Next year’s national budget of nearly 10 trillion riel, or about $2.4 billion, will include more than $40 million for agriculture and the rice industry, a figure experts say will not be enough to finance the government’s ambitious plans for the sector.
According to a copy of the draft budget, the Ministry of Agriculture will receive about $23 million, up $3 million from last year.
A separate amount of about $13 million has been set aside specifically to develop rice and milling sectors. In addition, about $7 million will be allocated to the Rural Development Bank.
The agriculture industry has been identified as one of the country’s major economic priorities, with Prime Minister Hun Sen recently calling for rice exports to reach 1 million tons per year by 2015.
Chan Sophal, president of the Economic Institute of Cambodia, said the $13 million set aside for developing the rice industry would not be enough to meet the government’s stated goals.
“Thirteen million dollars helps but is far below what the industry needs. If an incremental of 200,000 tons of paddy per annum is to be processed in Cambodia for export, it requires a working capital of $60 million, let alone purchase of equipment for processing,” he wrote in an e-mail yesterday.
Mr Sophal said that the private sector will also have to play a big role in funding the rice processing industry, and suggested that the government shifts its focus.
“I believe government should spend more to finance rice research, quality seeds production and extension as well as reducing both the informal costs and time for regulating exports,” he wrote.
Cheam Yeap, a CPP lawmaker and chair of the National Assembly’s commission on banking and finance, claimed the money allocated to agriculture would be sufficient because the government could also draw on grants and donor funds.
“That amount [in the budget] is for buying some equipment and officials’ salaries,” he said.
He said more than $82 million from the IMF and other agencies would go to support infrastructure and irrigation. If the total amount of money to be spent on agriculture were calculated including all funds, “it will be three or four times more” than $23 million, he said.
Mr Yeap said that defense spending remained a significant portion of the budget because of tensions with neighboring Thailand.
“We cannot stay in Phnom Penh if there is no protection along the border from the possible Siamese invasion,” he said.
Approximately $297 million will be spent on defense and security in 2011, up from about $273 million last year. However, this represents only an 8 percent jump, as opposed to a more than 20 percent increase between 2009 and 2010, and a 64 percent hike the year before that. About $185 million of the total will be allocated to the Defense Ministry, with the rest going to the Interior Ministry.
The social affairs sector will see one of the largest increases. A total of about $501 million will be allocated to the sector—up from about $435 million last year. This total is split between a number of relevant ministries, including social affairs, labor, women’s affairs, health and education. The ministries of Education and Health will be given about $218 million and $165 million, respectively.
The economic sector—incorporating the ministries of Finance and Commerce, among others—has been allocated almost $115 million, a drop of about $68 million from 2010. Included within the economic total is the $23 million earmarked for the Ministry of Agriculture.
(Additional reporting by Ian Williamson)