Cambodia's Financial Environment
Cambodia Weekly Financial News
2024-04-27View Times｜ 1076
Cambodia Weekly Financial News
April 22 ~ 26, 2024
22 April 2024
Cambodia mulls DTA talks with seven countries
Cambodia is mulling Double Taxation Avoidance (DTA) deals with seven countries, including the Philippines, Laos, Myanmar, France, Japan, Morocco, and the United Arab Emirates. Cambodia implemented DTAs with Singapore, China, Thailand, Brunei, Vietnam Indonesia, China’s Hong Kong Special Administrative Region, Malaysia, and South Korea, while DTAs with China’s Macau Special Administrative Region and Turkey are in the process of ratification. It stated in the press release,” DTAs not only avoid double taxation but also play an important role in attracting foreign direct investment and increasing international competitiveness”.They also prevent or eliminate tax discrimination between local and foreign companies, providing mechanisms for resolving tax disputes, as well as mechanisms for exchanging information between state authorities on tax evasion. In Cambodia, double taxation is eliminated by deducting from tax an amount equal to the tax paid in foreign countries by residents in the Kingdom.
Source : Khmer times
22 April 2024
Cambodia gears up for LDC graduation Challenges
Cambodia is now set to have a five-year preparation period for its transition from the LDC status until 2029 as against the earlier set 2027 and it is widely expected that this longer gestation period can help the country prepare better to tide over some of the challenges associated with graduation. While graduation is considered a development milestone for the country, it also means the loss of trade benefits enjoyed by LDCs, including duty-free status under the generalized system of preferences ( GSP) by various countries, especially the EU.” After graduation, Cambodia’s exports would face higher tariff rates, stringent rules of origin, and market competition. As the graduation will have string negative impacts on exports of agricultural products, the loss of the above benefits could limit fiscal space for socio-economic development,” said the Minister.
Source : Khmer times
23 April 2024
MFIs opt for loan restructuring over write-offs, property seizures
Microfinance institutions (MFIs), which service more than 2.1 million households in Cambodia, are now increasingly opting to restructure a loan overwriting it off or property seizures. For the fourth quarter of 2023, MFIs restructured about 4.1 percent of their loan book, as per data from the Cambodia Microfinance Association (CMA). This compares to loan write-offs of only 0.8 percent for the same quarter – as part of a policy decision by the National Bank of Cambodia (NBC) to give more grace period to loan borrowers given the impact of Covid, the global economic slowdown, and other macroeconomic factors. Given the real possibility of a revival in sectors such as tourism, NBC stepped in last year to instruct MFIs to restructure the loans of SMEs operating in sectors such as the hotel industry, F&B, tourism, etc. Certain provinces such as Siem Reap and Phnom Penh have benefited with many SMEs located there – which primarily cater to tourists – being given more time to repay their loans. MFIs say that this grace period given to them has resulted in improved loan repayment rates.
Source : Khmer Times
23 April 2024
Prime minister calls for wider use of digital technology
Prime Minister Hun Manet yesterday called for wider use of digital technology to narrow down inequalities exacerbated by the Covid-19 pandemic. Mr Hun Manet said that digital technology could also help meet the new needs of the people. “Through the use of technology, we can narrow the gap for accessing key opportunities and services, enabling us to share the fruits of development equally with all citizens,” he noted. In this regard, the Royal Government of the 7th Mandate decided to implement the Pentagonal Strategy Phase 1 with five priorities – people, roads, water, electricity and technology. The strategy aims at building a digital economy and society. In addition, the Royal Government is also implementing the Digital Economy and Social Policy Framework of Cambodia 2021-2035, the Digital Government of Cambodia Policy 2022-2035, the Cambodian Financial Technology Development Policy 2023-2028 and the National Policy on Science, Technology and Innovation 2020-2030. In the global and regional context, Cambodia has been actively participating in the implementation of the digital policy agenda to achieve regional and global digital development goals, including ‘ASEAN Digital Master Plan 2025’ and ‘Digital Strategy 2022-2025.’
