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Push for farming businesses to take advantage of gov’t funds

Sok Chan / Khmer Times Share:
Representatives of ARDB and the Cambodia Food Manufacturers Association signed a MoU to implement the Royal Government’s Special Financing Programme on SMEs. Fresh News Asia

The Agricultural and Rural Development Bank (ARDB) has inked an agreement with the Cambodia Food Manufacturers Association to implement the government’s Special Fund Programme to help small and medium Enterprise (SMEs).

The government’s special fund to SMEs is focusing on food processing, agricultural business, crop growing, livestock and aquatic businesses and any enterprise that uses raw materials from agriculture.

This is the fourth memorandum of understanding (MoU) after the ARDB signed an MoU with the Young Entrepreneurs Association of Cambodia (YEAC), Cambodian Women Entrepreneurs Association (CWEA) and the Cambodian Investor Association (CIC) last week. It also launched a $50 million special fund for SMEs to boost competitiveness, productivity and daily business operations amid the impact of the pandemic COVID-19 and a 20 percent withdrawal of zero tariffs under the EU’s everything but Arms (EBA) trade deal.

Kao Thach, director general of the ARDB, said at the signing ceremony that the financial institution is tasked to manage and implement the government’s special fund policy to assist SMEs with agro-processing and other food-related businesses, raising livestock and developing aquatic businesses – in fact any enterprise that uses raw materials from agriculture.

He also expected that the $50 million financing package would help more than 500 enterprises in Cambodia to expand as well as improve their production capabilities and improve standards in line with market requirements.

“So far, no SMEs or enterprises have applied for the special fund. We are preparing the procedures and we are working with the associations,” Kao added.

“Currently, demand for dried food to store in the freezer is high because people are afraid of the virus pandemic and some local enterprises cannot meet demand. Thus, it is time to expand production and promote their products locally.”

Kao said that with the closure of the border between neighbouring countries, the flow of goods will not be smooth, so this is an opportunity for local food producers to promote and show their products to the market.

He added the ARDB is pushing them through the associations to ask their members to apply for the special fund if they are really in need of it.

Meav Soktry, a representative of Cambodia Food Manufacturers Association, said at the ceremony that he will pass on the information to all members on the government’s special fund list and will encourage them to apply for help.

However, Chea Sokleang, a board member of Cambodia Women Entrepreneurs Association (CWEA), told Khmer Times that her members have already become involved in this task, but she has not yet received numbers of how many members are applying for the government’s special fund.

“I think the government’s special fund is a good mechanism to push SMEs and help improve  human resources in the small and medium enterprise sector,” Chea added. “More funds are good.”

According to the ARDB, SMEs can borrow up to $300,000 with an interest rate of 6 percent per year for working capital (for up to two years), and 6.5 percent per year for investment funds over a five-year payment period. The government will give a one-year grace period payment because the SMEs can currently pay only the interest rate for the first year.

Eligible SMEs for the special fund are those working on processing agricultural products, those able to expand operations and create from five to 30 jobs, plus those officially registered with the tax department.

Kao added that the bank will have to ask for collateral, but the bank can offer up to 80 percent of available assets. The bank will also accept machinery and equipment in a factory as collateral, he added.

However, some analysts believe the economic environment is discouraging borrowers and lenders from taking advantage of incentives.

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