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Logo of Phnom Penh Post newspaper Phnom Penh Post - Chinese bank pads million tonne rice goal

Chinese bank pads million tonne rice goal

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A woman dries paddy rice in Prey Veng province. Photograph: Derek Stout/Phnom Penh Post

China's Export-Import Bank officials proposed to provide loans of up to US$70 million for rice milling in an effort to aid Cambodia’s efforts to export a million tonnes of rice by 2015, government officials said yesterday.

The bank’s officials visited Cambodia last week to met with Cambodian government officials and rice millers to study the feasibility of providing loans to the rice processing sector to aid exports of rice to China.

Son Kunthor, president of the Cambodian state-owned Rural Development Bank, told the Post that his Chinese counterpart proposed the establishment of $70 million in loans for rice milling, which would enable the production of between 270,000-450,000 tonnes of unmilled rice.

The $70 million would be but a fraction of the $200 million that Cambodia seeks to improve the nation’s rice milling facilities as it aims to accellerate its exporting of rice in accordance with Prime Minister Hun Sen’s wishes.

Kunthor, said that of the 270,000 tonnes of milled rice, 210,000 tonnes of milled rice would be exported to China, 50,000 tonnes would be exported to world markets, while the final 10,000 tonnes would be distributed to the domestic market.

Under the proposed loans rice mills would be established in the Battambang, Banteay Meanchey, Prey Veng or Takeo province.

“This is their plan. We don’t know how much about it or if it will come to fruition, because first there are some conditions the government needs to ensure,” he said.

When an agreement will be reached was not disclosed because Kunthor’s Chinese counterpart requires the Cambodian government to insure the loan, while the government needs more time to examine the proposal and before making a decision. Approval must also be sought from the National Assembly as well, he said.

“The government is examining the proposal, but when a decision will be made is unclear,” he said, adding that the the discussed loans would have an annual interest rate of one per cent, with the interest rate jumping to 2.5 per cent for loans to the private sector.

Sen Rith, president of Siem Reap’s Rice Milling Association, said the private sector also met with the bank officials, but for any agreement to be made they need the government’s guarantee on the loans.

Interest rates between three and three per cent annually are fine for the producers, and better than any interest rate received from domestic banks, which are between eight and 10 per cent a year, he continued.

“Our private sector always looks to co-operate with the government and to have low interest rates, so the government should insure it,” he said.

Lim Sokundarun, director of Cambodian Center for Study and Development in Agriculture (CEDAC), said Cambodia’s challenges for the rice sector include the lack of the capital to purchase paddy rice for stocking and processing. Inevitably there is some loss from the processing of rice, more rice would enable the producers to meet demand.

“It is very good that there are foreign investments coming into Cambodia, in order to push us to meet the Prime Minister’s rice exporting target.”

Prime Minister Hun Sen has set the goal of exporting a million tonnes of rice a year by 2015, when Cambodia will join the ASEAN Economic Community. Cambodia is currently not on track to meet this years goal of exporting 250,000 tonnes of rice due to the drought that is affecting many regions of the country.

To contact the reporter on this story: Rann Reuy at reuy.rann@phnompenhpost.com

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