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ARDB to lend $300M to agro-industry SMEs

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Agricultural and Rural Development Bank of Cambodia (ARDB) director-general Kao Thach. Hong Menea

ARDB to lend $300M to agro-industry SMEs

The Agricultural and Rural Development Bank of Cambodia (ARDB) expects to disburse $300 million in loans this year at low interest rates for small and medium-sized enterprises (SMEs) in the agro-processing, agro-industrial and agricultural sectors.

The loans will further contribute to the government’s policy of promoting and encouraging an upswing in domestic agricultural production to ensure food security and increase export capacity.

ARDB director-general Kao Thach told The Post on January 25 that the state-owned enterprise plans to increase lending for the agricultural sector to the extent possible to capitalise on its development, buoyed by an expansion in its capacity to grow crops, livestock and aquaculture.

However, the government has yet to issue an in-depth plan outlining how much additional capital it would allocate to ARDB for the year, he said, noting his intent to submit his own proposal.

“We hope that the ARDB’s loans this year will be able to reach $300 million, but that’ll hinge on additional capital funding from the government,” Thach said.

He said government policy to promote agriculture has made the sector move at a brisk pace, especially when compared with the year-ago period.

Last year, ARDB disbursed about $245 million to rice millers, exporters, livestock and agricultural SMEs, he said. This represents a 45 per cent jump from 2019.

Chan Sokheang, vice-president of the Cambodia Rice Federation (CRF) and chairman and CEO at Signatures of Asia Co Ltd, said ARDB’s current loan disbursement rate has rocketed from the year-ago period.

While loans have contributed significantly to increasing milled-rice processing and export capacity, he cautioned that the domestic rice sector now faces a large outflow of paddy to Vietnam, which he said could impinge on the 2021 volume of milled-rice exports.

He said: “We really appreciate and welcome the additional lending of ARDB, but we also request the government take additional consideration into controlling paddy production and outflows, irrigation and new seed development – given how very imperative these are – to help boost exports of Cambodian agricultural products to international markets.”

Hong Vanak, director of International Economics at the Royal Academy of Cambodia, said ARDB plays a key role in the development of agriculture by subsidising those in need to uplift the industry.

He stressed the significance of ARDB’s position in contributing to national economic growth and collecting international currencies to inject into the national economy.

“Increasing ARDB’s funding will, in turn, garner much enthusiasm among farmers and investors in its lending, and accelerate Cambodia’s agricultural diversification to meet domestic demand and boost exports,” Vanak said.

In a show of support for farmers and investors in the agricultural sector, ARDB in May cut the annual interest rates from six to five per cent for working capital and from 6.5 to 5.5 per cent for capital investment, free of service charges.

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