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Hun Sen wants foreign money to invest in agro-processing

Sok Chan / Khmer Times No Comments Share:
A farmers works in a rice field during the rainy season. KT /Chor Sokunthea

Cambodia’s Prime Minister is calling for more investments on agriculture processing and technology industry in the Kingdom.

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Speaking at a graduation ceremony yesterday, Mr Hun Sen said that more than 2 million hectares of paddy were harvested among the 2.7 million hectares of cultivated land in 2019. He added that Cambodia is expect to have a surplus of 6 million tonnes of paddy on top of domestic consumption, seedling and animal feed.

The Premier added Cambodia can produce a high yield of paddy with more than three tonnes per hectare and, by the end of this year, Cambodia is expected to export 600,000 tonnes of milled rice and more than two million tonnes of unprocessed paddy exports to Vietnam.

“Our policy is to boost rice production and export 1 million tonnes. However, of the two goals, we have achieved only one,” Mr Hun Sen said. “We have a surplus of paddy of nearly 6 million tonnes per year. However, we cannot achieve 1 million tonnes of rice exports,” he added.

Mr Hun Sen said about 70 percent of the leftover paddy was sold to Vietnam and Thailand absorbed 30 percent. “Previously, we were lacking silos, warehouses and rice millings. Therefore, our choice is to sell paddy to neighbouring countries.

“Now, we are attracting investors to the processing industry in Cambodia. We want foreign friends to invest in the agro-processing industry in Cambodia. Because our industrial policy is set to attract the industry to process the agriculture products, it does not demand big capital investment. SMEs [small and medium enterprises] must run the processing both locally and internationally. We have many potential agriculture products,” Mr Hun Sen said.

“We want the investment in the technological side of the industry. Although we have many intensive labour industries such as garments, we cannot stand still, so we have to attract high technology and high added-value industry to the Kingdom.”

Yon Sovann, chief executive officer (CEO) of Bayon Cereal, a leading rice exporter in the Kingdom, welcomed the government move. He said that he will join with the government to process the raw agriculture products into finished products to supply the local market.

He said that now his company is expanding the business into food-processing by sourcing  local raw materials, particularly rice to make rice cracker Betamore. “Our product will be available in the market early next year. Now, we are designing the packaging,” Yon added.

“We have yet met certain issues or challenges because we are just starting developing the factory. However, I stink the market opportunity is big. Therefore, I hope the market will welcome our products,” Mr Yon added.

Hiroshi Uematsu, CEO of Phnom Penh SEZ Plc, told the Khmer Times via email that for the manufacturing sector, improvement in electricity supply and logistics must be addressed.

“I can also say that the productivity of Cambodian workers in many Japanese higher value-added factories dramatically improved in the last decade. The expansion of MinebeaMitsumi, Sumi Wiring Systems and Denso prove this.”

Sumitronics, which produces printed circuit boards, built its own modern factory in Poipet special economic zone (SEZ) because of the high productivity of Cambodian workers,” Uematsu added. “On the other hand, I’m sorry to say that the productivity and mind-set of some government agencies is not compatible with Industry 4.0,” Uematsu said.

Phnom Penh SEZ Plc now has 45 Japanese companies in the zone. It contains a big variety of industries such as automobile parts and accessories, electronic and electrical devices and parts, garment and footwear, household goods, food, packaging, stuffed animals and toys, pharmaceutical products, waste recycling etc.

There are some challenges still hindering Japanese investment in manufacturing, including electricity shortages, high tariffs on electricity, unstable electricity, a complicated taxation system, a tricky trade custom system, trade-related procedures, high costs of truck transportation cost and a poor logistics system, said Miyao Masahiro, chief representative of the Japan External Trade Organisation (Jetro), Phnom Penh Office.

“If this kind of cost is reduced, the trade and investment between Japan and Cambodia will increase,” he added.

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