First of all, let me express my sincere thanks to Mr. Abdurakmat Boymuratov, Chairman of Agrobank and all the organizers for hosting this successful event and for your warm and excellent hospitality to this beautiful Tashkent, Uzbekistan. Also, a special thank to the incumbent chairman and Mr. Bayaua and colleagues for your excellence service in APRACA.

It is my sincere pleasure to invite you to the 18th APRACA General Assembly Meeting 2012. This important event will be preliminary scheduled to take place in February 2012 in Cambodia. The exact date and the venue would be announced later after we get the final approval from the Governor of the National Bank of Cambodia. There might be two options:

• Option 1 is to hold the event in Phnom Penh, the Capital City, and then the field visit in our beloved historical and cultural centre, Siem Reap.
• Option 2 is to be held in Siem Reap, home to the much-celebrated UNESCO World Heritage Site of Angkor.

As you might have noticed in the upcoming event of FinPower, National Bank of Cambodia will be hosting the Regional Dissemination Forum on the Status of Transformation of NGOs and Projects into Microfinance Institutions, which will be scheduled to take place on September 7-8, 2010 in our royal capital, Phnom Penh. Therefore, I would also like to welcome you all to participate in this event.

To have a good grasp of our country, let me brief you a little bit of Cambodia’s situation as follows:

Cambodia is a Southeast Asian country, member of ASEAN with population of 14million, neighboring with Thailand, Laos and Vietnam, and in the south attached to the sea. We are also member of Sub-Mekong Region. The Mekong River has intersection of 4 arms in front of the Royal Palace in Phnom Penh City. One is the big lake named Tonle Sap, which is rich in fish, and 2 are flowing to Vietnam.

Cambodia is agricultural economy. It covers about 80% of Cambodian economy, consisting mainly of rice, rubber, cassava, and other agriculture products. Our four main pillars of growth are agriculture, garment industry, tourism, and construction and real estate. Our main exports are garment, rice, and other agriculture products.

Up to the year 2008, the average economic growth is about 9% per annum. And the inflation rate is about 1%. The current growth per capita income is around 750 US dollars per annum. In 2009 after the crisis, our growth is only 0.1%. Due to the rise in oil and food prices and the fast growth in credit to private sector, the inflation peaks to 25% in June 2008. But year on year change in 2008 is 12.3%. In 2009, the inflation decelerates to only 5.6%. The 2010 growth is projected around 4%.

The banking sector is the most advance sector, comprising of 30 commercial banks, 6 specialized banks, and 21licensed microfinance institutions, of which 4 got deposit-taking license MFIs, and 26 registered rural credit operators.

Cambodian Microfinance sector is very successful and internationally well-recognized. Most of MFIs were transformed from NGOs. As of 2009, MFIs and registered NGOs provided a total loan outstanding of USD 308.38 million to 904,298 borrowers, and mobilized deposits of USD 10.78 million from 171,190 depositors. We provide deposit-taking license only to the strong MFIs that are well-managed to collect deposit from the public. The central bank’s supervisory and regulatory approach to rural finance is of supporting and flexible so not to impose any burdens on MFIs. We are now in the process of establishing the regulation to control the activities of cooperatives such as credit union and mutual credit.

The financial sector was not directly affected by the crisis, though there were some constraints on liquidity in the banking system. In the second semester of 2009, the banking system experiences excess in liquidity due to the hesitation in providing credit by the banks plus difficulty in selecting good customers. There is substantial reduction in credit demand owing to the slowdown in economic activities. Though still profitable, the banks and MFIs have seen a decrease in their profits. NPLs increase from 3.7% in 2008 to around 5% in 2009 in the banking sector, and NPLs in microfinance is increased to almost 3%. In 2010, there is a sign of recovery in Cambodia economy which boosts up the credit demand and lending activities and decreasing trend in NPL’s rate.

Please accept this warm invitation to the Kingdom of Cambodia for the 18th APRACA General Assembly Meeting 2012. We look forward to hosting you and welcoming you to this much-anticipated event of APRACA. We would assure you the most pleasant and productive stay in Cambodia – Kingdom of Wonder. Thank you.

H.E. Tal Nay Im
Director General
National Bank of Cambodia