January 26th, 2009 
Cambodia Economy Commercial Banks and real estate agencies applauded the move, which the National Bank of Cambodia slashes bank reserve requirement from 16 percent to 12 percent, eliminated restrictions on real estate lending effective on Feb 01.
The Central Bank tripled the minimum capital requirement for all commercial banks on September 19, 2008 in a bid to fight against the increase of the inflation and to tighten and strengthen the banking sector, which is growing in the last decade.
“We increased the reserve rate [in June] because we were vigilant over the crisis and to prevent inflation. Now, inflation is falling, so we lowered it to give banks easy cash to provide more loans to their customers,” said, Tal Nay Im, General Director of National Bank of Cambodia, according to the Phnom Penh Post.
After increasing the reserve requirement, it affected the banking sector and loan limitation of real estate. Cambodian developers and banks industrialists also repeatedly called on the government to ease restrictions on bank lending to the property sector, by limiting loans to the property sector to 15 percent of banks’ total loan portfolios in May.
Those said that the looser rules would stimulate lending amid a worsening economic crisis.
Construction costs in Cambodia are traditionally met through deposits from buyers, rather than bank financing. However, property sales have dried up in Cambodia in recent months, due largely to uncertainties over the political relationship with Thailand and a lack of confidence in the wake of the global financial crisis.
Tal Nay Im, Director General of NBC, said that the latest figures indicate that Cambodia has 630,000 commercial accounts holders and about 670,000 clients of microfinance lending organizations, adding around 10 percent or 1.3 million people, can borrow money from the banking system.
“In Cambodia, people can borrow money … only if they have valuable assets, land or house titles,” he said, adding that “they get loans of only about 10 percent to 20 percent of the value of their collateral”, said Yim Sovann, Sam Rainsy Party lawmaker, quoted by the Phnom Penh Post.
According to the National Institute of Statistics of Ministry of Planning, the Inflation rocketed to 25.1 percent in the first half of 2008 and dropped to 13.46 percent in December. Cambodia’s economic growth was up double digit during 2005-2007. 2009 growth would be projected 6.5 percent and inflation would drop to 10 percent.
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