Banking sector emerges from financial wilderness

Written by Sebastian Strangio
Friday, 27 June 2008

After decades in the wilderness, Cambodia’s financial sector is finally starting to make inroads into the country’s vast, largely unregulated cash-based economy. But despite recent progress, there is still a long way to go in reform and transparency if growth is to be maintained long-term, say economic analysts and industry experts. Over the past few years, the country’s double-digit annual growth rates have led to a rapid expansion in retail and commercial banking, with outstanding personal and business loans rising from a total of $471.6 million in 2004 to $893.6 million two years later, according to figures from the International Finance Corporation (IFC). In its latest annual Asian Banking Outlook report, global credit rating firm Moody’s has painted an optimistic picture of the Kingdom’s business sector, predicting economic growth of 7.2 percent in 2008 and financial stability over the next 12-18 months despite the recent global credit crunch.“In Cambodia, public confidence in the banking system is recovering,” said the report, a development it put down to sustained economic growth, increasing personal wealth and a stable regulatory environment. Since the restoration of private property rights in 1989, the National Bank of Cambodia has been leading the government effort to reform and develop the financial sector. more....


Out of the rouge,into the black
1954 National Bank of Cambodia established following independence from France. Begins printing riels.
1975 Ultra -communist Khmer Rouge takes Phnom Penh and blows up the National Bank building. Money is outlawed for the next three-and-a-half years.
1979 Vietnamese-backed government begins massive challenge of rebuilding Cambodia’s financial services. It many ways, the rebuilding remains a work in progress.
1989 Government renounces communism; turns to market economics.
1999 Foreign banks are guaranteed rights and obligations equal to local banks. There are no restrictions on foreign ownership of banks.
November 2000 A restructuring initiative by the National Bank leads to the de-licensing and liquidation of 12 banks that fail to increase their paid-up capital from $5 million to a new minimum of $13 million.
2006 Outstanding personal and business loans reach $893.6 million, having increased almost 90 percent over two years from $471.6 million in 2004.
2007 Bank deposits account for 18 percent of gross domestic product, meaning Cambodia remains an overwhelmingly cash-based society.
2008 Cambodia welcomes arrival of 24th commercial bank with the launch of Japan’s Maruhan bank in Phnom Penh.

Source: Phnom Penh Post