clutchcargo wrote: ↑Tue May 19, 2020 5:59 pm

Freightdog wrote: ↑Tue May 19, 2020 1:43 pm

Bitte_Kein_Lexus wrote: ↑Mon May 18, 2020 3:39 pm ... They leveraged themselves out to the max and took out crazy loans against all common sense. Sure, you could argue that it was predatory lending (which it is), but they put themselves in that boat and have to take responsibility for their actions...

In fairness, that’s a common issue in many parts of the ‘developed west’ where reducing education standards result in folk having barely any comprehension of what interest, compound interest, interest rates, etc actually mean. Payday loans at one point seemed an epidemic. The fine print showing a simple loan carry several hundred percent interest doing nothing to deter some borrowers. In my mind, legalized loan sharks.
Now, put the same mentality into a society where education Is often non-existent or wholly inadequate in the first place, and it’s a recipe for disaster.

Mrs Cargo took out a microfinance loan and had no idea how much interest she was paying...all she knew was that she could pay the monthly amount.

Those who dont know what interest is, pay it. Those who know what interest is, receive it. No offense to Ms Cargo, shes in the majority of people and almost all women.

Freightdog wrote: ↑Tue May 19, 2020 1:43 pm

Bitte_Kein_Lexus wrote: ↑Mon May 18, 2020 3:39 pm ... They leveraged themselves out to the max and took out crazy loans against all common sense. Sure, you could argue that it was predatory lending (which it is), but they put themselves in that boat and have to take responsibility for their actions...

In fairness, that’s a common issue in many parts of the ‘developed west’ where reducing education standards result in folk having barely any comprehension of what interest, compound interest, interest rates, etc actually mean. Payday loans at one point seemed an epidemic. The fine print showing a simple loan carry several hundred percent interest doing nothing to deter some borrowers. In my mind, legalized loan sharks.
Now, put the same mentality into a society where education Is often non-existent or wholly inadequate in the first place, and it’s a recipe for disaster.

So its the lack of education that is the problem with borrowing, and mostly not understanding the interest amounts on the money they borrow and that results in them not able to pay the lone back. Whereas the educated wealthy are on the receiving end of gaining monies by having an interest account with the microfinances. I would say most cases its borrowing beyond ones means, like the people in the article, they needed money from their two sons. Its easy to see for the borrower "if something happens" we can't afford to payback.
But here we have more then that, being that of a pandemic worldwide effecting people everywhere financially. Governments closed schools and business down to prevent the spread of the virus, has usual the government will not have the finance itself to help the lone borrowers, or the majority of people it may have put out of work on shutdown, although it finds resources for food parcels for the needy, also carries on with other tasks, such has infrastructure and roads of Sihanoukville. It may be said that this time Aid from the west maybe a little more difficult because of the situation, but I think it will arise even so. I also think that is one of the main issues, the country now classed has a developing country, depends on aid, voluntary contributions and loans, even that their are so many rich here. To me the place does not differ in respects of its neighbours, being that you can give but you can not take.

Cambodians Forced to Sell Assets to Repay Loans as Coronavirus Hammers Economy
2020-05-26
As the coronavirus pandemic continues to hammer the economy, many Cambodians are being forced to sell their livestock and farms to pay off debts to banks and microfinance institutions, prompting calls for the government to prevent lenders from collecting during the outbreak.

Some Cambodians told RFA’s Khmer Service that creditor’s agents have even been visiting their homes and demanding loan repayment even though the National Bank of Cambodia has urged them not to do so amid the health crisis, which has seen 124 people in Cambodia become infected with COVID-19, the disease caused by the coronavirus.

A villager from Svay Rieng province, who spoke to RFA on condition of anonymity out of concerns for his security, said an agent from microfinancer Amret MFI visited him recently and threatened to confiscate his property if he refused to pay the U.S. $10,000 he owes, including interest and principle.

He said he was forced to sell off half of a hectare (1.25 acres) of farmland to settle the debt.

“They told me to pay the debt within four to five months, otherwise they would foreclose on my house and auction it,” he said.

RFA spoke to a representative of Amret who said that the lender “needs time to investigate the case in detail” before it could comment on the case.
https://www.rfa.org/english/news/cambod ... 62236.html

PM Says Bank Should Take Action Against Those Who Don’t Want to Pay Back
AKP Phnom Penh, June 24, 2020 --

Prime Minister Samdech Akka Moha Sena Padei Techo HE has called on all banks to take action against anyone who doesn’t want to pay their loans back.

