Message From Chairman – FUNAN Microfinance PLC

To reach the poor, promoting access to microfinance has been regarded as the significant mechanism in improving socio-economic environments in Cambodia’s post war reconstruction and rehabilitation. The microfinance sector got its start in Cambodia in the early 1990s. Since then, the sector has grown very impressively. The expansion of the microfinance sector in Cambodia has made it possible for borrowers to shift from informal to formal sources of credit, especially among the poor and receiving the protections properly while all formal institutions are well-managed under the supervision of National Bank of Cambodia, adopting the Client Protection Principles (CPP).

As the subsidiary of the Cambodia Post Bank Plc, FUNAN Microfinance has played its role to complement to mass-market segment of low income and rural people contributing to reduce the poverty in Cambodia through its mission. With 51 branches and Other branchless operation areas and the business cooperation with local Payment Service Institution (PSI) FUNAN is reaching where is underserved especially rural area across the country. For the past three years after the acquisition, the asset size of FUNAN have been increasing of 69% (Y-o-Y) in line with the right demand of the segment and a proper screening to assure loans have been provided with positive impact.

The growth of sector supported by economic growth, approximately around 7% in the last decades in which per capita increasing from USD786 in 2010 to USD1,621 in 2019, more than hundred percent increment, resulting from the country peace and stability attracting lots of the tourists and investors. For instance in 2019, the Foreign Direct Investment (FDI) was increasing to USD3,592M, 45% growth comparing to the last 3 year. The growth of tourists was around 9% increase, 39% and 61% was Chinese and non-Chinese respectively. Increasing of investment in Cambodia is the key factor for reducing the unemployment rate and stabilize people income. Inflation of 1.9% in 2019 contributed to the economic stability.

Due to the new coronavirus disease (COVID-19) pandemic, the resulting economic slowdown in the major advanced economies and the People’s Republic of China, and the country’s reduced access to export markets, Cambodia’s economic growth is expected to drop from 7.1% in 2019 to 2.3% in 2020. Many of garment and footwear factories file for the operational suspension since the beginning of 2020, effecting job suspension of thousand workers across the country. Even if the less infected cases found in Cambodia, but demand and supply shock are the key challenges in the globalization. The purchase orders from the EU and US have been cancelled; and the raw materials import is delayed that are the reasons of all factories asking for suspension. The sectors are defined with serious affect by the COVID-19 including— garment and footwear industry, tourism, construction and other services.

As a Microfinance, FUNAN is ready to support our clients recovering from the Crisis of new coronavirus disease pandemic affect through provide loan restructuring to ensure our clients be sustainable their businesses. With great support from the shareholders both in funding source and technical assistance, FUNAN still would be able to turn this challenges to opportunities gaining more trust from stakeholders including clients, regulators, lenders for the progress of FUNAN in the coming year.

We thank to the Government of Cambodia taking the right steps to respond to the crisis, including providing wage support for garment workers and tax and credit relief for businesses. The government has also created the fiscal space to minimize the economic impact of this crisis, especially on the most vulnerable people.

We thank to National Bank of Cambodia, the central bank, for placing into action of all banks and financial institutions under its supervision to settle all challenges responding to the crisis benefiting to all users. Dealing with this experience, we are optimistic on banking and financial system in Cambodia be stronger and stronger.

For the performance record 2019, it was very appreciated with the financial aspects including, gross loan portfolio growth of 23% from USD46.9 Million in 2018 to USD58 Million in 2019. The year to date total asset is USD59.38 Million, 25% growth. The current year net profit after payable tax is USD2.96 Million.

Last but not least, I would like to thank our dedicated FUNAN team, clients, business partners, regulators, lenders and shareholders for their best effort, cooperating, trusting and support FUNAN Microfinance achieving a fruitful result in 2019.

Yours Sincerely,

Chairman of the Board of Director.