28 March 2014-03-28
As the financial sector expands, more money is
flowing into a more complex economy. Loans are increasing along with concerns
about long-term risk.
How is Cambodia’s financial sector progressing at
the moment?
The banking sector has progressed very well. Every
year, we have seen an average 30% increase in deposits. More deposits mean a
higher level of trust from people. Last year, however, deposits rose only 12.5%
amid the election and political instability. Still, this reflects the trend
that more and more Cambodians are joining this formal sector.
There are an estimated 2.3 million people with
bank accounts, out of a population of 14 million. If we can get a ratio of 10
million out of 14 million, that will be a good thing. We have more commercial
banks, but they are amassed only in crowded urban areas.
Credit is also increasing. Access to financing in
Cambodia has become much eaiser, for one reason: the existence of more
microfinance institutions, which are located almost everywhere throughout the
country, meaning more business activity is happening.
Our financial sector has just started. We are
behind other countries in the region, but it doesn’t mean that we are weaker
than the others. We have just started to run, but we have been running quite
fast through these years.
In 2013, loans increased 25% compared to the previous
year, while the rate of savings increased to only 12.5%. Does this number imply
risk in the financial sector, and has the central bank taken steps to tighten
lending?
This number does not say anything. The number of
loans reflects the level of the whole economy. When a country’s economy is
rising, usually more capital is needed for investment. So companies borrow more
money from the bank to expand their operations. This is simple.
In our country, we see very high growth, but the
question is from what base we are increasing. We have to acknowledge that we
have just recovered from wars. We need capital to rebuild infrastructure and so
on, which requires more loans from the bank.
Loans for real estate have also noticeably
increased. Could this pose any long-term problems for the economy?
Our young people now tend to want to live
independently from their parents. This mindset of owning a house has become
more common among new couples. So they can achieve it now because the bank
offers loans. Housing loans have risen recently, but I am not very nervous
about this, because the question we need to ask is whether they are buying to
live or to speculate.
What we fear more is people speculating in real
estate. But so far, more people are using the loans to get a house for their
family, they will not risk losing their property to the bank. This is a good
thing happening to Cambodians.
You have to understand that before 2003, not many
people deposited their money in the bank. People started to get their savings
and invest them in houses and land. That is why we saw the price of property
rise later.
What happened in 2008 was not a bubble bursting,
because property values at that time increased and have not come down yet. The
property values remain the same, it’s just that there is not as much buying and
selling activity as in the past five years.
Looking at the rest of 2014, what is the outlook
for the banking sector?
So far we have seen widespread access to loans
among the people. What we need to do is keep this momentum, meaning the good
quality of our credit. We now have the Credit Bureau, where details and history
of clients are being kept and used by the banks. We want to raise awareness
that the bureau is a very important tool for them to access loans without
necessarily using collateral. We also want financial institutions to be
transparent to their clients about the risks regarding loans.
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