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Logo of Phnom Penh Post newspaper Phnom Penh Post - Chinese loan for rice sector on hold

Chinese loan for rice sector on hold

A project to build 10 warehouses to store rice paddy using Chinese funding has hit a roadblock, as the Cambodian government has been unable to meet criteria set by the Chinese for the project, according to an official associated with the project.

Project leader and senior adviser to the Supreme National Economic Council (SNEC) Mey Kalyan told the Post yesterday that while a draft memorandum of understanding had been submitted to the Chinese government late last year, Cambodia has not responded to Chinese requirements on the loan.

“There are some technical problems from our Chinese counterparts. Both parties are looking at their own benefit, and now we are negotiating.”

Kalyan, however, could not comment on whether it was likely that Cambodia will secure the loan.

Announced in November, the loan was meant to support warehouses which are part of a government plan to store 1.2 million tonnes of paddy, in a bid to ensure uninterrupted supply to millers and exporters.

Hun Lak, vice president of Cambodia Rice Federation (CRF), said that members lacked the capital to purchase rice for storage during the harvest season, adding that the Cambodian government has said it will try to help the CRF with this.

“So far there is no help from the government, but they are working on this issue,” he said.

A lack of proper warehousing facilities has been a major constraint and will continue to hurt the rice sector if left unaddressed, said Srey Chanthy, an independent economic analyst.

He said, however, intervention in the form of capital injection by the government could help rice millers and exporters, as has been done in the past.

“It [the government] has gotten the Rural Development Bank to give loans to rice processors and exporters for this purpose and at good interest rates,” he said.

Rice exports totalled 283,825 tonnes for the first six months in 2015, an increase of almost 60 per cent compared to the same period last year, as reported by the Secretariat of One Window Service for Rice Export Formality.



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vandavid's picture

The project simply put a false set of objectives that do not serve neither the common good nor solve Cambodian farmers and millers competitiveness. The two key issues and priorities are providing loans at less than 4% per annum and firmly develop our waterways to allow transport of goods up to the sea like neighboring countries do. Anything else would be futile.

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