Seize properties if borrowers refuse to pay loans, Cambodia PM tells lenders
PHNOM PENH: As Cambodia suffers from the Covid-19 economic fallout, Prime Minister Hun Sen has asked financial institutions to confiscate the property of borrowers who refuse to pay loans.
Hun Sen’s remarks came at a time when Cambodians faced unemployment amid what was called a “crisis” in the country’s US$10 billion microcredit sector.
While the government had moved to help lenders, human rights activists and political opponents said the government had done little to pro- tect borrowers.
The Nikkei Asian Review reported that Hun Sen also took aim at what he called “propaganda” intended to incite people to stop making repayments or to withdraw deposits — an apparent reference to a call by self-exiled opposition leader Sam Rainsy for the indebted to hold onto their money.
“Those who want the banks to collapse by refusing to pay their bank loans back and by withdrawing their deposits might be disappointed,” Hun Sen said.
“I encourage banks to seize the collateral of those who believe the propaganda. For those who are trying to pay off their loans, I appealed to the banks be understanding because these are very tough times.”
Rainsy, who fled to France in 2015 to avoid arrest, had seized upon the issue of personal debt to criticise the government.
“We have to get rid of this miserable regime through a campaign of passive resistance by refusing to repay our debts to the banks controlled by the Hun family on grounds of force majeure,” he had wrote on Facebook.
Cambodia has the world’s highest average microloan debt per borrower at US$3,804 — more than double the country’s gross domestic product (GDP) per capita.
Before the pandemic, the International Monetary Fund warned that microfinance institutions, with more than 2.6 million borrowers, posed a risk for Cambodia’s financial and macroeconomic stability because of their “growing systemic importance” to the economy.
The pandemic had also hit Cambodia’s main economic drivers — apparel exports, tourism and construction.
The World Bank said 1.7 million jobs were at risk, while the Asian Development Bank predicted Cambodia’s GDP will contract by 5.5 per cent this year, a steep drop from the more than seven per cent growth the country has enjoyed in recent years.