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Loan for Silos in Limbo

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There seems to be no definite period of when a $300 million loan from the Chinese government, to build large silos to store rice for milling, will be disbursed to the Cambodian government.
 
According to a report last December, Cambodia’s Ministry of Economy and Finance sent a draft memorandum of understanding to the Chinese government seeking a loan of about $300 million to build 10 large silos, which could store a total of 1.2 million tons of paddy rice to ensure both millers and exporters could have a continuous supply of the commodity.
 
Mey Kalyan, advisor to the Supreme National Economic Council said the process to get the loan from China was going ahead and negotiations were continuous. 
 
But Mr. Kalyan agreed that there were certain hurdles in getting the loan.
 
“The issue of the loan collateral is complicated. We can use the paddy rice stored in the silos as collateral, but will that work?” he asked.
 
Mr. Kalyan pointed out that paddy rice is a perishable item and lenders are reluctant to loan money using it as a security.
 
The Cambodia Rice Federation (CRF) has been urging the government to build silos for storing paddy rice in order to boost rice exports. It has also asked for help from the government to provide emergency loans to millers and exporters who are currently in financial doldrums due to cheaper rice flooding the market from neighboring countries. 
 
Hun Lak, vice president of CRF, told Khmer Times that the project to build silos was under the Ministry of Commerce and the Chongqing Grain Group was responsible for the project study.
 
“Chongqing sent their representatives to do a joint study with us for the loan application from the Chinese government. However, till today, we have yet to hear anything from them,” said Mr. Hun Lak.
 
Mr. Hun Lak said that since this project was on a government-to-government basis, the private sector was by-passed.
 
China plans to increase its rice import quota from Cambodia next year and China will import another 200,000 metric tons of milled rice in 2017 on top of their current rice imports from Cambodia. 
 
Cambodia’s rice export in the first six months reached about 268,190 tons, according to a report released by the General Department of Agriculture on Thursday.

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