Dr. Serey attributed this growth to the introduction of new features in the Bakong system, which has driven user adoption and financial inclusion in Cambodia. Launched in October 2020, Bakong facilitates secure and efficient interbank transactions between financial institutions, promoting financial inclusion as a core objective. The system empowers users to make mobile payments and transfers seamlessly across different institutions within the country. Additionally, Bakong has integrated with regional partners, enabling cross-border money transfers.

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In her keynote address, H.E. Cham Nimul highlighted Cambodia’s vibrant and promising business climate. She emphasized the country’s remarkable economic growth, averaging over 7% annually for the past two decades. This success, she attributed to a strong foundation of political stability, sound economic policies, and a government that actively fosters public-private dialogue.

The MOC, working collaboratively with the MOT, is actively developing frameworks to facilitate competitive business operations and enhance the overall business environment.

Cambodia’s foreign direct investment (FDI) is projected to surge in 2024, reaching an estimated US$4.25 billion, which translates to roughly 9.0% of the country’s GDP. This optimistic forecast comes amidst a flurry of investment activity in key sectors.

Minister Cham Nimul encouraged investors to explore the vast potential Cambodia offers, from its growing economy and strategic location to its advancements in the digital sphere.

Cambodia’s commitment to digital transformation was also a key focus. The Minister highlighted several government initiatives, including the Cambodia Data Exchange (CAMdx), verify.gov.kh, the National Single Window, CambodiaTrade.com, the Digital Economy and Society Policy Framework, the Digital Skill Development Road Map, and digital payment systems like Bakong.

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However, promoting the riel domestically requires a multi-pronged approach. Vice President Lor Vichet of the Cambodia Chinese Commerce Association (CCCA) emphasizes the importance of encouraging savings in riel. Historically, the dollar’s influence grew alongside the UN’s presence in Cambodia.

Shifting consumer behavior takes time. Vichet acknowledges the need for refined financial policies and payment infrastructure. Additionally, import costs and car purchases often rely on USD, creating a hurdle.

Simple solutions exist. Malls and supermarkets displaying prices in riel can normalize its use. Similarly, mobile phone top-ups could transition from USD to riel, leveraging Cambodia’s booming mobile payment sector.

The National Bank highlights the success of mobile payments, with transactions reaching 1,100 million in 2023. The Bakong system is a prime example, boasting millions of accounts and facilitating payments across numerous businesses.

By embracing technology, the NBC aims to streamline transactions, promote financial inclusion, and ultimately, strengthen the riel. This aligns perfectly with the government’s vision of a digital, socio-economic Cambodia.

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The deployment of modern payment systems, the development of apps for QR code-scanning payment, and Internet usage have facilitated the digital payments in a secure and fast manner, the NBC said in a press statement.

“Digital payment transactions in Cambodia are growing rapidly through the use of credit cards, debit cards, money transfers, in particular QR code scanning payment, ranging from small to large shops, covering almost everywhere across the country,” it said.

The total number of mobile payment transactions in KHR and US$ rose to 1,100 million in 2023, with a total amount of US$492 billion, equal to 16 times gross domestic product (GDP), read the statement.

Among the payment systems, the use of Bakong system has increased significantly, with a total of 27.6 million accounts, available for payment with more than 2.9 million shops and services throughout the country by the end of 2023.

Developed by NBC in partnership with Japanese tech firm Soramitsu, Bakong allows Cambodians to transfer and receive digital funds using their smartphones without traditional bank accounts.

In the context of technology progress, the NBC has grabbed the opportunity to develop a payment system, enabling payment transactions easier, safer, and faster, particularly solving obstacles in inter-bank payment transactions, NBC Governor H.E. Dr. Chea Serey said recently.

“Efficiency of the payment transaction system has actively contributed to boosting trading of goods and services, financial inclusion, and promoting Khmer Riel uses, which support the target of the government’s digital socio-economic development,” she underlined.

The NBC’s report was made to reject a result of a survey by digital payment service provider VISA stating that the use of digital payment methods in Cambodia is declining and still low, and that the use of cash continues to increase, contrary to regional trends.

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The inauguration ceremony on Mar. 25, 2024 with participation of Mr. Ing Kimleang, Deputy Governor of Siem Reap, Mr. Benjamine Bootle, Managing Director of AGG Business Asia, and Mr. Ing Siv Khov, Director of ING Holdings Co., Ltd, with relevant officials.

