The Ministry of Economy and Finance announced on Monday that the government will block all illegal rice imports at its borders and limit legal rice shipments from Vietnam based on production cost.
As part of the new regime, only milled rice with a production cost of $300 to $600 per tonne can legally be imported from Vietnam. The goal, according to the ministry, is to eliminate cheap Vietnamese rice that sells for $200 or less per tonne from the Cambodian market.
The ministry also requires identifying features, such as the name of the rice producer, rice variety and any trademarks, to be visible on imported packages in order to assess its true cost.
Moul Sarith, secretary-general of the Cambodian Rice Federation (CRF), the industry body representing the Kingdom’s rice millers and exporters, said the new policy would help Cambodia’s struggling rice sector survive amid an onslaught of cheap Vietnamese milled rice.
“This mechanism will control the flood of rice imports from Vietnam as well as rice smuggling,” he said yesterday. “It will also control the quality rice in the market.”
According to Sarith, Vietnamese rice produced for $200 to $300 per tonne was cheaper than locally milled rice, even with a 17 per cent import and VAT tax assessed.
He also said the government will exempt rice producers from paying a 15 per cent tax on day-worker salaries, as well as give a $20 million to $30 million loan to the CRF to help keep the local industry afloat, provided the organisation can produce a transparent spending budget.
In March, the CRF called on the government to take urgent measures aimed at addressing two key challenges to the domestic industry: millers’ insufficient access to capital and the flood of illegal rice imports from neighbouring countries.
The request followed a separate initiative by the Cambodian Rice Industry Survival Implementation Strategy (CRISIS) group, which provided a nine-point action plan to address what it described as an industry on the brink of collapse.
The government agreed to strengthen entry points along Cambodia’s borders to block illegal rice imports on March 30.
According to Kann Kunthy, CEO of Battambang Rice investment Co Ltd, the government has always claimed to support the rice sector, yet in reality provides little assistance.
“We need the government to take better action instead of talk a lot,” he said. “The government should take action on rice smuggling as it is much more prevalent than legal rice imports.”