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Chairman, Association of Banks, Cambodia<\/figcaption><\/figure>\n
Quagmire of burden<\/strong><\/p>\n <\/p>\n In many countries, Cambodia included, financial literacy\u00a0 is a key factor in sustainable financial development to contribute national, social, economic development. Without it, the masses will be trapped in a quagmire of burden from which even the state may not be able to rescue them.<\/p>\n At presents, a lot of banks and microfinance institutions are putting the public\u2019s financial literacy at the top of their agendas. It is to align with the central bank\u2019s agenda and remain competitive\u00a0 with the rise of competition in the country\u2019s fiscal sector.<\/p>\n \u201cWe are big advocates of financial literacy because we believe it is actually leading to financial inclusion, so that more people can benefit from financial services and products so that they can improve their lifestyles,\u201d says Shin Chang Moo, president of PPCBank.<\/p>\n He says that the bank is trying to make all the bank\u2019s procedures and processes easier because many ordinary customers in Cambodia feel that banking is very difficult because there are so many documents to be filled in.<\/p>\n He says the bank is working very closely with NBC because its big agenda is financial literacy and financial inclusion. \u201cSo we are the biggest supporter of the NBC. At the same time, we have own our financial education programme,\u201d he says.<\/p>\n The financial education programme is important in the financial sector, says Chief Executive Officer of microfinancier LOLC (Cambodia) Sok Voeun.<\/p>\n \u201cWe want the financial operators and consumers to be aware of financial literacy\u00a0\u00a0 it will make operations work well in terms of equity and transparency,\u201d he says.<\/p>\n <\/p>\n Educational programme<\/strong><\/p>\n <\/p>\n Sok says that when the customers want to receive\u00a0 services from LOLC, our staff always sit with them and explain the terms of the loan and the repayments. In addition to that, LOLC is also offering an educational programme to its customers and non-customers in the community about financial literacy.<\/p>\n \u201cWe explain to them about saving, cash-flow management, over-indebtedness, micro-business management, or we talk about the products which are suitable for farmers and micro-businesses and how they should manage their life skills to adapt to our loan system and to improve their business and manage cash-flow well to improve their family\u2019s lives,\u201d he adds.<\/p>\n \u201cRegarding consumer protection, we have done a lot. LOLC has client protection principles and what we have done is to ensure that our products and services are suitable for the real needs of customers at an affordable price, suitable for their business and they can get results and profit so we grow together,\u201d he adds.<\/p>\n \u201cWe will not allow them to borrow too much, but we allow them to borrow according to their ability \u2013 and we protect them. Even though customers may be in a critical position regarding payments, we sit with them and resolve matters peacefully to make it a win-win strategy,\u201d Sok points out.<\/p>\n Access to finance in Cambodia ranked in third place in the world, according to a World Bank report. This means awareness of the customers about financial literacy in Cambodia is high at present, says In Channy, chairman of the Association of Banks in Cambodia.<\/p>\n \u201cIf they do not understand, they will not use the banking services and finance. And if the agent of the banks do not have knowledge, they cannot promote it. Thus, our people are more aware of it now,\u201d In adds.<\/p>\n In stresses that capacity building is very important to allow the bank\u2019s human resources to teach customers. Now, teaching customers is very important. He says that how to calculate interest rates must be taught in high school.<\/p>\n \u201cThey should know about interest rates so they can calculate them by themselves. And all agents should continue teaching them \u2013 and this knowledge should be embedded in primary schools, so we want it widely available,\u201d he adds.<\/p>\n Financial literacy forms the backbone of the financial sector development strategy 2016-2025 which mandated relevant governmental institutions to organise programmes to promote it in order to enhance financial knowledge among the public, especially for the preparation of the national general academic programme, according to the NBC.<\/p>\n The NBC\u2019s report in the first half of 2019 shows that outstanding deposits in the banking and finance sectors increased to 6.8 million accounts, while 3 million people had outstanding loans in them during the same period. On top of that, customers using the payment services numbered 4 million people.