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Rice Group Seeks $30m Emergency Loan

Sok Chan / Khmer Times Share:
Sok Puthyvuth, president of the Cambodia Rice Federation (C), at a press conference yesterday. KT/ Vireak Mai

The president of the Cambodia Rice Federation (CRF) has asked the government for an emergency loan of $20 million to $30 million, saying it is necessary to prevent the collapse of the rice sector. 
The government could provide the funds through the Rural Development Bank (RDB), federation president Sok Puthyvuth told a press conference yesterday, saying he had made the proposal to the government and that the funds would be used for emergency loans to rice millers and exporters. 
Mr. Puthyvuth urged the government to provide the loan free of interest, saying the federation had its own group to monitor and evaluate emergency loans to rice millers and exporters to ensure transparency and prevent them from going bankrupt. 
“It is an emergency source of funds which would be provided only to rice millers facing problems with their business,” Mr. Puthyvuth said. 
Hun Lak, the federation’s vice-president, said seven or eight rice millers had stopped production, most of them in Battambang province.
“The CRF proposes about $20-$30 million in emergency aid to help the rice sector purchase rice and not let it flow outside the country, but we have mechanisms and precise plans to ensure that the fund package provided to rice millers and rice exporters will not cause a loss,” Mr. Lak said.
Song Saran, president of miller and exporter Amru Rice, said last week that a letter was sent to the Commerce Ministry by millers and exporters to explain the current issues and challenges facing rice millers, exporters and farmers.
“We cannot sell in the domestic market in recent years because we cannot compete with Vietnamese rice. The government should increase taxes on imported rice to protect domestic farmers,” he said.
Last week’s letter said domestic rice millers and exporters asked the Commerce Ministry to prohibit imports of milled rice from Vietnam for six months or enact policy measures to stem the flow.
The letter also called for loans of about $500 million at 4 percent interest per annum to help develop infrastructure and cut electricity costs to $0.10 per kilowatt hour so domestic millers could become as competitive as their counterparts in Thailand and Vietnam. It also called for a warehouse to be built at Sihanoukville port with a capacity to hold 20,000 tons of rice.
Mr. Lak said the federation could not limit the amount of imported rice from neighboring countries as there were many ways for it to come into the country.
“If we stopped imports and there was no rice for processing or local consumers to use, inflation would shoot up. It would also affect our economy,” Mr. Lak said. “We have laws, mechanisms and import licenses, so that we can benefit the country.” 
He added that local demand is about 2 million tons a year, with an estimated 500,000 to 800,000 tons flowing into the domestic market from Thailand and Vietnam each year, stressing however that the import figure was a guess. 
Mr. Puthyvuth said the challenges the federation faces is trust between farmers, millers and exporters. “We need to keep a free market base as other countries have other mechanisms. This formula is our power,” Mr. Puthyvuth said. 
Mey Kalyan, a senior advisor to the Supreme National Economic Council, told Khmer Times that the rice business fluctuates, making winners and losers. He said he did not object to a loan to the federation but stressed that it should be made cautiously. 
The loan must be channeled to millers and exporters who really need it, and the process must be monitored, Mr. Kalyan said.  
“Giving a loan to rice millers and exporter is to push their businesses to work, but if those businesses do not benefit the loan will be lost,” Mr. Kalyan said. “I confess that there are many problems in Cambodia, such as logistics, electricity tariffs, bureaucracy and corruption, so in general it can be difficult to work,” he added. 
He said if the federation gave money to the right people it could be beneficial. The federation should carefully consider how it uses the loan, Mr. Kalyan said, adding that the government and private sector should work together to support the rice sector.

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