Speaking at the official launch of Cash Transfer Programme for Poor and Vulnerable Households during COVID-19 held here this morning, Samdech Techo HE said there have been some wicked people who took advantage of COVID-19 crisis to incite others to stop paying their bank loans back or to withdraw their deposits from the bank, therefore the authorities and banks should take action against those propagandists.

“Those who want the banks to collapse by refusing to pay their bank loans back and by withdrawing their deposits might be disappointed. I would like to emphasise that I encourage the 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 to understand them because this is a very hard time,” he underlined.

Samdech Techo HE stressed that over the world, there is no case of not repaying the bank despite any situation.

In a joint statement between the Association of Banks in Cambodia (ABC) and Cambodia Microfinance Association (CMA) released in March, the customers affected by the COVID-19 outbreak get the special loan repayment suspension.

The move was made after Samdech Techo HE asked MFIs and banks to consider suspension of loan payments for garment workers whose factories face temporary closure due to raw material shortages in the wake of COVID-19 outbreak.
- AKP

Garment Workers Pressed by Piling Microfinance Debt, Report Says
8 min read

Ouch Sony and Hun Sirivadh Tue Jun 30, 2020 6:40 pm

Tens of thousands of garment workers, who are facing slashed work hours and wages amid the global pandemic and economic downturn, will struggle to repay mounting microfinance debt, a new civil society report says.

The majority of more than 100 surveyed microloan-holding union workers said they were already eating less food or had taken another loan to repay their debts, according to the report released on Tuesday by labor rights group Central, human rights organization Licadho and the Cambodian Alliance of Trade Unions (CATU).

The vast majority of surveyed workers, all CATU members from three garment factories located in Phnom Penh and Kampong Chhang province who were questioned between March and May, said they would not be able to repay debts if their factory suspended operations and that “their livelihoods were much worse or slightly worse after taking a loan,” the report says.

Among the 158 loan holders polled, the most common reason for taking on debt of any kind was to repay another loan. More than half of the workers said they had borrowed from microfinance institutions (MFIs), while a quarter took loans from relatives, a fifth borrowed from private lenders and just 4 percent borrowed from banks.

Of the 106 microloan-holding workers surveyed, 16 had sold land in order to repay their microloan, while 32 others said they planned to sell land in the future. Nearly 80 percent of all microloans were collateralized by land titles, a common financial practice which the civil society groups have said puts borrowers at risk of losing their land and livelihoods as well as potentially leads to other human rights abuses, including human trafficking and child labor.

The groups again called on MFIs to stop requiring land titles as collateral and for the government to require MFIs to return millions of land titles currently held by lenders to their owners.

Before the Covid-19 pandemic, the average worker was already spending more than they could earn in one month on food, rent, household expenses and loan payments, the report says. Now, surveyed workers were earning less than $100 per month on average — less than a quarter of their average monthly household expenses — after dozens of garment factories have suspended operations during the pandemic.
https://vodenglish.news/garment-workers ... port-says/

Can Cambodia’s Looming Microfinance Disaster be Averted?
A solution to Cambodia’s spiraling debt crisis is urgently required, but risks uncovering deeper economic problems.
David Hutt
By David Hutt
October 09, 2020

Now that it is generally agreed that Cambodia’s microfinance sector has utterly failed to achieve its original, honorable goals – and, worse still, has produced a debt crisis that risks driving tens of thousands into poverty and landlessness – attention is turning to possible solutions.

In a recent article, four senior members of Cambodia’s civil society, associated with the Center for Alliance of Labor and Human Rights, argued that “what is needed is relief in the form of debt forgiveness and write-offs, in significant numbers, to prevent borrowers from losing their land en masse.” A fine suggestion, but some of the intricacies must be discussed. First, debt forgiveness for whom? If we assume that not every borrower can have their debts wiped out – given outstanding microfinance debt now exceeds $10 billion, just under a third of GDP – then some criteria must be established. Will debt forgiveness only be extended to the poorest of borrowers, or those most at risk of losing their land or homes put up as collateral, or those most likely to fall further into poverty if they are forced to make repayments?

Should one also examine the reasons for their indebtedness? Put differently, should there be bailouts for unscrupulous debtors who invested unwisely or selfishly, as well as for debtors who genuinely tried to use their loans sensibly but now cannot make repayments, either because of the economic downturn, or because they had no choice in taking on such debt, such as by having to pay for essential medical care?

