Khmer Circle: So these micro-finance groups are not there to assist in economic development and helping the needy then?
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2020-04-29
Cambodian workers enter a factory compound in Phnom Penh, Oct. 5, 2018.
AFP
An organization set up to support Cambodia’s microfinance sector has rejected a call by NGOs for a blanket suspension of the repayment of loans made to Cambodians hard hit by recent business shutdowns amid the COVID-19 pandemic, saying requests for relief must be considered on a case-by-case basis.
Writing in a joint letter, 135 Cambodian community organizations and other groups have asked the Cambodia Microfinance Association (CMA) to halt for three months demands for repayment by the more than two and a half million Cambodians who now hold microloans.
These demands have now put the livelihood and land security of loan holders at risk, the letter says.
“Millions of workers in the tourist, garment and construction sector are facing layoffs and loss of wages,” the letter says, adding that government efforts to subsidize losses have largely failed to meet workers’ needs.
“The government must ensure that MFIs [microfinance institutions] immediately suspend all loan repayments as well as interest accrual on loans for at least three months and return the millions of land titles currently held as collateral by MFIs to their owners,” the letter says.
“These actions are necessary to ensure that people are able to survive this crisis without risking their health or homes, and are able to avoid further risky loans that could lead to bonded labour, human trafficking and other human rights abuses.”
In an April 28 statement, the CMA said however that requests for suspension will be considered only on an individual basis.
“We will suspend debt payments upon the client’s request to the MFI,” CMA deputy president Bun Mony told the Phnom Penh Post on April 28. “We do not force them to sell their land under the present circumstances because we know that they are facing hardships. Additionally, we won’t require them to pay late fees.”
“The success of the customer is the success of the MFI,” Bun Mony said. “And the MFI cannot succeed on the failures of its customers.”
Threats to seize land and homes
Speaking to RFA’s Khmer Service, Vorn Pov—president of the Independent Democracy of Informal Economy Association (IDEA), a group representing small business owners—said however that only a few banks and MFIs have agreed to suspend payments of mortgage and interest for the requested three-month period.
“A number of banks have continued to demand payment, and those banks are threatening loan-holders, saying they will seize their homes,” he said, adding that many of his association’s members have faced severe financial hardships during the last four months.
“Our members are complaining that the banks still want their payments,” he said.
Also speaking to RFA, a fruit vendor from southeastern Cambodia’s Kandal province said he had borrowed about $20,000 from a bank to invest in a mango plantation and street shop to sell mangoes outside garment factories.
Following the outbreak of the coronavirus, though, his business has lost money, and if the government doesn’t intervene, his creditors will confiscate his land and house, he said.
“Before that, my business was good. I made my payments for the last nine months, and I even made payments ahead of the due date,” he said. “But after the outbreak of COVID-19, my business began to fail, and now I don’t even have $4 in my pocket.”
“My creditors keep calling me and demanding payment and have even come to my house. I have asked them to hold off for three months, but they’ve refused and are threatening to take legal action,” he said.
RFA calls to National Bank of Cambodia spokesman Chea Serey and government spokesman Phay Siphan for comment rang unanswered on Wednesday.
Reported by RFA’s Khmer Service. Translated by Samean Yun. Written in English by Richard Finney.
1 comment:
Anybody who thinks the Microfinance Group in Cambodia is to help the poor and the needy must have been living in a cave. These MFIs are like loan sharks. Their purpose of existence is to make money from the poor and the needy. They have done so much harm to the poor and the needy. If you can't make payment on time, they will confiscate your property. Many millions of Cambodians have fallen victims into this scam and regretfully, there's no easy way out for them. They'll get deeper and deeper into this debt trap.
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