A new micro-finance institution from South Korea has opened in Phnom Penh, but as the 23rd MFI in Cambodia, some insiders say it faces a tough battle to secure business.
Choi Sooho, chief executive of the newly established Angkor ACE Star Credits Limited, said yesterday that the firm – which has made an initial investment of $1 million – would offer competitive rates in the crowded MFI market.
“The scope of our firm’s loan’s would be between US$300 and US$5,000 to a client with a competitive interest rate between 1.8 percent to 4 percent per month,” he said, and added that the decision to open the MFI came after seeing many customers access loans in Cambodia with relatively high interest rates.
The Chairman of Cambodian Microfinance Association, Chea Phalarin, who is also general manager of the second largest MFI Amret, said there were probably too many MFIs in the Kingdom, but it provided increased options for customers.
“There is tough competition in the microfinance sector at the moment, thus the success of the newcomer would depend on its strength in terms of capital, expertise and competitive interest rates,” he said.
He said the rates charged by Angkor ACE were likely below many competitors. Amret offers rates between 1.8 percent to 3 percent per month.
Sim Senacheert, general manager of the Kingdom’s largest micro-lender Prasac, agreed that there were too many MFIs in Cambodia, but said many were quite small operators.
“Only about nine MFIs have a porfolio greater than $10 million,” he said yesterday. “Thus, many MFIs are not a concern for us as they are so small.”
To gain market share, Angkor ACE needed attractive interest rates, he said.
“Prasac offers very attractive interest rates between 1.6 percent and 3 percent per month.”