A report published in December 2018 by Lor Samnang, a researcher at the local think-tank Future Forum, asserted that only one-third of microloans surveyed went towards financing “economic activities,” like opening or expanding businesses, the main purpose of microfinance to begin with. The remainder went on either essential services, such as unexpected medical bills, or on non-profitable spending like consumer goods. Between 2009 and 2017, household consumption more than doubled in Cambodia, from $7.92 billion to $16.78 billion.

One doesn’t like to resurrect the “deserving poor” versus “undeserving poor” trope, but if the reasons for the individual debt aren’t going to be factored into potential write-offs, then the situation could get messy. For starters, blanket, no-questions-asked write-offs are hardly useful for solving problems of financial illiteracy in Cambodia, which must be factored in as at least one reason for the current situation.

I appreciate that it is a controversial argument, but at some point we must ask how it was that some individuals took on debt they must have known they couldn’t afford, to such an extent that the average microloan is now double GDP per capita. Clearly, many indebted people are victims of the system. But to assume victimhood in all cases doesn’t really help us answer the important questions of what went so terribly wrong, especially if we want to avoid a similar scenario in the future.
Another challenge is the social problems that are likely in the event of a selective debt amnesty. Anger would be a natural response if your neighbor had their debt written-off because they couldn’t repay a loan they took out to buy a motorbike while your family was left repaying a loan taken to start a now-failing business.

The second major query is who makes these decisions. The MFIs, perhaps through the Cambodia Microfinance Association, could take the decision themselves to write-off, say, a tenth of all debts – though a tenth may still be too small a percentage to make much difference. Outstanding microloans are estimated to sit at around $10 billion, so wiping out a tenth of debts would see MFIs lose around $1 billion. Such losses would be easier to absorb for the large, more profitable and generally foreign-owned MFIs (especially those that stick to rules on capitalization) compared to the smaller, less-profitable ones. Yet such an agreement is optimistic: if MFIs are so unscrupulous as to have created this problem, as many critics claim, then why think they will suddenly become beacons of altruism when their own bottom lines are affected?

The same international development agencies that once promised a microfinance utopia for Cambodia might also play some part in the decision-making. But between them and the MFIs, any meaningful decision might not be made until well into next year, whereas the crisis calls for immediate solutions. Indeed, the debt mounts every day that Cambodia endures the present COVID-19-induced economic crisis, and pre-pandemic levels of employment and growth are not likely to return until at latest the middle of 2021, if not later.

Full article: https://thediplomat.com/2020/10/can-cam ... e-averted/

December 14, 2020 8:00AM EST
World Bank: Investigate Cambodia’s Micro-Loans

(Bangkok) – The World Bank Group should investigate alleged coerced land sales and other rights abuses linked to predatory lending and over-indebtedness in the micro-loan sector, Human Rights Watch said today. These longstanding problems have worsened during the economic crisis resulting from the Covid-19 pandemic.

An external report in March 2020, the Microfinance Index of Market Outreach and Saturation (MIMOSA), based on data provided by the World Bank Group’s International Finance Corporation (IFC), found serious problems in Cambodia’s micro-loan sector. Civil society groups and investor-commissioned reports have corroborated these findings, which highlight the need for action to protect micro-loan borrowers in the country.

“International donors to Cambodia’s micro-loan sector should not be feeding a system that is abusing the rights of highly indebted borrowers struggling during a public health and economic crisis,” said Phil Robertson, deputy Asia director at Human Rights Watch. “The International Finance Corporation and other microfinance donors should conduct field investigations guided by human rights considerations before making further investments in the sector.”

The MIMOSA scorecard, which measures market penetration for micro-loan borrowers, found that Cambodia’s rate of credit saturation was the highest among the 11 countries it studied. Loan sizes in Cambodia have continued to rapidly grow over the years, resulting in the insurmountable over-indebtedness of borrowers. The MIMOSA report noted that client protection is “uneven,” and there are “no clear [government policies] regarding aggressive sales and debt collection practices.”

It reached the “worrying finding” that seizures of collateral, which most commonly is land in Cambodia, are a regular part of collection practices.
Full article: https://www.hrw.org/news/2020/12/14/wor ... icro-loans

The little town of Prey Veng is full of microfinance company's many of them new, the towns booming these past couple of years, new petrol stations, hotels,shops, and big home's getting built.