Bank reports slump in remittances

Photo by: Heng Chivoan
Slumping volumes through Cambodia’s ports have led to a 24.6 percent drop in ACLEDA Bank’s remittances business.

The Phnom Penh Post
Monday, 17 August 2009
Nguon Sovan

ACLEDA counts 25 percent drop in trade transactions over first half of year compared with 2008, but expects an uptick before the end of the year after flows showed signs of recovery in June

Cross-border money remittances through ACLEDA Bank dropped 24.6 percent year on year in the first half from US$727.34 million to $547.83 million, Executive Vice President and Chief Operations Officer So Phonnary said.

The fall was due largely to exports and imports, she said.

"The major decline was due to the drop in garment exports, so money transferred into the country was down," she said. "Because demand for imports of automobiles, machinery and goods and commodities into Cambodia also dropped, the amount of money transferred out of Cambodia was also down."

Outgoing remittances fell 16.4 percent to $284.29 million, and inbound remittances dropped 31.8 percent to $263.54 million.

Even as total remittances fell, the number of transactions increased by roughly 1,500 to 28,000. "Due to the crisis, cross-border trades became smaller in size," So Phonnary said.

So Phonnary said the most severe drop was in January when $39.7 million was transferred out of the country and $40 million in. By June, outbound remittances through ACLEDA had rose again to $54 million, and money coming into the country had increased to $42 million.

"Based on these figures, we expect business activities are going up in the second half of this year, but it's a slow recovery," she said.

Local money transfers through ACLEDA were more stable, dropping 5 percent from $1.24 in the first six months of 2008 to around $1 billion in the first half of this year. Average transaction sizes also fell domestically as the number of transactions rose 145,000 to 526,000.

Transfer fees are 0.1 percent of the total for inbound remittances and 0.17 percent for transfers out of the country.

Figures were not readily available Friday for remittances at other banks, but Union Commercial Bank CEO Yum Sui Sang estimated that cross-border remittances had dropped about 15 percent to an average of around $44 million per month.

"Business slowdown is the main factor," he said. "Exports slowed down, especially garment exports, so the money remittance declined."

Cambodian Public Bank country head Phan Ying Tong said remittance figures were unavailable. "I don't have the figures to compare, but I think the volume is quite stable.... It hasn't dropped dramatically or increased dramatically.

Tal Nay Im, director general of the National Bank of Cambodia, said Friday that the central bank did not directly supervise remittances and did not have figures to hand.

"[The crisis] has definitely reduced business activities between Cambodia and foreign countries," she said. "I hope the global economy recovers; when the economy recovers the banking industry will recover, too."