Situated in Meanchey commune, Prasat Bakong district, Siem Reap province, the corn farm is equipped with the latest agricultural technology as revolutionising modern farming practices in Cambodia’s agricultural sector.

Mr. Ing Siv Khov said that with the integration of cutting-edge agricultural technology, the farm aims to enhance competitiveness and elevate Siem Reap’s agricultural landscape.

The partnership between AG AGRIBUSINESS ASIA and ING Holdings underscores a pioneering approach to agricultural development, ushering in a new era of innovation and sustainability in Siem Reap’s agricultural sector.

Deputy Governor of Siem Reap Mr. Ieng Kimleang congratulated and thanked the firms for choosing Siem Reap to invest in corn growing on about 1,000 hectares in Prasat Bakong district.

“Through this investment, the province hopes that the company will continue to increase investment in Cambodia, especially Siem Reap province to participate in the province’s development and contribute to increasing employment,” Mr. Ieng Kimleang said. AKP

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The sector reported that 25 percent of its loans and 16 percent of deposits are now denominated in Riel, the Cambodia Microfinance Association (CMA) said in a press release issued on Mar. 25.

The total loan balance in Cambodian Riel escalated to an unprecedented KHR 5.56 trillion. Furthermore, the volume of Riel deposits at Microfinance Deposit-taking Institutions (MDIs) has swelled to KHR 1.52 trillion, signaling a notable shift in the public’s saving habits toward the local currency.

These figures are indicative of a growing confidence in the national currency, greatly surpassing the benchmarks previously set by regulatory bodies, CMA said.

Under the stewardship of the National Bank of Cambodia (NBC) and collaboration with the CMA and other stakeholders, extensive efforts have been made to broaden the public’s understanding and embrace of the Riel. Initiatives focusing on improving financial literacy, advocating for adopting digital transactions in Riel, and highlighting the advantages of a vigorous local currency system have been critical. These endeavours have paved the path toward establishing a more inclusive and durable financial environment nationwide.

Ms. Dith Nita, Chairperson of the CMA, highlighted the strategic importance of these initiatives. “The comprehensive approach that our members adopted in 2023 was designed to elevate the Riel’s role in our financial transactions and to deepen our community’s relationship with our national currency. This effort is crucial for creating an inclusive and resilient financial ecosystem,” she said.

The influence of microfinance loans on the Cambodian economy has been significant, touching upon various sectors such as households, commerce, agriculture, and beyond, she added.

“Our targeted interventions across these sectors have not only propelled economic activity but also emphasised the microfinance sector’s integral role in supporting Cambodia’s developmental ambitions,” Ms. Dith Nita commented.

According to CMA, the remarkable growth in transactions through Cambodia’s Bakong payment system, with a 3.4-fold increase in Riel transactions, significantly outstripping those in U.S. dollars, underscores a year of unparalleled success for the national currency.

“This leap forward symbolises a concerted push towards cementing the Khmer Riel’s position as a preferred medium of exchange, bridging the gap between digital and traditional commerce. It’s a clear indication of Cambodia’s journey towards economic self-sufficiency and sustainability,” CMA said.

Cambodia has 59 commercial banks, nine specialised banks, and 87 microfinance institutions across the country, with 16.5 million deposit accounts and 3.8 million credit accounts, pointed out the NBC report.

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The official launching ceremony was virtually held on Dec. 22 under the presidency of H.E. Mrs. Chea Serey, NBC Governor, H.E. Wang Wentian, Ambassador of the People’s Republic of China to the Kingdom of Cambodia, H.E. Top Sopheak, Secretary of State and Spokesperson of the Ministry of Tourism, and relevant officials.

From today onwards, visiting UnionPay cardholders will be able to use their UnionPay-enabled wallets, such as the UnionPay app and commercial bank apps that are enabled for UnionPay QR Code payment, to scan KHQR codes to complete payment transactions at approximately 1.8 million merchants in Cambodia, H.E. Chea Serey said.

Additionally, by early 2024, Cambodian residents will be enabled to use their Bakong wallet to make payments at UnionPay QR code accepting merchants in China and globally, thereby optimizing the mobile payment experience during international travels, she said.

“The introduction of cross-border QR code payments between the National Bank of Cambodia’s Bakong and UnionPay International will elevate the level of financial cooperation between both institutions by leveraging the technology to benefit users in both countries and globally,” the NBC governor said.

“This collaboration will substantially contribute to the promotion of trade, tourism activities, and financial inclusion in Cambodia,” she underlined.

