Sinan said he welcomed the initiative as a “very proactive” move from the government to aid recovery of the tourism sector during a “tough” time.
“The tourism sector will be in need of funding for business recovery now that the Covid-19 situation is easing … With [TRCS] funds, they can also shape their business model in a flexible way in response to the Covid-19 situation,” he said.
The maximum interest rate of TRCS has been set at 6.5 per cent per year, with loans of up to $400,000 and loan terms of up to seven years.
He said the fund should be utilised to “finance renovations or improvements of impacted businesses for reopening rather than for expansion or entirely new businesses”.
