The Cambodian League for the Promotion and Defense of Human Rights (LICADHO) and Korean Transnational Corporations Watch (KTNC Watch) today filed a complaint to the United Nations Working Group on Business and Human Rights and four other Human Rights Council Special Procedures mandate holders detailing predatory practices and gross human rights violations in Cambodia’s microfinance sector.

The submission calls on the mandate holders to examine Cambodia’s over-indebtedness crisis and issue communications to relevant national and international business enterprises, investors, governments and institutions. These communications can play a role in alleviating the worst impacts of this crisis for Cambodia’s most vulnerable borrowers by calling on relevant actors to bring the sector in-line with international human rights standards including the UN Guiding Principles on Business and Human Rights (UNGPs).

The complaint concerns the activities of local Cambodian financial institutions and their international shareholders and investors, including the South-Korea-based KB Financial Group, Dutch state development bank FMO, Sri Lanka-based LOLC, and other state and private investors.

“Cambodia’s microfinance crisis continues to worsen, despite years of public reporting and pleas for international investors to get serious about providing remedy,” said Naly Pilorge, outreach director for LICADHO. “Our clients are losing their land, livelihoods, and even lives to these predatory microfinance lenders – they desperately need relief, and the international investors who continue to profit from these predatory loans need to start providing it.”

Cambodia’s microloan sector now stands at more than $16 billion. Average loan sizes are above $5,000, the highest average size in the world and more than three times median annual incomes in Cambodia. Meanwhile, domestic credit to the private sector reached more than 170% of GDP in 2023, putting Cambodia in fourth place globally and reflecting a broad over-indebtedness problem in Cambodia that extends to the microloan sector.

Microfinance institutions and banks that offer microloans continue to pressure Cambodian borrowers to sell land, borrow from informal moneylenders, and take their children out of school to repay debts. These loans often disproportionately harm women, Indigenous peoples and people living in poverty.

"These predatory lending practices lead borrowers and their families into deeper poverty and adversely impact their rights to food, health, education, and an adequate standard of living,” said Misol Kang from KTNC Watch. “Pursuant to the UNGPs, all actors in the value chain, including parent companies, investors, lenders, and governments, must take urgent measures to address these adverse impacts and provide remedy to victims."

The Working Group is a special procedure body of international human rights experts set up by the United Nations Human Rights Council in 2011 to promote, disseminate and implement the Guiding Principles on Business and Human Rights, as well as to make recommendations for the implementation of those principles.

PDF: Download full statement in English - Download full statement in Khmer
MP3: Listen to audio version in Khmer