Local rice miller Amru Rice will be the recipient of the first loan to Cambodia’s private sector that has been guaranteed by the Export-Import Bank of the United States (EXIM), a government agency that provides loan, guarantee, and insurance products to aid the export of American goods.
The loan, amounting to $345,400, will be disbursed by Atrafin LLC, a US-based banking institution, and will be used to purchase a grain storage system from SCAFCO, a manufacturer of agricultural equipment in Washington State.
Some analysts hail the move as a positive step in diplomatic relations between the Kingdom and the US, the world’s largest economy. This relation was strained after the Cambodian Supreme Court dissolved the country’s main opposition, the Cambodian National Rescue Party (CNRP), which led to a diplomatic row between the two nations.
“The transaction is the first use of EXIM’s term financing for a buyer in the private sector in Cambodia,” EXIM said.
“Although Amru Rice could access funding from Cambodia’s government-owned bank, it was unable to obtain term financing from local commercial banks. EXIM’s guarantee enabled the company to obtain credit on longer repayment terms for the purchase from a US supplier.”
EXIM staff is now working closely with the US embassy in Phnom Penh on an upcoming trade mission in June to stimulate additional purchases of US agricultural equipment and products, according to the bank.
Jeffrey D. Gerrish, EXIM’s acting president and chairman of the Board of Directors, said that “EXIM is pleased to support this financing in the private sector in Cambodia.
“This transaction represents an expansion of the use of our products in this market and signals that EXIM is open and willing to assist Cambodian buyers seeking to buy American-produced goods and services on longer repayment terms.”
Jim McDonald, SCAFCO’s CEO, said the deal would not have been possible without EXIM’s support.
“We worked hard to win this sale. EXIM’s support not only helped us to seal this deal but also has generated new interest in US manufactured equipment in Cambodia. And that’s good news for our employees in Washington.”
Atrafin’s CEO Stephen Greene said he was pleased to support SCAFCO’s export sales and Amru Rice’s expansion of its business.
“Our initial underwriting assisted EXIM in considering this transaction without a local bank guarantee, and we applaud EXIM on this first financing in the private sector.”
Song Saran, president of Amru Rice, told Khmer Times yesterday that the loan guarantees that they will continue to supply the international market.
“It will allow us to keep larger amounts of rice in storage. We can now buy more paddy rice from our famers and store it for longer in good conditions. It will help us continue exporting our rice.
“The loan is not big, but it is important. We now know that EXIM Bank will support small-business owners here, many of which lack the capital to expand their businesses,” he said.
Anthony Galliano, CEO of Cambodian Investment Management, said it was a milestone deal.
“It demonstrates that transactions can be executed with the support of an EXIM guarantee between international commercial lenders and local Cambodian companies.
“It fills a void in the market when local commercial lenders in Cambodia lack the appetite for international trade credits.
“The transaction demonstrates that EXIM can assist Cambodian buyers of American-produced goods and services, and will open up and facilitate trade with Cambodian companies as buyers, which should whittle away at the huge trade deficit the US has with Cambodia, in a small way,” Mr Galliano added.
Atrafin LLC is a commercial lender established in 2003 that has worked through EXIM since 2006 to provide financing for medium-sized foreign buyers interested in purchasing US-manufactured equipment. It has financed US exports to buyers in Central and South America, sub-Saharan Africa, and other emerging markets.
Cambodia’s milled rice exports fell by nearly 3.5 percent during the first three months of the year. Only 161,115 tonnes were sent abroad, compared to 166,678 tonnes the year before, according to figures from the Ministry of Agriculture.
Cambodia sends rice to 63 countries, with China as the top buyer, followed by France, Malaysia, Gabon, Poland, the Netherlands and Britain.