The government has decided to strengthen entry points along Cambodia’s borders to block illegal rice imports, while promising to dissolve any company’s certificate of origin that is caught mixing contraband rice for export, Cambodian Rice Federation (CRF) president Sok Puthyvuth announced following a meeting yesterday with Deputy Prime Minister Kheat Chhon.
Additionally, the government will scrap the value added tax (VAT) on imports of rice milling machinery – a move aimed at reducing millers’ high capital costs.
“As result of the meeting, the government has decided to drop the VAT on milling machines for the rice industry,” Puthyvuth said.
Members of a government task force attending the closed-door meeting also considered a request by the CRISIS (Cambodian Rice Industry Survival Implementation Strategy) initiative for the government to facilitate $250 million in soft loans to rice millers.
The funding package aims at reducing the financial burden on millers, who typically have to take loans out at 8 to 10 per cent interest from commercial banks or 20 to 30 per cent interest from microfinance lenders.
While Puthyyuth said nothing concrete had been decided about issuing soft loans, a recommendation to reduce logistics costs by facilitating access to Laem Chabang port in Thailand was also discussed during the meeting.
The request to reduce electricity tariffs to about 400 riel per kilowatt hour, was also broached.
“The result of meeting was very productive, and rice millers and members of committee are happy with the results”, said Moul Sarith, acting secretary-general of the CRF. “With the VAT dissolved, it will motivate rice millers to stay in the industry.”
According to Sarith, the government will implement the new requirements after Khmer New Year in mid-April.
The CRISIS group produced a nine-point action plan to address what some described as a rice industry on the brink of collapse. Commerce Minister Sun Chanthol submitted a report that mirrors four urgent measures outlined in this plan to Prime Minister Hun Sen on March 10.
“Out of the four issues under discussion, some are difficult to deal with,” Chhon said, adding that they only dealt with the ones that are possible.