On July 10, 2023, both parties signed a Memorandum of Understanding, agreeing to jointly promote cross-border QR code interoperability between their networks.

As a facilitator, it has enabled cross-border payment linkages and is currently undertaking cross-border payment projects with partner and regional countries. At present, the National Bank of Cambodia has successfully launched cross-border QR code payments with Thailand, Lao PDR, and Vietnam.

Promoting safety and efficiency in innovative products and services is a main objective of NBC to support the financial inclusion agenda of the Royal Government of Cambodia and further encourage digital payments. To this end, NBC is committed to further enhancing the safety, security, and convenience of cross-border payments.

As a regulator and overseer, the NBC has formulated regulations, policy frameworks, and rules and procedures to manage, supervise and support payment systems.

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Addressing the event, H.E. Ms. Chea Serey shared her perspective on digital money provided that Cambodia has already launched the Bakong system which can be considered as one form of digital money with many features similar to that of the Central Bank Digital Currency.

According to NBC, digital money has become a global topic in recent years given its potential benefits that can boost productivity and improve economic outcomes in particular it can improve efficiency, lower costs, and enhance financial inclusion.

However, it added, that digital money also brings about some concerns on financial stability and stronger consumer protection. The conference gathered strong minds and talents of policymakers and academia around the globe to share experiences and discuss major policy dilemmas surrounding digital money.

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National Bank of Cambodia (NBC) Governor H.E. Mrs. Chea Serey and State Bank of Vietnam’s Governor H.E. Mrs. Nguyen Thi Hong presided over the launching event held in Siem Reap province on Dec. 3.

This enables people of the two countries to make safe, secure, convenient, and affordable cross-border payments and also to promote the usage of their local currencies, according to an NBC news release.

“The launch of the cross-border QR payment system between Cambodia and Vietnam is also expected to benefit Cambodians and Vietnamese citizens, especially tourists and merchants,” the Cambodian central bank said.

Under the project, Cambodian travelers will be able to make payments in Vietnam in Riel via the Viet QR code, while Vietnamese customers can make payments in Cambodia in the Vietnamese Dong via the KHQR code.

KHQR is a universal quick response (QR) code system created for retail payments in Cambodia. It only requires a single QR to receive payment from any mobile app including the Bakong app.

NBC in 2022 launched the KHQR code payment service, aiming at promoting mobile retail payments in the country.

Besides Vietnam, Cambodia also makes bilateral cross-border QR code payment cooperation with its neighboring Thailand and Laos.

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She made the remarks at CamTech Summit 2023 held at the Centre for Banking Studies, Phnom Penh on Nov. 30.

The summit was organized by NBC in collaboration with the Cambodia Association of Finance and Technology around the theme: “Forging Partnerships: Fostering Collaboration and Innovation for Digital Financial Services in Mekong and Beyond.”

The CamTech Summit is a unique opportunity to provide an integrated platform for policymakers, regulators, businesses, and Tech players from various sectors to discuss the recent advancement of technologies both in Cambodia and globally, the opportunities and challenges they provide, and their growing importance in shaping the Cambodian economy in the digital era, especially in the context of recovery from the Covid-19 pandemic.

“This platform will promote awareness, coordination, exchanging of views, knowledge, and experience among all stakeholders and enable policymakers and regulators to gather input for better design of appropriate policies and regulations to cope with fast-evolving technology, and especially prepare Cambodia for the transition towards a digital economy and moving from a middle income to an upper middle-income country,” she said.

In partnership with and in support of the private sector, the NBC has been at the forefront of this trend, leveraging new technologies to modernize payment systems by introducing a range of innovative solutions – the most prominent being our Bakong backbone for payment systems to enhance interoperability, promote financial inclusion, and facilitate the ease of using the Cambodian Riel, she said.

While the offer of digital financial services has kept growing over the years, especially since it enabled the financial sector to demonstrate its resilience throughout the Covid-19 pandemic, the FinTech industry has been given the opportunity to play a significant role in promoting financial inclusion, provided a number of challenges are addressed, NBC Governor said, adding that such challenges include digital literacy especially in the rural areas; cybersecurity risks; data privacy and data protection.

The NBC is committed to further supporting FinTech adoption, innovation, and fair and transparent competition as reflected in its FinTech Development Roadmap (FDR) 2020-2025 in alignment with the objectives of the Financial Sector Development Strategy (FSDS) 2016-2025, the National Financial Inclusion Strategy (NFIS) 2019-2025 and Digital Economy and Society Framework by the Royal Government of Cambodia (RGC). AKP

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