Pricey Loans to Blame for Slow Rice Exports: National Bank

The high-interest loans that banks offer to rice millers will likely contribute to the country’s failure to meet its goal of exporting 1 million tons of the crop by the end of the year, the head of the National Bank of Cambodia said Tuesday.

Speaking during an investment luncheon at the Raffles Hotel Le Royal in Phnom Penh, National Bank Director-General Chea Serey said the inability of millers to access funds means they cannot buy paddy to process for export.

“A lot of our rice millers face difficulties in getting loans from the banks because the banks ask the millers to use their land as collateral,” Ms. Serey said. “But the millers say they don’t have land to use as collateral because they just rent or lease it.”

Banks, meanwhile, charge exceptionally high interest rates because they consider lending to millers to be high risk, she said.

Lun Yeng, secretary-general of the Cambodia Rice Federation, which represents the country’s rice milling and export associations, said banks typically charge between 10 and 12 percent for loans greater than $50,000 and at least 7 percent for loans of $1 million or more. For loans of less than $30,000, microfinance institutions usually charge between 2 and 2.5 percent.

“The point is that millers need revolving funds when they need to buy rice paddy from farmers, while payments from exporters are generally late and their [millers’] collateral is placed at banks at the time they borrowed the money,” he said.

Millers also need the money to purchase milling machines and build warehouses, he added.

According to Mr. Yeng, rice exports increased by 64 percent in the first five months of the year, compared to the same period last year, totaling 243,025 tons.

“The increase in rice exports is because rice was exported to China a lot after a deal was made for Cambodia to supply 100,000 [tons] to the country,” he said.

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