Source : Khmer Times
24 April 2024
High ticket loans of $50,000 issued as credit guarantee scheme kicks off
To boost startups and SME entrepreneurs, more high-ticket (above $50,000) loans without property collateral are now being issued by microfinance institutions (MFIs). The main reason behind this is the take-off of the Credit Guarantee Corporation of Cambodia (CGCC) for SMEs. Normally, MFIs would only give small-ticket loans between $1,000-$3,000 without property collateral. In the last decade, the higher the loan amount more the property collateral asked for. So looking at data from the fourth quarter of 2024 from the Cambodia Microfinance Association (CMA), for tier-1 loans less than $3,000 — 85 percent of these loans were issued without property backing it as collateral. Then for tier-2 loans between $3,001-$10,000 – 22 percent of loans were issued without collateral. And for tier-3 loans between $10,001-$50,000 – only 19 percent of such loans were issued without property collateral. Mindful of the diversity of SMEs in the country, CGCC guaranteed as much as 50 percent of loans for SMEs in services and trade, 3 percent from agriculture, 7 percent from industry, and the remaining 40 percent to other miscellaneous SMEs.
Source: Khmer Times
24 April 2024
Sereys says NBC keeps modernizing payment systems
The National Bank of Cambodia (NBC) continues to develop and modernize payment systems in the country, making local and cross-border payments using KHQR efficient, secure and cost-effective, said its Governor Chea Serey. Serey said at the 30th Anniversary Celebration of the Association of Banks in Cambodia (ABC) recently that NBC has been paying close attention to the digitalization of Cambodia’s economy to make trade and investment activities easier in line with the fast evolution of financial technology. “NBC has helped the development and modernization of payment systems such as the National Clearing House, the Fast Payment, the Online Banking, the Retail Pay, the Cambodian Shared Switch and the Bakong System,” Serey said. NBC has cooperated with ministries and development partners in promoting financial literacy as well as digital financial literacy and has also paid close attention to consumer protection by implementing laws and regulations and creating working groups to receive and handle complaints. The country currently has 59 commercial banks, nine specialized banks and 86 microfinance institutions with 2,614 headquarters and branches as well as 3,998 automated teller machines (ATMs).
Source: Khmer Times
24 April 2024
The General Department of Customers and Excise of Cambodia (GDCE)
delegation visits Sydney for ease of trade
A delegation from the General Department of Customs and Excise of Cambodia (GDCE) led by Director General Kun Nhim recently attended the 25th Asia-Pacific Customs General Conference of the World Customs Organization (WCO) in Sydney, Australia. During the conference, the WCO submitted a report on its reform initiatives and policies. Member countries also approved the Asia-Pacific Strategic Plan RSP for 2024-2026. The meeting also looked at the progress made in projects that addressed issues like gender equality and Plastic Waste Management. At the conference, Cambodia requested that the National Customs School be designated as the Asia-Pacific WCO Regional Training Center. This request was approved by WCO members. GDCE Director General Kun Nhim thanked members of the meeting for their support in setting up a training center in Cambodia.
Source: Khmer times
25 April 2024
Property insurance grows 8 percents to $49 million in Cambodia
Property insurance – where homes, offices, and factories take protection against unforeseen circumstances – saw an 8 percent year-over-year growth to $48.9 million in 2023. Insurers say this growth is because of growing awareness in the market. More people now see the need to protect against unforeseen events such as fire, lightning, explosion, flood damage, hurricanes, and other natural catastrophes. Post-Covid, property insurance has seen decent growth. In 2020, gross premiums from property insurance in Cambodia were at $40.2 million. Then it grew only 1.2 percent to $40.7 million in 2021 – because of the impact of COVID and the resultant economic slowdown. In 2022, it grew nearly 11 percent to $45.2 million. And in 2023, growth was at 8 percent to $48.9 million.
