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Monday, December 22, 2008

Mixed future for Cambodia's MFIs

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.


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I WOULD LIKE TO THINK THAT THINGS WILL STABILISE NEXT YEAR.

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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
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Cambodian PM regrets death of Khmer typewriter keyboard inventor

PHNOM PENH, Cambodian Prime Minister Hun Sen expressed his deep regret here on Monday over the death of Keng Vannsak, inventor of the Khmer typewriter keyboard.

Vannsak just died at 83 years old of pneumonia in a hospital at the outskirts of Paris, where he had lived since the 1970s. His funeral will be held there on Tuesday.

"I was so regretful that we lost a famous intellectual of our country," Hun Sen told the graduation ceremony of a university.

"Grandfather Keng Vannsak told me in a recent letter that he had the plan to visit Cambodia," he said, adding that he had never returned to Cambodia since the 1970s.

Vannsak invented the Khmer typewriter keyboard in 1952 and was also known as a politician, Khmer-language teacher and scholar, poet, composer and historian.
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Chinese man arrested in Cambodia on terrorism charges

Phnom Penh - A Chinese national was arrested and charged with kidnapping and terrorism offences in Cambodia, national media reported Monday.

Police on Sunday arrested Hour Ming, 33, after he allegedly held hostage Seang Youhour, 34, for 13 hours in his house in the capital Phnom Penh and threatened to set off a bomb if officers tried to raid the building, The Phnom Penh Post reported.

The man slashed the victim's face with a knife and stabbed himself in the chest as police raided the house early Sunday morning, officials said.

Police said the suspect and the victim were being treated in a Phnom Penh hospital.

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