Cross-Border Credit Report Sharing Collaboration For Enhancing Financial Inclusion Of Cambodians In Korea
Credit Bureau Cambodia (CBC) has joined hands with Korea Credit Bureau (KCB) and Jeonbuk (JB) Bank to seek mutual collaboration to establish cross-border credit reporting sharing between the Kingdom of Cambodia and the Republic of Korea.
An official Memorandum of Understanding (MoU) was signed on May 16, 2024 during the Cambodia-Korea Business Forum in Seoul, in the presence of Prime Minister of Cambodia, Hun Manet, and the Korean Minister for Trade, Industry and Energy, Ahn Duk-geun.
Senior government leaders, central bankers and senior executives from credit bureaus, financial institutions and businesses from both countries also attended the event.
According to a press release issued by CBC, this initiative aims to develop cross-border credit sharing mechanism between the two countries. It can play a significant role in enhancing access to finance for more than 50,000 Cambodian workers in Korea.
Korea is the second most popular destination among Cambodians for labour migration. In the Korean foreign labour market, Cambodia stands as one of the top countries with workers in the less skilled category. On the other hand, as per latest data from the Korean Ministry of Foreign Affairs, there are 10,608 Koreans living in Cambodia.
Moreover, Korea is one of the top sources of Foreign Direct Investment in Cambodia. As more Korean businesses are seeking investment opportunities in Cambodia, the number of Koreans living in Cambodia are also likely to grow further.
“Cambodia and Korea already have good bilateral relations in terms of trade, investment and financial sector cooperation. We are happy to additionally bring the two countries under this framework of cross-border credit report sharing that can directly benefit a large number of Cambodians overseas to support their access to access for improving their quality of life," said H.E. Rath Sovannorak, Deputy Governor of the National Bank of Cambodia (NBC) and Chairman of CBC.
With increased mobility in the global workforce, cross-border sharing of credit reports has become a more pressing issue in recent years. When individuals move to a new country, they often have difficulties in accessing credit from banks and financial institutions due to lack of credit history in the new country.
While such individuals may have established credit histories in their home countries, typically, they cannot be shared across the border. The lack of transparency and bilateral sharing of an individual’s previous credit history creates potential obstacles for credit applications when relocating to live or work in another country. Credit history information plays a very important part in a lender’s loan application assessment process.
CBC and KCB have committed to putting in efforts to develop the cross-border credit report sharing initiative to fill this information gap. Once the mechanism is ready for implementation, upon an individual’s application for any credit facility, this will permit the retrieval of up-to-date and legitimate credit reports directly from the source i.e. the credit bureau in the individual’s home country which is likely to contain a complete and comprehensive account of the individual’s credit history.
Such an initiative can make it possible for member financial institutions of CBC and KCB, upon obtaining the individual’s consent, to access the individuals’ credit report(s) where the individual has made an application for a credit facility with that financial institution. With the credit data obtained, financial institutions will be able to make more thorough assessments on an individuals’ credit worthiness before extending credit facilities to them.
“Economic exchanges between Korea and Cambodia have greatly expanded, resulting in an increase in immigration and labour force. We are very pleased to pursue this cross-border credit report sharing initiative with CBC as leading bureaus representing both nations to improve the access of Cambodians to credit in Korea," said Hwang, Jong-Sup, CEO of KCB.
Jeonbuk Bank is a member of KCB and a leading financial service provider in Korea with commitment to promote access to finance of Cambodian workers. JB Bank plans to develop customised credit products to Cambodians working in Korea and ease the credit assessment by utilising cross-border credit reports. Furthemore, JB Bank shall also collaborate with CBC and KCB to assess the feasibility of reporting credit history data of Cambodians in Korea to CBC to facilitate their access to finance.
“The MOU stems from Jeonbuk Bank's unwavering commitment to promoting financial inclusion. As a leading bank to support migrant workers in Korea with financial solutions, we are delighted to collaborate with CBC and KCB to provide Cambodian nationals with an enhanced range of benefits and differentiated financial services," said Baek, Jong-Il, CEO of Jeonbuk Bank.
“We are pleased to join hands with Korea Credit Bureau, a leading credit bureau in Korea with our commitment to support a large number of Cambodians living and working in Korea in enabling access to financial services. Financial inclusion of our citizens within and beyond our borders is our key priority. This is the second bilateral cross-border credit reporting sharing collaboration that CBC is planning after it launched the first partnership with Credit Bureau Singapore in March 2023," said Sothearoath Oeur, Chief Executive Officer of CBC.
This press release was supplied.