A senior executive of the state-owned Agriculture Rural Development Bank (ARDB) said the financial institution has released $245 million to rice millers and exporters, the livestock sector and small and medium enterprises (SMEs) in the agriculture sector.
Chief Executive Officer of ARDB Kao Thach said around $47 million out of $50 million earmarked from the government special fund for the rice sector and its exporters has been disbursed and the remainder of the funds will be released at the end of this month, in time for the upcoming harvest of the Sen Kro Ob paddy variety.
Thach added another $50 million special fund for the SME sector has also been drawn down by up to 600 businesses.
In March 2020, the government allocated a $50 million special fund for SMEs. It is designed to specifically focus on agricultural processing, food processing, agri-business, crops including vegetables, livestock and aquatic businesses plus any enterprise that uses raw materials from agriculture.
The bank has reduced interest rates from 6 to 5 percent for working capital and 6.5 percent to 5.5 percent for investment capital. Also, the repayment period was moved upwards to a seven-year term. SMEs can borrow up to $300,000.
Thach said the loans will be directed primarily to aquatic, livestock, poultry and vegetable farms. Eligible SMEs are those working on processing agricultural products that are able to expand their operations, that can create five to 30 job placements and are registered as SMEs with the taxation department and relevant ministries.
The bank will also provide training to SMEs regarding business plans, financial statements, good governance, marketing plans, financial management and training on technical support.
“Through the ARDB fund, the development partners’ fund and the government’s special fund, we see good progress in the rice sector and with agricultural sector SMEs. The price of paddy is stable and we have seen that once parties receive funds, they are able to expand their business activities and generate more jobs for the Cambodian people,” Thach added.
He said that the bank will do its evaluations in early 2021 for the loans and added the volume of non-performing loans in these sectors is manageable. In addition to this, the bank also encourages rice millers to purchase more paddies from farmers whether it is cheap or expensive during the harvest season.
“So far around $245 million of the loans and special funds from ARDB have been drawn down with 60-70 percent going to the rice sector and its infrastructure. The rest went to SMEs, livestock, vegetable plantation and the aquaculture sector,” Thach said. He added some loans will be repaid in July this year.
Chour Chheng, director of Ky Siv Chheng Protein Food enterprise – a local producer of dried meat, fruit and jam – said he is not concerned about capital. His issue is a lack of customers because his products target tourists.
“Our sales have fallen 80 to 90 percent and we have had to terminate some workers,” he said.
“Dried fruit and jam are mostly sold to foreigners, but because there are no more international arrivals, our sales have been affected,” he added.
He noted: “Our business is struggling but, luckily, we have our own production factory. If we rented a processing space, we would have collapsed in February last year.”
Chheng added that up until this point the only business support he has received was government-directed tax relief.