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Logo of Phnom Penh Post newspaper Phnom Penh Post - Rice duties scrapped to halt rising prices

Rice duties scrapped to halt rising prices

C AMBODIA has waived customs and excise duty on rice imports to curb soaring local prices for the national staple, which has been hit hard by civil war and unseasonable weather.

A senior government official announced the decision to scrap the seven percent tax, saying the tax would not be reinstated until the end of the year.

"The aim is to preserve stability of the rice price on the local market," Finance Ministry adviser David Ashley told Reuters, adding that Cambodia faces an expected production shortfall this year of 180,000 tonnes.

Ashley said standards of living had been hurt by the price rises. In April, 1992, a kilogram of rice cost 178 riel (seven cents).

The price skyrocketed when UN peacekeepers arrived a year later to around 978 riel (39 cents), easing to 753 riel (30 cents) last April, according to the Cambodia Development Resource Institute.

Ashley said prices were running at around 800 riel (33 cents) now.

The government has blamed the production shortfall on a guerrilla war being waged mainly in the northwest provinces, traditionally regarded as Cambodia's rice bowl.

In fertile Battambang province, Cambodia's main rice growing region, agricultural production was hit severely by a government military offensive in March and a Khmer Rouge counterattack in April, when the rebels advanced to within 20 Km of the provincial capital.

The World Food Programme (WFP) has said it is ready to provide 40,000 tonnes of rice worth $15 million to plug the production gap.

WFP official Kenro Oshidari said war and unseasonable rains were behind the shortfall.

"It's a combination of factors, both man-made and natural," he said. "Kompong Thom province is one of the worst-affected areas, it rained at the wrong time, while in Battambang it was security."

Oshidari said dry-season fighting in Battambang and Banteay Meanchey had displaced over 50,000 people.

"It disrupted the land preparation period for planting," he said. "Even for the people who went back, a lot of their homes were burned or destroyed; they'd lost their tools and there were newly laid mines," he said. "There was a risk from ploughing that they would hit a mine."

Cambodia is among the world's most heavily mined countries. An estimated 10 million land mines lie buried throughout the country.

A July 19 announcement on state radio confirmed that the guerrilla war was hurting agricultural production.

One well informed transportation source said he was sceptical about nation-wide rice shortages and said the aid work could be counterproductive.

"The distribution of free rice lowers prices and encourages it to be sold abroad. Price rises are not necessarily a bad thing - after all 80 percent of Cambodia's populations gets its income from rice production."

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