The government has set aside $250 million for direct financing in 2022 through two state-owned financial institutions at low interest rates, and is resolved to encourage commercial banks and microfinance lenders to provide additional credit to support agriculture and other priority sectors, according to Minister of Agriculture, Forestry and Fisheries Veng Sakhon.
The state-owned banks are Small and Medium Enterprise Bank of Cambodia Plc (SME Bank) and Agricultural and Rural Development Bank of Cambodia (ARDB).
The move was revealed at a virtual closed-door meeting last week to review and discuss preparation of a “Draft Strategic Framework and Programme to Restore and Stimulate Cambodia’s Economic Growth in Living with Covid-19 in the New Normal”, which was presided over by Minister of Economy and Finance Aun Pornmoniroth.
Sakhon said in a statement that the document is designed to reform and introduce measures to rehabilitate the agricultural sector, which it flags for its apparent continued high potential to support food security, underpin economic growth and create jobs.
He noted the government has rolled out fiscal and financial support measures and incentives to inspire investment in agriculture and develop the agro-processing industry, a move he said has helped the Kingdom enhance local agricultural products to meet consumption demand and further increase exports.
The minister added that the direct loans from SME Bank and ARDB under the financing mechanism set for 2022 would have “low interest rates of around five to 5.5 per cent for key segments such as cultivation, animal husbandry, agricultural product processing and ecotourism”.
“At the same time, the government will encourage commercial banks and microfinance institutions to increase lending by revising the credit guarantee conditions of the Credit Guarantee Corporation of Cambodia [CGCC], by expanding the scope of guarantee coverage in conjunction with other favourable terms,” he said.
Mostly unscathed by Covid shocks, agriculture and agro-industry were considered high-potential sectors during the crisis – as demand for food increased – for the alleviation of the burden and impact shouldered by other sectors, by providing employment and income for families and the national economy.
Cambodia Rice Federation chairman Hun Lak told The Post on November 22 that the agriculture-centred financing mechanism would provide many benefits to growers and lead to investments that prop up production, to meet demand for domestic consumption and exports.
Agricultural products play an important role in creating jobs and improving family economies, especially during Covid, he said.
“In the past, government financing for agriculture had been for the rice sector, but since the Covid-19 crisis, the government has considered a lot of other segments such as crop growing, livestock raising and agricultural product processing.”
He noted that processing and packaging were not so much an issue when it comes to exports, but that matters concerning the procurement of fresh fruits and vegetables require further discussion and government-supported agreements on phytosanitary rules that cover the entire supply chain, from cultivation to packaging and transport.
Citing the agriculture ministry’s National Phytosanitary Database, Sakhon previously reported that Cambodia exported 6,364,607.24 tonnes of agricultural products in January-October, surging by 87.53 per cent year-on-year from 3,393,915.64 tonnes, valued at $4,071,571,098.37, to 68 countries and territories.
