Chairman’s Message – FUNAN Microfinance PLC

Firstly, I would like to thank to the Royal Government of Cambodia for taking appropriate actions against the COVID-19 out-break in Cambodia as we noticed for the confirmed cases happened in 2020 were just 363 (as of 12 December 2020) and mostly the imported cases while the serious out-break were token place in many countries either in region or world. Many cities were confirmed lockdown or implementing the restriction to manage this spread. The authority has responded quickly to the recent spike in cases with fast testing to the direct contacts and implementing the quarantines. As a chairman of board directors of FUNAN and my own self, we keep our commitment to join the Government of Cambodia to overcome this situation for peace and stability .

Even, it is controllable in the country, but the world pandemic disrupted the globalization, supply chain and changing the way of interaction, living. It is totally, affected to Cambodian economy, especially in the key economic drivers including import and export sectors, tourism and transportation. Many of garment and footwear factories filed for the operational suspension since the beginning of 2020, effecting job suspension of more than two hundred thousand workers across the country. These are leading to the economy growth contraction of 2% this year.

The financial sector remains positive in 2020 with sector growth in term of asset was 15.7 percent. A combination of banks and microfinance institutions (MFIs)—grew by 14.8 percent, while deposits increased by 15.4 percent. Total loan portfolio of microfinance institutions (MFIs) was US$6.8 billion, increased 12.5 percent over 2019. The distribution of those loans broke down by category as loans to families at 31.2 percent, loans to commerce and trade at 20.9 percent, loans to agriculture concerns at 18.9 percent, to service providers at 16.2 percent, loans to transport firms at 6 percent, construction at 3.8 percent with others accounting for the remaining 3 percent. This proportion is consistent to the share of FUNAN lending activities. Financial sector experienced with fluctuation of portfolio at risk (DPD30+) month on month in 2020 reflected to income constrain of borrowers in line with the instability of economic activities in the country. By quarter 4 of 2020, the economic activities seem to be recovered, the loan in delinquency was improved and recorded at 1.71% as industry wise while it was 1.64% and 1.63% for Bank and Microfinance sector respectively.

Most of Banks and Microfinance-taking Deposit Institutions (MDIs) in Cambodia in the circumstance of social distancing, have been promoting digital banking with cashless transaction via mobile bank transfer or QR scan. With support from National Bank of Cambodia (NBC) via interconnected systems especially BAKONG system, all FIs were able to interconnect with interbank transfer with free of charge and actively play a vital role for cashless payment or e-wallet in the Cambodian society in this digital era.

As a Microfinance, FUNAN has been supporting its clients to sail through and recovering from the pandemic with providing loan restructuring and loan refinancing 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 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.

We would like to thank the FUNAN team, clients, business partners, regulators, lenders, and shareholders for their hard working, cooperating, trusting, and supporting FUNAN Microfinance Plc. achieving its financial year indicators. We look forward to your continued support in future.

We wish you and your family with happiness, prosperity and success in your business .
Stay safe and healthy.

Neak Oknha Dr. Pung Kheav Se
Chairman of the Board of Director.