Royal Government of Cambodia:

·         Ensuring that every Cambodian, particularly the poor, has access to credit should be a primary concern.  To do this, the government must ensure the development of a strong micro-financial sector that provides reliable access to credit to the poor, particularly the rural poor.

Included. RGC has established a Rural Development Bank (RDB) to support micro-finance and rural finance sector. The mission of the RDB is to enhance agricultural and rural development. RDB provides financial and technical support to MFIs.

·         There should be constant dialogue between the government and implementers, both in the formation of laws but also in formulating methods of improving the sector.  

Not specifically included, although the need for MRD to “coordinate with the Rural Development Bank, relevant institutions, external agencies and NGOs” is recognized.

·         Maintain a stable political and economic environment.  Adopt economic and legal policies that encourage private investment, lower inflation and maintain a stable exchange rate in order to promote rural economic growth.

Included. A financial system will be developed to facilitate domestic and foreign investment, and the Ministry of Economy and Finance has adopted a policy of avoiding central bank's financing of budget deficit, which could have impact on the exchange rates, prices and inflation.

·         Avoid interest rate controls as they undermine the development of the micro-financial system.  Allow for the free market to promote positive real interest rates on both deposits and loans.

Not specifically included.

·         Amend the influential shareholder liability requirement from the law and review the licensing period of three years, which are disincentives for serious investors interested in the microfinance sector.

Not included.

·         Strengthen the legal system that allows for fair enforcement of contractual obligation and fosters conflict resolution.

Not included.

·         Avoid talks of debt moratorium or politicians talking of paying debts of borrowers as this undermines the successful implementation of credit and savings programs and can harm the medium term goal of developing a strong rural financial market.

Not included.

·         Waive taxation on interest earnings of small savings depositors to encourage local savings  (e.g. Thailand does not tax savings interest if interest on savings does not exceed 1,000 baht).

Not included.

·         Waive taxation on gross receipts of MFI for a limited period of time (three to five years, similar to tax holidays given to private investors) to allow MFI to improve their services and strengthen their financial and operational capacity. For this limited time period, MFI will be exempt from gross receipt tax but will have to pay taxes on net profit.

Not included.

·         Consider waiving taxes on organizations with strong social objectives.

Not included.

·         Formulate a policy, legal and regulatory framework that allows for diversity in institutional structures and credit delivery schemes for both the formal and non-formal financial institutions concentrating on regulation and supervision which creates a conducive environment for micro-credit to thrive. 

The need to allow diversity is not mentioned in the text, but an improved system of supervision is included in the Action Plan matrix.

·         Organizations undergoing formalization should be given sufficient time and adequate support and training to become licensed MFI. 

The Action Plan Matrix (2.5.) refers to “developing a system to support and supervise MFIs, introduce prudential norms for licensed MFIs…improving the capacity to support licensices MFIs… “ A budget for such activities is not included.

·         Proactively pursue establishment of deposit guarantee institution (be it government or privately owned) to promote client confidence in the financial sector and strengthen deposit mobilization, a necessary component of a strong rural finance sector.

Not included.

Donors:

·         Allow for diversity of implementation strategies. 

Not included.

·         Introduce complementary development programs to address the constraints to micro-enterprise development and rural economic growth.

Not included.

·         Provide substantial support for training and technical assistance to develop Cambodia’s human resource and institutional capacity at all levels. 

Capacity building of licensed MFIs included in the Action Plan matrix. (2.5.).

·         Provide funding assistance for organizations involved in transformation. 

Not included.

·         Enhance donor coordination to ensure that donor funded programs complement the development of the micro-finance system.

Not included.

·         Avoid supporting programs that are neither transparent nor accountable to external controls. 

Not included in the text, but the Action Plan matrix includes developing and improving supervision of MFIs.

·         Promote the formation of an Association of MFIs to avoid bad practices, over-indebtedness of households and sharing of information.

Not included.