Paying off debt remains top priority for Cambodians
Paying off debt remains top priority for Cambodians
Paying off debts has remained a top priority for Cambodians across all demographics, according to Consumer Report Cambodia 2024.
The set of financial goals also included reducing unnecessary expenses, saving for a major purchase, increasing income through side jobs or business, saving for retirement, investing in stocks or funds alongside building an emergency fund.
“In 2024, the lending financial priority across demographics in Cambodia is paying off debt. Younger individuals below 18 focus on reducing expenses and increasing income through side jobs, while those aged 35-44 and 25-34 are primarily concerned with debt repayment.
“For those over 65, saving for retirement is significant. Both males and females prioritise paying off debt and reducing unnecessary expenses. Across all regions, paying off debt is a common goal, but in Kampong Speu, increasing income through side jobs or business stands out as notable,” the report pointed out.
Speaking to Khmer Times, Seng Hon, a research fellow with Centre for Economic Studies, Fudan University, said the middle-class in the country continue to reel under the shadows of economic plight caused by the pandemic and it would take a few more years to clear off the debts that they have accumulated during the pandemic period.
“The past two years have not been really good for self-employed, low-income as well as middle-class individuals in the country.
“Their earning graph hit remarkably low during the pandemic, and all self-employed did incur debts during the time. Definitely, there has been a recovery. But the accumulated debt still haunts them and they are paying off them slowly.”
He added that the situation is much worse for those who fell prey to loan shark rackets. “Many studies have shown that there has been a substantial rise in illegal lending in the country, which has added to the debt woes of common people.
“The National Government along with the National Bank of Cambodia is taking right steps to tackle the growth of these illegal lenders and I am hopeful that innocent victims could be rescued from the clutches of these loan sharks.”
A survey conducted by the Asian Development Bank (ADB) during the middle of the pandemic period showed that Cambodians suffered a 26 to 50 percent decrease in their income, affecting their spending power.
It found that “nearly all households experiencing financial difficulties had to reduce consumption, about half drew down cash and savings, while roughly a third did the following: borrowed from friends or relatives, delayed payments and debt repayment and applied for government aid.”
In total, the 1,026 Cambodians surveyed from both rural and urban areas revealed that 77 per cent of their household incomes had decreased.
Nineteen percent of those surveyed had a 1-25 percent decrease in income, 12 percent experienced a 51-75 percent reduction and 11 percent reported a drop of more than 75 percent. Self-employed income and income earned from household businesses were affected the most.
Cambodians can now request a free annual personal credit report through the Credit Bureau Cambodia. The move is expected to empower the citizens by helping them monitor their credit health alongside detecting errors to secure loans on better terms and conditions. It is also expected to boost financial literacy and responsible borrowing.