Source: Khmer times
25 April 2024
Cambodia records 22.5% rise in foreign tourist arrivals
According to Rath Sophoan, Chairman of ABC, to date, riel loans in the banking sector account for 11 percent of the total outstanding loan volume while riel in deposits sees a remarkable increase compared to the last 10 years. “The Bakong system of the National Bank of Cambodia (NBC) and various other digital payment systems have contributed to making it easier for people to use the riel,” Sophoan said at a press conference yesterday. By the end of 2023, loans disbursed by financial institutions reached $57.6 billion, or 180 percent of GDP in Cambodia, through a total of 3.8 million accounts, while deposits were $47.9 billion, through 18.6 million accounts, an ABC report showed. With the objective of de-dollarizing the economy based on the market mechanism and on a gradual approach, NBC has implemented various policy measures to promote the riel.
Source: Khmer Times
26 April 2024
Cambodia keen on continues US support
Cambodia recently urged the United States (US) to continue to support its development pursuits. The US assistance was crucial for Cambodia to rebuild its war-torn economy in the last several decades. According to a statement, in their meeting, the Deputy Prime Minister and the Ambassador discussed various topics related to the bilateral relations. Chanthol also asked the US to continue to support Cambodia’s capacity-building efforts for its officials. The report stated that the latest trade data from Cambodia’s General Department of Customs and Excise (GDCE) showed that the country’s exports to the US reached $1.98 billion in the first quarter (Q1) this year, rising by 8.9 percent, compared to the same period last year. The US is also the third biggest trading partner of Cambodia. Trade between the two registered a growth of 8.6 percent during the Q1, 2024 period year-on-year and reached $2.04 billion, the data revealed.
Source: Khmer Times
26 April 2024
Another new “ special economic zone” will emerge in
Kandle province on an area of 120 hectares
The Royal Group Kandal Special Economic Zone (RGKSEZ) covers an area of about 120 hectares, connected to the Royal Group Phnom Penh Special Economic Zone by a new bridge across the Prek Tnaot River, which the company has built since 2022. According to the company, so far, the company has started to fill the groundwork as well as the construction of the basic infrastructure and may be completed to welcome new investors this year. Due to the increasing demand for investment sites, about 100 hectares of land has already been reserved by a company operating in the Royal Group Phnom Penh Special Economic Zone. When fully operational, the company will create about 20,000 more jobs for Cambodians. According to a report from the Council for the Development of Cambodia (CDC), as of 2023, Cambodia has 24 special economic zones operating in a number of sectors, including garments, footwear, car assembly plants, bicycles, and electronics.
Source: The Cambodia China Times
26 April 2024
The General Department of Taxation
decides to revoke the license of a company’s tax service agency
According to the announcement, the General Department of Taxation has decided to cancel the tax service license of GICTFOX CONSULTANCY & SERVICE CO., LTD. As a result of this decision, the company was disqualified as a tax services agent that could no longer provide tax-related services to customers or taxpayers. In this regard, the General Department of Taxation has confirmed to you as the Governor of the company, taxpayers, and the general public who are or wish to use tax-related services from the above companies to suspend or not use tax-related services to avoid suffering Fines and penalties in accordance with the laws and regulations on taxation in force.
Source: The Cambodia China Times
26 April 2024
Covid 19 cash assistance of $1.2B helped labour market
Cambodia’s largest social assistance programme-the Covid-19 cash transfers program-has played a crucial role in boosting the economy, said the World Bank in its latest report. Since its launch in June 2020, the program has distributed $1.2 billion as of September 2023. The World Bank noted the positive impact of these programs and said,” increase in cash aid and their coverage expansion serves to alleviate further the negative impacts experienced by poor and vulnerable households.” The World Bank in its 2024 report also acknowledges that it was the size of the program – “being the largest in the country” – that helped in poverty alleviation and improving the livelihoods of the marginalized. The report also noted that the government doubled its conditional cash transfer program to about $380 for each pregnant woman bearing one child up to the age of two with ID Poor cards from August 2023. The report noted it as a positive that the coverage includes female workers who are members of the National Social Security Fund, female civil servants, interns, and officials.
Source: Khmer Times
Lady Aegies Comment: To be continue...............
