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Logo of Phnom Penh Post newspaper Phnom Penh Post - Rice-smuggling toll nears half a million tons

Rice-smuggling toll nears half a million tons


It's nearly full moon and the night sky illuminates a wooden boat heading out of

the river port of Angkor Borei in Takeo province. Loaded inside are 50 tons of unmilled

rice, known as paddy. Incense sticks on the bow give off a dull glow.

Workers load 70 kilogram sacks of unmilled rice, known as paddy, on to boats headed to a border crossing with Vietnam.

The boat is headed to Vietnam. It is one of dozens that unofficially export rice

from Cambodia, predominantly in the main harvest season that runs from December to

February.

Hean Tech, whose shipment this is, grabs a torch and climbs in to a longboat. He

is headed downstream to the border checkpoint where he will pay the authorities for

permission to sell his load in Vietnam. It is one of several charges, known euphemistically

as 'informal fees', the traders make. Tech is a busy man.

"We export paddy rice day and night," he says pointing to his laden boat,

barely distinguishable from three others headed to Vietnam. "Particularly in

these three months once the wet season rice has been harvested."

Tech says at this time of year he shifts around 140 tons of rice a day, and around

20,000 tons a year. He is one of ten traders at the port running rice across the

border.

The route he uses through Angkor Borei is only one of several in the area. In the

adjacent province of Prey Veng, traders operate out of Kampong Trabek, Koh Sapov,

Chakrey, Svay Ro Gnoung, and Kaom Sam Nor.

The profit margin on a kilogram of rice seems low - between 20 and 50 riel per kilogram;

it is the sheer volumes that make it lucrative.

Half an hour later the fast boat delivers Tech to the checkpoint just inside the

Cambodian border. Electricity shimmers from Bac Dai on the Vietnamese side. Although

the slow boat that carries his rice won't reach there for another two hours, men

will work through the night to unload and reload the 70 kilogram sacks from Cambodian

boats onto one of a dozen Vietnamese counterparts.

It is hard to call this smuggling, since that is an activity normally associated

with evading tax and customs duties. Rice exports merely require a license, which

is given for free by the Ministry of Commerce. Tariffs on rice exports are zero.

However there is some alarm at the amount of undeclared rice exports. The Cambodia

Development Resource Institute's 2001 economic review stated that the country's surplus

production "urgently requires an export market". Excessive illegal rice

exports could affect the country's food security. Only six years ago Cambodia had

to import rice to feed its people.

After the sacks are unloaded from trucks at Angkor Borei, workers reclaim spillage from broken bags. It was only in 1995-1996 that Cambodia once again grew enough rice to feed its people.

It is not known how much rice is exported illegally. The CDRI report states that

only a few thousand tons are registered exports, but the body estimates that as much

as 470,000 tons went across the country's borders in 1999. That equates to half the

surplus achieved in 2000, says the country's Rice Millers' Association (RMA).

"During the main harvest season, a significant proportion of paddy was reportedly

exported to Thailand and Vietnam," the CDRI report stated. "Unofficial

reports indicate that over the past five years, large quantities of paddy have been

illegally exported to Thailand and Vietnam. These exports have happened exclusively

through the illegal border checkpoints where 'informal fee/taxes' are collected."

Although the traders pay no official fees, they regularly pay cash at the checkpoints

along the way. The traders at Angkor Borei complain loudly at the extortion they

encounter.

One trader, who asks not to be named, says there are simply too many officials collecting

bribes along the route. There are ten checkpoints on the 10 kilometer stretch between

Angkor Borei and the border, and traders pay up to 50,000 riel at each one.

"It is too much to pay," he complains, watching his workers load paddy

rice. "I end up spending as much as 500,000 riel ($125) for each trip."

With each boat carrying 50 tons, that works out to $2.50 per ton, a figure that still

excludes numerous other fees he will incur.

The CDRI estimates that the full cost of fees totals as much as $15 a ton. If the

government rather than local officials gathered that revenue, it could earn an extra

$7.5 million a year. That amounts to three-quarters of the government's 2002 budget

for the Ministry of Agriculture.

The president of the RMA, Phou Puy, says the majority of the paddy goes to Vietnam.

Seventy percent of all paddy grown in Pursat province is exported to Vietnam, says

Puy, as is 90 percent of the crop from Takeo, Svay Rieng, Prey Veng and Kandal. Around

one third of the harvest from Siem Reap, Banteay Meanchey and Battambang provinces

also crosses the border into Vietnam.

The only solution, he says, is for domestic rice millers to step in and buy this

surplus. He says that would cost as much as $10 million, capital his members simply

don't have. To help them, the RMA plans to borrow the money from the Rural Development

Bank.

"At the moment we cannot export milled rice, because we don't have enough cash

to buy paddy rice from the farmers for stock," says Puy.

Back on the Vietnamese-Cambodian border the moon is high in the night sky. Tech's

boat has arrived and, after paying the Vietnamese authorities, has crossed the border.

The Vietnamese rice traders welcome him and after inspecting his load, agree to buy

all 50 tons. They order another boatload of jasmine rice and make a down payment

of 30 million Vietnamese dong, around $2,000.

While Tech's wife goes to exchange the dong for riel at the local moneychanger, a

drunk Vietnamese soldier approaches him and demands Tech ferry him to the opposite

bank. Tech's Vietnamese is as limited as his sailing skills, and he has trouble explaining

to the soldier that he cannot help him.

Eventually the man climbs into a rowing boat and is taken to his checkpoint on the

opposite bank. When Tech crosses to the checkpoint he is threatened and manhandled.

It takes 20 minutes before he and his boat are allowed to sail back into Cambodia.

He is both angry and philosophical about the encounter.

A trader checks incoming rice for quality. This load was deemed good enough for export.

"We have to keep them happy all the time," he says. "If not, then

they just make it difficult to do business, even though we pay them import taxes."

The RMA's information officer, Hort Bunsong, says the secret trade in rice cause

the country to lose out in many ways. The more unmilled rice goes out of the country,

the fewer people are employed at the rice millers. Also the government loses tax

revenue on gasoline used to power the mills.

Cambodia also foregoes the bran from the milled rice, which is normally used for

animal feed, and the husk, which is burned for fuel.

"That means the country loses all this potential income," says Bunsong.

"The way I understand it, other countries don't even allow paddy rice to move

from province to province, never mind allowing it to be exported."

That is of little concern to the likes of Tech, who is back in Angkor Borei early

the following morning. Overloaded trucks have brought more rice from across the country:

Kampong Speu, Battambang, Siem Reap, Kampong Thom, Pursat and Preah Vihear.

Tech negotiates the price for another 50 tons of jasmine rice, then orders his men

to load up. By 8 am his boat, low in the water, casts off, turns slowly with the

current and heads back to the Vietnamese border.

Paddy figures for 1999/2000

Rice cultivation area:
2.2 million hectares
Production:
1.9 tons per hectare
Total amount harvested:
4.18 million tons
 
 
Source:
CDRI Annual Economic Review 2001

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