Opening the Cabinet’s meeting at the Peace Building, Council of Ministers, Prime Minister Samdech Techo Hun Sen makes a brief announcement of his appeal to banks, microfinance institutions and informal moneylenders in Cambodia to show leniency to flood-affected debtors by not foreclosing on their houses or lands and to provide them with more loans.

Today we are meeting here for a Cabinet’s meeting with a number of pre-defined agendas. However, before we actually start the meeting, taking the opportunity that we already have the press people here and the fact that I will later sign a written appeal on behalf of the Royal Government of Cambodia on the flood-affected money lending business I may as well take the chance to brief us all about this development.

Banks and Microfinance Institutions to Relax Terms

It is everyone’s knowledge that the flood of 2013 has been a serious disaster after the one in 2011. As we are talking about it here, a majority of the flood-affected people has been provided with assistance, while help continues to reach the rest. Rescue assistance will also continue. It should be noted that some households, despites the provision of assistance, would not be able to resume cultivation. They will have to face the fact of going without any crops at all and waiting one full year for next cultivation. What I want to stress here is in fact the situation of those households who have been in debts to the microfinance institutions and informal money lending business. The Royal Government hereby issues its appeal for three considerations:

(1)   Those people who have been severely affected (by flood) and are unable to repay the debt in time, the microfinance institutions should not foreclose on their houses or lands for failing to repay debts on schedule. This refers to the case of people who owed certain amount of loan to banks and microfinance institutions, while the terms of payment are due. According to the contracts, banks and microfinance institutions may enforce foreclosure on their properties. I would in this case appeal to the banks and microfinance institutions to relax their term of payment so that these people would not have to sell or mortgage their property to pay back the debts. This should apply only to those who loan for honest business but have been affected by flood. This should not apply with those who borrowed money for gambling.

(2)   Loan of due payment should be reviewed with leniency by not imposing fines and by lowering interest rates as much as possible. This point is therefore important that I would specifically bring the attention to the lenders. In every due payment, for this category of flood-affected people, I wish that the lenders would either reschedule their payback time free of fines or allow payback without charging interest or with reduced rate. For every loan, there is always obligation for the case of failing to pay back. We propose rescheduling the term of payback for certain period – three or six months or one year, not without specified timeframe. As for interest rate adjustment, they could bring it down like from 5% to 1% or lower. These people have had double difficulties already – destroyed cultivation by flood and their loans are due, while they had to face up with fines for missing the payment date.

(3)   I would urge the study to find out if it is possible to provide further loan/credit with low interest for them to restore their living condition through cultivation of dry season, flood recession rice or growing other crops. There is no other means than providing them with further help. In Khmer, it is said that “once a horse ran off, you need another horse to chase and get it back.” This metaphor mainly addresses loss in gambling but I use it here to illustrate the situation of those whose livelihoods were made difficult by natural disasters. It is better that we should not kill the hen but raise her to get more eggs later. It is the win-win situation.

As far as this credit situation is concerned, the Royal Government of Cambodia is placing it under the charge of Permanent Deputy Prime Minister Keat Chhon, who is also Head of the Economic and Financial Policy Committee. The work will need to be coordinated under his leadership with the Ministry of Economy and Finance to uphold the implementation of this appeal. I am of the opinion that Deputy Prime Minister HE Keat Chhon and all heads of banks and microfinance institutions, would have a good meeting to discuss this matter in an understanding way. We also had some positive experiences from what we did in 2011.

Informal Money Lending Among People

For loans that are occurring in the informal lending business, people to people, I also ask those informal moneylenders to exercise understanding for their debtors. In the past, it is said in Khmer that “(borrowing) a bucket of rice in the rainy season would result in payback of two in the next dry season.” I would in this case also appeal to those informal moneylenders and those in debt to work out a good deal together as we all are Cambodians.

That is all I wanted to say today to banks and microfinance institutions, and the informal moneylenders as they are not mentioned specifically in the written appeal. I would like to thank all concerned parties for listening to the appeal verbally. As I said earlier the written appeal will be issued later./.