Cambodia Launches Energy Efficiency Fund with ADB Support to Boost SME Investment

The Asian Development Bank (ADB), in collaboration with the Royal Government of Cambodia through the Ministry of Mines and Energy, the Small and Medium Enterprise Bank of Cambodia (SME Bank), the Credit Guarantee Corporation of Cambodia (CGCC), CIMB Bank, and FTB Bank, has launched the Energy Efficiency Revolving Fund (EERF) to support increased investment in energy-saving technologies in Cambodia. Ms. Yasmin Siddiqi, ADB Country Director for Cambodia, stated that the EERF is an innovative mechanism complementing ongoing ADB-supported reforms to accelerate clean energy transition and promote inclusive and sustainable finance. "This is an initiative that responds to the current situation where energy security is affected by the conflicts in the Middle East," she said. "By fostering public-private collaboration, this initiative aims to mobilize greater private sector investment in energy efficiency, expand access to finance for businesses, and pave the way for a competitive, low-carbon, and resilient economy." The EERF is a financing mechanism established under Cambodia’s Energy Transition Sector Development Program, designed to boost investment in energy-saving technologies by local small and medium-sized enterprises (SMEs), which constitute over 90% of operating businesses in the country. By providing access to more favorable financing terms with flexible financial products, the EERF will enable SMEs to invest in modern, energy-saving equipment and practices, thereby improving their competitiveness through reduced energy costs and reliance on imported fossil fuels. With an initial capitalization of $20 million, managed by ADB—including $12 million from the United Kingdom through the ASEAN Catalytic Green Growth Fund (ACGF) and $8 million from the Green Climate Fund (GCF) through the ACGF’s Green Recovery Program (GRP)—the EERF will support Cambodia in achieving its National Policy on Energy Efficiency target of reducing energy consumption by 19% compared to business-as-usual levels by 2030. Dr. Thy Narith, Secretary of State of the Ministry of Mines and Energy, stated that energy efficiency is the cheapest and cleanest energy source for Cambodia's energy transition, offering the most effective means to reduce energy costs, enhance energy security, and cut emissions. "The EERF will help translate the National Policy on Energy Efficiency into action by accelerating investment in energy-saving technologies and supporting Cambodia's goal of reducing energy consumption by 19% by 2030," he emphasized. The fund will be implemented by SME Bank, with CGCC providing partial credit guarantees supported by grants from the Asia Climate Partners (ACliFF). These guarantees will be offered to participating financial institutions as an alternative financial product, aiming to reduce lending risks and encourage loans for businesses lacking collateral, which remains a significant challenge for most SMEs in Cambodia. The EERF will also specifically focus on women-led and women-empowered enterprises, which often face greater obstacles in accessing bank loans. Dr. Pan Phalla, Secretary of State of the Ministry of Economy and Finance and Chairman of the Board of Directors of SME Bank, noted that this project builds on the success of the SME Co-Financing Scheme launched by SME Bank in 2020 in response to the COVID-19 pandemic. He added that the scheme played a crucial role in enabling both registered and unregistered SMEs to access favorable and affordable financing terms. "For the EERF, we will work closely with participating financial institutions to ensure rapid fund disbursement to accelerate the adoption of energy-saving technologies among SMEs," Dr. Phalla affirmed. "We are proud to support investments that enhance energy efficiency and drive long-term growth." CIMB Bank and FTB Bank are the first financial institutions to join the EERF, and their resources will be used to expand green lending operations. Mr. Heng Vuthy, Acting Chief Executive Officer of CIMB Bank, stated their core purpose is to uplift customers and society, viewing energy efficiency as a direct driver of business growth. "Through the EERF, we will provide SMEs with the capital they need to improve their operations, reduce high operating costs, and enhance their competitiveness," he highlighted. "This is not just about reducing environmental impact; it is about empowering Cambodian businesses to increase profitability and build long-term commercial success." Mr. Dit Vutheall, Chief Executive Officer of FTB Bank, expressed delight in being part of this significant initiative to expand access to green finance for Cambodian enterprises. "By jointly managing risks and strengthening lender confidence, the EERF creates opportunities to scale up investments in energy efficiency, helping enterprises become more competitive and sustainable," he added.