Rice Tax Break Hopes to Strengthen Industry

The Ministry of Finance has instructed that customs fees on milled rice exports should be scrapped in a bid to strengthen the industry and bolster sagging export figures.

A letter to the department of customs and excises, signed by Finance Minister Aun Porn Moniroth on April 2, says the customs fees will be lifted from May 1, according to Bou Bunnara, chief of public relations at the department.

“We want to increase the number of milled rice exports and this customs exemption will help the private sector,” Mr. Bunnara said.

Hean Vanhorn, director-general of the general department of agriculture, hopes the government directive will enable the industry to bounce back and expand after milled rice exports dropped by 11 percent during the first quarter.

“It’s a way for the government to give incentives to make Cambodia more competitive because Cambodia is still inexperienced in exporting rice.”

First-quarter exports fell from 95,228 tons in 2013 to 84,330 tons this year, according to the Federation of Cambodian Rice Exporters. The drop came as demand from Thailand slumped from 13,000 tons in 2013 to 300 tons this year as the country attempts to sell its huge stockpiles at below market rates following the collapse of its state rice-buying scheme.

Lim Bunheng, chairman of both the Loran Import-Export Co. Ltd. and Cambodian Rice Exporter Association, said the directive would allow his company to save at least $15 per container.

Mr. Bunheng added that the tax change will help increase his milled rice exports, which last year amounted to 23,000 tons of milled rice.

“I plan to increase my rice exports by 50 percent more than last year,” he said.

Srey Chanthy, an independent economist, said although the tariff removal will be a boon to the industry, there still needs to be a greater focus on rice milling ca­pacity and quality to ensure that Cambodian rice meets international standards.

“[The tax break] will speed up the rice export process, and rice exporters will be able to sell more milled rice and make prices competitive in the international market,” he said.

“But rice exporters must im­prove their capacity in rice processing and stocks for export.”

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