AMK chief Paul Luchtenburg talks to the Post
How has the global financial crisis impacted microfinance institutions (MFIs) in Cambodia?
The financial crisis has affected all MFIs in two ways. First, [there are] less funds available from lenders. Second, [there] is less money flowing around in the country. It means less funds and people will be less able to pay back their loans.
How long do you think the crisis will continue to affect the MFI sector in Cambodia?
That's hard to say. Some people say there will be only short-term minimal impact. Others ask what will happen next.
I would like to think that things will stabilise next year.
What about short-term future lending?
Our mission is to help as many people as possible. But we have fewer funds, so that means less lending.
Do you anticipate any change in interest rates on current loans?
We are committed to keeping interest rates as low as we can. The challenge is that AMK works in remote areas, where we have to send staff to make sure the poor are properly receiving our services. Our interest rates are higher because of these remote services.
--------------------------------------------------------------------------------
I WOULD LIKE TO THINK THAT THINGS WILL STABILISE NEXT YEAR.
--------------------------------------------------------------------------------
Have AMK's profits suffered as a result of the crisis?
We cover our costs, even despite the current crisis, and we still have funds available for lending. The challenge on our side is to improve the system so poor people in need of financing can get the funds they require more rapidly.
Do you see greater risk of default among your clients because of the global crisis?
Our client portfolio is among the best in the world. We have had very few problems.
How much does AMK lend per year?
Our portfolio has grown from US$10 million last year to $22 million so far in 2008. We have put some $72 million into Cambodia's economy in the last three years. I think MFIs are strengthening the economy because lenders come back for more loans.
In what ways does AMK help reduce poverty?
This is hard to quantify. We are currently doing a study to assess this, which will come out next year and which compares our clients with others who don't currently use our services. But I will always believe that microfinance takes the highest view of people's potential than any other development-based initiative.
What responsibilities remain for the Ministry of Rural Development to reduce poverty?
Cambodia's poorest provinces, such as Preah Vihear, Oddar Meanchey and Stung Treng, need infrastructure. They need roads, houses and greater access to education.
Has the crisis affected AMK's ability to get continue to secure outside funding?
I think we've seen a 25 percent drop. This is an estimation. We have projected a 40 percent drop in 2009.
Are you concerned by recent growth predictions from the World Bank and others that show lower GDP next year?
It is a concern because we could see problems with repayment. So, we have to be careful in assessing potential clients' ability to repay.
But we are facing more difficult times, and more people will need our help. We just need to make sure the best candidates are the ones receiving loans.
What do you think the MFI sector will look like two or three years on?
I think 2009 will be an interesting year. We have some new players entering the sector. I think the slowdown will continue, but the way we react will set the tone for 2010. But I believe that AMK will continue to remain stable.
With the slowdown likely to continue, how do you explain the rise in new commercial banks?
Cambodia is an emerging market, and we have seen a lot of interest in the banking sector. New banking requirements relating to capitalisation have opened up new possibilities for niche markets. Will some of them be forced to close down? It's hard to say. Some could refocus on mortgages, others could focus on other things. That's the good thing about competition. It makes every organisation better. There is no room for sloppiness in Cambodia. This, in turn, has created a very dynamic environment for microfinance.
Have you thought of turning AMK into a specialised bank?
With the NBC regulations, it is too expensive for us. ... But we want to start collecting savings independent from investors or creditors.
Fixed Deposit Interest Rate of 10 Banks (5 December 2008)
The financial crisis has affected all MFIs in two ways. First, [there are] less funds available from lenders. Second, [there] is less money flowing around in the country. It means less funds and people will be less able to pay back their loans.
How long do you think the crisis will continue to affect the MFI sector in Cambodia?
That's hard to say. Some people say there will be only short-term minimal impact. Others ask what will happen next.
I would like to think that things will stabilise next year.
What about short-term future lending?
Our mission is to help as many people as possible. But we have fewer funds, so that means less lending.
Do you anticipate any change in interest rates on current loans?
We are committed to keeping interest rates as low as we can. The challenge is that AMK works in remote areas, where we have to send staff to make sure the poor are properly receiving our services. Our interest rates are higher because of these remote services.
--------------------------------------------------------------------------------
I WOULD LIKE TO THINK THAT THINGS WILL STABILISE NEXT YEAR.
--------------------------------------------------------------------------------
Have AMK's profits suffered as a result of the crisis?
We cover our costs, even despite the current crisis, and we still have funds available for lending. The challenge on our side is to improve the system so poor people in need of financing can get the funds they require more rapidly.
Do you see greater risk of default among your clients because of the global crisis?
Our client portfolio is among the best in the world. We have had very few problems.
How much does AMK lend per year?
Our portfolio has grown from US$10 million last year to $22 million so far in 2008. We have put some $72 million into Cambodia's economy in the last three years. I think MFIs are strengthening the economy because lenders come back for more loans.
In what ways does AMK help reduce poverty?
This is hard to quantify. We are currently doing a study to assess this, which will come out next year and which compares our clients with others who don't currently use our services. But I will always believe that microfinance takes the highest view of people's potential than any other development-based initiative.
What responsibilities remain for the Ministry of Rural Development to reduce poverty?
Cambodia's poorest provinces, such as Preah Vihear, Oddar Meanchey and Stung Treng, need infrastructure. They need roads, houses and greater access to education.
Has the crisis affected AMK's ability to get continue to secure outside funding?
I think we've seen a 25 percent drop. This is an estimation. We have projected a 40 percent drop in 2009.
Are you concerned by recent growth predictions from the World Bank and others that show lower GDP next year?
It is a concern because we could see problems with repayment. So, we have to be careful in assessing potential clients' ability to repay.
But we are facing more difficult times, and more people will need our help. We just need to make sure the best candidates are the ones receiving loans.
What do you think the MFI sector will look like two or three years on?
I think 2009 will be an interesting year. We have some new players entering the sector. I think the slowdown will continue, but the way we react will set the tone for 2010. But I believe that AMK will continue to remain stable.
With the slowdown likely to continue, how do you explain the rise in new commercial banks?
Cambodia is an emerging market, and we have seen a lot of interest in the banking sector. New banking requirements relating to capitalisation have opened up new possibilities for niche markets. Will some of them be forced to close down? It's hard to say. Some could refocus on mortgages, others could focus on other things. That's the good thing about competition. It makes every organisation better. There is no room for sloppiness in Cambodia. This, in turn, has created a very dynamic environment for microfinance.
Have you thought of turning AMK into a specialised bank?
With the NBC regulations, it is too expensive for us. ... But we want to start collecting savings independent from investors or creditors.
Fixed Deposit Interest Rate of 10 Banks (5 December 2008)
3 Months 6 Months 12 Months
USD Riel USD Riel USD Riel
ACLEDA 5.50% 6.00% 6.50% 8.00% 7.50% 9.50%
ANZ Royal 4.55% 4.60% 5.25% 5.55% 5.40% 6.70%
Canadia 5.00% 5.00% 6.00% 6.00% 7.00% 7.00%
Cambodia Comercial Bank 3.00% 3.00% 3.25% 3.25% 3.25% 3.25%
Vattanac Bank 4.25% N/A 5.25% N/A 6.00% N/A
SBC Bank 3.00% N/A 3.50% N/A 4.50% N/A
Cambodia Asia Bank 5.50% N/A 6.50% N/A 7.50% N/A
Cambodia Mekong Bank 2.50% N/A 3.25% N/A 3.50% N/A
May Bank 2.00% N/A 2.50% N/A 3.25% N/A
Cambodia Public Bank 5.25% N/A 6.25% N/A 7.25% N/A
