After the reign of the ‘Khmer rouge’ ended in 1992, the Cambodian microfinance sector has boomed. Emerging from isolation, large-scale aid and relief operations followed, with the first microfinance experiments laying the foundations of a microfinance industry now reaching almost half a million micro entrepreneurs. Currently, microfinance is one of the fastest growing sectors in the Kingdom of Cambodia and one of the most rapidly developing microfinance sectors globally.
Next step for MFIs
Within the microfinance sector, regulation has been, and still is, mainly pioneered by Acleda Bank, Cambodia’s largest and most renowned Micro Finance Institute (MFI), although there are many more MFIs active in Cambodia, all willing to take the next step forward in the development of their core-business. MFIs and insurance companies are constantly developing new products. Financial regulation only took effect recently, in 2000. The current focus lies with offering insurance products (insurances policies are worth around $20 million): mainly car-insurances, and (in smaller amount) also health-insurances.
Current pension provision
At the moment the Cambodian government does offer a form of pension provision, but this product is not very reliable. Large companies are allowed to save part of their employees’ income in order to provide pensions for their employees, but these also contain several hooks and eyes and can not be seen as full-fledged pension provisions.
Demand for savings products
From contact with Cambodian MFIs, the Pension & Development Network learned that implementing pension schemes in the Cambodian market is difficult. Because of a lack of financial regulation and the lack of trust in the country’s financial institutions, people are reserved to deposit their money for longer term and demand the possibility to access their savings at any given moment. The current development of the Cambodian financial market focuses on short-term (1 to 3 years) savings products, and aims to build bridges toward long-term (5 to 10 years) savings products. The Pension & Development Network is currently looking into possibilities of assisting in the development of these savings products.