Tourism

Travel firms say they missed out on a $150 million loan scheme

Tourism-focused local private businesses are reportedly struggling to secure funds from a recently launched $150 million co-financing scheme meant to support an industry still reeling from Covid-19 restrictions.

And as the main issue among the many complaints and points of contention, the initiative’s requirements for financial reporting over the past two years are put forward.

On May 17, the government launched the $150 million Tourism Recovery Co-financing Scheme (TRCS), funded by a partnership fund between the government and financial institutions.

A total of US$75 million is to be allocated from the state budget in the form of loans issued by the state-owned Bank for Small and Medium Enterprises of Cambodia (SME Bank), and the remaining US$75 million in the form of loans provided through participating financial institutions. (PFI).

The scheme’s main offerings include a top interest rate of 6.5% per annum, a 12-month grace period, a loan term of up to seven years, a loan amount of up to $400,000, and the option to receive funds in riels or US dollars. .

The scheme is allegedly prioritizing tourism-related businesses across the country that are believed to have been significantly affected by the Covid-19 crisis, in particular hotels, guest houses, restaurants and suppliers in the tourism sector.

Cambodian Travel Agents Association (CATA) President Chhai Sivlin believes that TRCS will boost the recovery of the tourism sector, but noted that PFIs will require consistent and reliable financial statements to benefit from the scheme.

“This is an obstacle that the private sector cannot overcome because, in more than two years, revenues have fallen sharply, which has led to the collapse of some companies and enterprises in the industry and the impossibility of saving them.

“While the government reopened Cambodia to foreign tourists in November 2021, only about 40% of tourism business has reopened so far.

“This lending requires further coordination between SME Bank and private banks regarding financial reporting as no travel company can stay afloat for more than two years,” she said.

Pacific Asia Travel Association (PATA) Cambodian chairman Thurn Sinan told The Post on May 29 that the 6.5% annual interest rate cap had been set too high, which he said was close to the level of private banks.

It offers an interest rate of three to five percent per annum and a loan term of 10 to 15 years to effectively support the tourism sector.

Covid-era reports from independent financial information provider Credit Bureau (Cambodia) Co Ltd (CBC) painted a grim picture of cash-strapped travel businesses with trade shrinking, unable to repay loans and seeing their credit profile worsen, he said, citing this as a root. the main piece of the industry’s ills.

The greater-than-usual degree of uncertainty about the timing and size of cash flows underscores the inherent difficulty in assessing the future of these ventures, Sinan said.

Kim Know, owner of Maisons Wat…

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