PRIME Minister Hun Sen announced yesterday that the government would guarantee 50 percent of commercial bank lending to rice producers in a bid to increase Cambodia’s exports of the grain to a million tonnes by 2015.

Speaking at a Phnom Penh unveiling of the government’s new rice production and export policies yesterday, he said borrowers would still have to repay loans, but the state would cover 50 percent of defaulters’ payments.

“We decided to create this policy in order to encourage all commercial banks to provide loans to be used for expanding paddy production and rice exports without worrying,” he said.

ACLEDA Bank Chief Executive Officer In Channy predicted the government’s guarantee would encourage commercial banks to increase agriculture lending.

However, In Channy said ACLEDA would not immediately increase its loans to the sector.

ACLEDA was responsible for more than half of lending by commercial banks to the agricultural sector last year, according to National Bank of Cambodia’s statistics.

In Channy said agricultural lending already exceeded the in-house limit of 15 percent of its total loan portfolio.

ACLEDA extended credit of US$99 million to the agricultural sector during the first seven months of the year.

Canadia Bank would increase agricultural loans in response to the new guarantee, after lending $12 million to the sector last year, its country manager Bou Ros said yesterday.

Hun Sen said Cambodian farmers generally harvested only one crop of rice per year, with relatively low yields, but that the industry had the potential to lift future production. “Our goal is to try our best to exceed domestic demand by as much as 4 million tonnes per year by 2015.”

The seven-point plan to increase production of Cambodia’s “white gold” yesterday included strategies to build irrigation systems, provide technical services, land reform, financing, marketing, developing farming communities and improving institutions.

Cambodia has plenty of potential to increase rice exports, according to Yang Saing Koma, president of the Cambodian Centre for Study and Development in Agriculture.

“I believe that Cambodia will become one of the world’s biggest rice exporters in half a decade,” he said.