<\/p>\n <\/p>\n Loans increasing in H1<\/strong><\/p>\n <\/p>\n In the first half of the year, 2019, loans in the banking and microfinance sectors rose by about 22.4 percent in, growing by $27.7 billion. The value of all outstanding loans has now reached $21.5 billion in the banking sector and $6.2 billion in the microfinance industry.<\/p>\n The NBC will continue its effort to strengthen financial literacy and encourage sound practice pertaining to individual borrowing. It says that a buildup of individual borrowings is partly a consequence of greater financial access, which could help foster economic growth and improve standards of living.<\/p>\n \u201cThe NBC would aim to strike a sustainable balance between financial inclusion and financial stability and, in doing so, deem financial literacy of the general public a crucial ingredient,\u201d according to Neav.<\/p>\n <\/p>\n Careful consideration<\/strong><\/p>\n <\/p>\n \u201cIndividuals are encouraged to carefully consider the terms and conditions of their borrowings and select the lenders from the NBC\u2019s registered list to avoid unfair practices,\u201d she adds.<\/p>\n Hong Cheap, head of Commercial Banking at CIMB Bank, said: \u201cFor CIMB, we are not focusing on giving them [consumers] a loan, but the bank\u2019s staff will explain to customers the importance of the usage of the loan and its risk. He adds that the bank also studies the customer\u2019s income to see whether he or she can pay back the loan they borrow or not.<\/p>\n \u201cWe are afraid that after they borrow our loan they may encounter a problem and the bank may confiscate their property, so it is not in our interests, especially at CIMB. We try to explain to them the circumstances around any loan they take out.\u201d<\/p>\n Hong says the bank also has documents and other materials that help potential borrowers to understand more about the products and services. The documents will explain the benefits they may be receiving. The bank will also study their needs and try provide them with the necessary documents to study, he adds.<\/p>\n \u201cWhat we are proud of is the fact CIMB\u2019s non-performance loans (NPL) are very low, almost nonexistent. Thus, it reflects that what we have worked out with customers is good. However, when acustomers borrows a loan from the bank and\u00a0 encounters a problem, it will cause the customer trouble and the bank will also have an issue on loan defaults,\u201d says Hong.<\/p>\n According to Hong, \u201cin general we cannot say how much financial education could help reduce risk, but what we can see is that they are aware and understand more so that they can select a loan or make a decision which loan is high risk or low risk for them, or whether they can repay it when they request a lot of money, so it is education that helps them to set their financial planning\u201d.<\/p>\n Minister of Education Hang Choun Naron says the education ministry is in a collaboration with the NBC to embed financial literacy in the national curriculum from primary school to high school, starting from early next year.<\/p>\n A life skill <\/strong><\/p>\n <\/p>\n \u201cWe will strengthen mathematics in schools and we also include financial literacy. We will provide the knowledge to the young people and youth to know how to save money and how to spend money,\u201d he adds.<\/p>\n \u201cFinancial literacy courses are just a life skill subject offering to students. It is a the requirement for the school to implement, but we reserve two hours per week for each school to allow teachers to choose the life skill subject to teach students,\u201d he adds. Those include financial literacy, agriculture, entrepreneurship among others,\u201d he adds.<\/p>\n \u201cAt present, the ministry has prepared the programme on financial literacy with the NBC, but it has yet to be included in the curriculum for the educational programme, but we encourage the school to add more about financial literacy in the curriculum because we cannot include all the subjects in the general education programme,\u201d Hang says.<\/p>\n \u201cWe start with the primary school, to educate the students to know how to calculate numbers and understand how to spend and save money on daily living. At high school, financial literacy is taught at a higher level, including statistics. Teachers can choose it as a life skill to teach,\u201d he adds.<\/p>\n","protected":false},"excerpt":{"rendered":" Fiscal knowledge vital for Cambodia\u2019s future<\/p>\n","protected":false},"author":3,"featured_media":2194,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_FSMCFIC_featured_image_caption":"The trade dispute not only affects manufacturing but also stock prices and exchange rates, and the future consumer economy AFP","_FSMCFIC_featured_image_nocaption":null,"_FSMCFIC_featured_image_hide":null,"footnotes":""},"categories":[3],"tags":[364,46],"yoast_head":"\n![\"\"](\"https:\/\/capitalcambodia.com\/wp-content\/uploads\/2019\/11\/Page-5s-682x1024.jpg\")
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