Rules in the works for tourism recovery program loans
The government is developing a set of procedures and conditions for tourism-related businesses to obtain a guarantee certificate from the Credit Guarantee Corporation of Cambodia Plc (CGCC) and receive credit from the $150 million Tourism Recovery Co-financing Program recently launched (TRCS).
TRCS was financed by a matching fund between the government and financial institutions, with $75 million from the national budget to be disbursed in the form of loans issued by the Small and Medium-sized Enterprise Bank of Cambodia Plc (SME Bank) , run by the state. and the remaining $75 million in loans made through commercial banks and microfinance institutions (MFIs).
In a June 24 meeting on the issue, State Secretary of the Ministry of Tourism, Song Tong Hap, stressed that the procedures and conditions must support the TRCS – deployed on May 17 – to restore the tourism industry. tourism and promote growth.
Tong Hap, who also chairs a tourism industry and workforce support sub-working group, noted that the CGCC launched the Co-Financing Guarantee Program (CFGS) on Sept. 22 to provide credit guarantees on business loans, sharing risks with credit institutions and fostering financial inclusion.
The main TRCS offers include a maximum interest rate of 6.5% per annum, a grace period of 12 months, a loan term of up to seven years, a loan amount of up to $400,000 and the possibility of receiving funds in riel or in US dollars. . According to Tong Hap, no collateral is required either.
He believes that the TRCS, combined with the CFGS, will be an important financial tool to quickly align the tourism recovery with the ministry’s expectations that Cambodia will receive seven million foreign visitors and see 11 million domestic trips by 2023.
CGCC Deputy General Manager No Lida said the tourism business must meet a number of conditions, such as: being more than 50% locally owned; be registered with the tax authorities “after obtaining a credit guarantee”; and demonstrate its ability to repay.
He said such businesses can obtain a Letter of Guarantee (LG) by contacting the institution from which they applied for the loan, which will in turn apply for the LG from CGCC.
Thourn Sinan, chairman of IMCT Co Ltd and the Cambodian chapter of the Pacific Asia Travel Association (PATACC), said he believed the procedures and conditions would be “very attractive” to tourism-related businesses, noting that the he industry still faces obstacles in the loan application process. .
“The Ministry of Tourism has really worked hard to help tourism businesses. But in the past, we had some problems, for example when the SME Bank announced an interest rate of 6.5%, but when our members went to ask for a loan, the rate was rather 7, 5%, and more sustainability reporting money was required, and that’s what worries us,” he said.