EXECUTIVE SUMMARY
This Report is presenting the current development of Cambodia banking sector, which we believe the prospects of this sector will be very strong. Over the last two decades, banking industry has grown significantly and become one of the key sectors of the Cambodian economy. The credit to private sector to the country’s GDP has hugely increased from 2.4% in 1993 to 28.0% in 2010. This growth has been reflected in increasing political stability, soaring economic development, improving banking system, rising demand of funds, and gradually gaining confidence from both local and foreign customers and investors in the Cambodian financial sector. And most of loans are offered to wholesale & retail trade, and hotel & restaurant activities, which are also a main contributor to the economic growth.
Banking sector in Cambodia is composed of three depository institutions: commercial banks, specialized banks, and microfinance institutions. Commercial banks and specialized banks provide funds to big and medium enterprises while microfinance plays an important role in savings and financial intermediation for individuals and small enterprises, especially outside of the main urban areas.
Very high spread of interest rate is one of the main constraints of banking sector, so Cambodia plans to offer another source of funds and investment – Cambodia Securities Exchange – to fund seekers and fund providers. With this regard, in the long run,
Cambodia banking sector will face a very high level of competition not only within the banks but also between sectors (banks and stock market). For the short term however, it is very profitable to invest in the sector, since the demand of funds is excess the loans and the spread of interest rate is also quite high. Therefore, investing in Cambodian banking sector is a great opportunity to higher profit with lower risk, and PPS is here to help all investors.
OVERVIEW OF AGRICULTURE SECTOR
Since 1975 – The Khmer Rouge period, Cambodia has already transformed banking system several phases (figure 01) for the purpose of efficiency through the efforts of privatization and consolidation.
And due to the absence of financial market, Commercial banks are primary sources of funds, and the National Bank of Cambodia (NBC) is solely a regulatory and supervisory agency. To date, Cambodia has 30 commercial banks including 3 international banks – CIMB of Malaysia, Bank of China, and Vietnam Bank for Agriculture and Rural Development – operated last year 2010, 7 specialized banks, and 25 microfinance institutions. With this regard, banking sector has become more market-oriented although the government has little influence on lending decision1. In overall however, the sector still remains segmented and cannot fulfill the funds demanded. Thus, banking sector is going to develop more in order to provide sufficient funds for companies with an appropriate lending rate, while stock market to be launched in this July 2011 (or maybe a few months delay) is a provable effort of Cambodia to offer another sources of funds, which in turn increase the competitive and complementary effects in the whole financial industry.
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