Two Cambodian banks have set aside US$200 million for loans to bolster the Kingdom’s struggling rice-milling industry, officials said yesterday.
The move comes as the Cambodian government has called on the private sector to boost loans to rice millers during the harvest season as a way to curb paddy exports to neighbouring countries.
ANZ Royal Bank and Canadia Bank said yesterday they would prioritise lending to rice millers given the government presently lacks the funds necessary to subsidise the still-developing sector.
“ANZ Royal is very keen to expand it’s lending to rice millers. In fact, I’d be happy to make $100 million available today for millers with the right credit quality,” CEO Stephen Higgins said.
The lending market to rice millers is very competitive at the moment, Higgins noted, as many banks have been aggressive in chasing potential customers.
Canadia has also set aside $100 million to loan to the agriculture sector, especially rice millers, Vice President Dieter Billmeier said yesterday. He noted that agriculture loans account for 8 per cent of all the bank’s loans, and the rice industry comprises a significant part of that lending.
The government has reached out to the private sector to provide much-needed capital to rice millers, as public funding as of now cannot meet the industry’s need.
“The problem is a lack of capital to buy rice for stock. We need US$200 million to $300 million. If we don’t have enough, the rice will flow to other countries,” Son Koun Thor, general director of state-run Rural Development Bank, said on Monday.
RDB holds $60 million in working capital for loans to rice millers, Son Koun Thor said. Beyond that figure, some commercial banks are working with the industry as well.
Chhun Thom, a rice miller in Prey Veng province, where most unmilled rice is shipped to Vietnam, agreed that paddy-buying capacity is constrained by companies’ small budgets.
“Of course, we got some money from the bank, but it is still limited unless we have enough collateral” to ensure the loans, he said. “But if we don’t have that collateral, we cannot get the loans.”
Prime Minister Hun Sen had said previously that Cambodia will export 1 million tonnes of milled rice by 2015, however experts have countered that the country lacks the milling capacity necessary to meet that goal.
Much of the country’s unmilled rice is shipped to Thailand and Vietnam for processing. As a result, help from the private sector will be crucial, Son Koun Thor said.