This article discusses Cambodia's escalating debt crisis, highlighting the urgent need for new laws to protect citizens from overwhelming debt, especially in microfinance. It examines the failures of the national bank in regulating risky financial institutions like Prince Bank, the involvement of criminal elements, and the consequences of high non-performing loans. The author calls for slow, sustainable economic growth and reforms to prevent future financial disasters.
The ongoing financial situation in Cambodia is becoming increasingly alarming. The debt crisis, particularly related to microfinance, is deepening and threatens the economic stability of the country. This article aims to shed light on the issues surrounding Cambodia's debt crisis, the failures in regulation, and the urgent need for new laws to protect the citizens.
The information shared here is intended solely to help the Cambodian people. The insights come from a long-term perspective, foreseeing problems before they fully manifest. The goal is to warn and prepare citizens before the crisis worsens.
In 2023, a video was made warning that Cambodia was heading towards a severe debt crisis. The proposed solution was to enact new laws that would protect citizens by granting them the right to erase their debts and start anew. This law would specifically target microfinance institutions, not banks.
The key points of the proposed law include:
Such laws are common in developed countries but have yet to be implemented in Cambodia.
Despite warnings, Cambodia has not enacted these laws. The debt crisis has worsened over the past three years, even before any potential conflicts with neighboring countries. The rapid expansion of financial influence within the country is dangerous; instead, growth should be slow and healthy.
Not everyone can borrow money to buy houses, trade Forex, or invest in Ponzi schemes without consequences. Many have lost thousands of dollars in scams and fraudulent projects. It is time for Cambodia to reflect and clean up its financial system to prevent repeated mistakes.
Several critical mistakes have been made by the National Bank of Cambodia:
Licensing Prince Bank Without Proper Background Checks: Chen Zhi, a major criminal involved in fraud amounting to tens of thousands of millions of dollars, invested 250 million dollars to open Prince Bank. The National Bank failed to investigate the source of this money.
Failure to Monitor Prince Bank: Despite significant losses (50 million dollars in one year), Prince Bank was not placed under proper supervision in 2025.
Ignoring High Non-Performing Loans (NPL): The international standard for NPL is between 3% to 5%. Prince Bank's NPL reached 12% in 2024 and could rise to 20-30% in 2025. The National Bank did not include Prince Bank in the watchlist despite these alarming figures.
High NPLs do not necessarily mean a bank is insolvent immediately, but they indicate serious financial health issues. Prince Bank has a Common Equity Tier 1 (CET1) capital of 188 million dollars, which can be used immediately. However, continuous losses of 50 million dollars per year could lead to closure within 1-2 years.
The international community is aware that Prince Bank has been used by criminals for money laundering. It is concerning that the National Bank of Cambodia was unaware of this until international sanctions were imposed.
If the National Bank does not reform and continues to allow risky practices, similar financial disasters will recur. The system must be overhauled to prevent future crises.
Cambodia is currently facing a deepening debt crisis exacerbated by inadequate regulation and oversight. The failure to enact protective laws for citizens and to properly supervise financial institutions like Prince Bank has put the country at risk. It is imperative for Cambodia to implement new laws that protect borrowers, enforce strict oversight on financial institutions, and promote slow, sustainable economic growth to ensure the financial health of the nation and its people.
The warnings have been made clear; it is now up to the authorities and citizens to act before the crisis worsens further.
