[PHNOM PENH POST]
While the World Trade Organisation yesterday lauded Cambodia’s economic
achievements since joining in 2004, officials pointed to the lack of
much-needed financing for the Kingdom’s burgeoning trade sector.
Cambodia
lacks the capacity to finance the manufacturing and agriculture exports
that would allow the country’s industries mature, Minister of Commerce
Cham Prasidh said yesterday, speaking at a presentation of the WTO’s
first trade policy review of the Kingdom, released on Friday.
“We
are still running short of liquidity from commercial banks and from
other financial institutions. We have a lot of warranties to trade but
not [enough] money to roll out these activities,” he said.
Cambodia
has exported more than 2 million tonnes of unmilled rice this year, the
minister claimed last month. And rice yields have increased by more
than 4 per cent compared to last year, rice experts in country have
said.
Still, rice, corn and cassava traders largely fail to
capitalise on value-added processing, which is currently done abroad,
and lose out on potential revenues, Cham Prasidh said.
Exporting 2
million tonnes of milled rice requires about US$1 billion to finance
the buying, processing and exporting of the grain, Cham Prasidh offered
as an example. Resources from local banks are limited at about $300
million for rice financing, he said.
Financing shortfalls also
strain the Kingdom’s garment manufacturing industry, Garment
Manufacturers Association of Cambodia president Van Sou Ieng said
yesterday.
The industry’s annual export value of about $3 billion
is nearly equal to the commercial bank loan capacity in Cambodia, he
said, leaving a dearth of local trade insurance and financing.
Where
domestic financing has fallen short, the World Bank and the
Export-Import Bank of the United States have not come to the industry’s
aid despite lobbying efforts, he said.
“All [the two banks]
needed to do is check the credit of the buyer: Gap, Levi's . . . For
such an easy task, they still have a problem. I do not know what the
problem is,” Van Sou Ieng said.
According to the WTO trade policy
report on Cambodia issued last week, the inaccessibility of finance
abroad may be connected to the significant increases in labour and land
disputes, as well as unenforced or inadequate regulation.
In
early August, the World Bank halted new country loans to Cambodia
because of ongoing land disputes at Boeung Kak lake in Phnom Penh.
Garment
manufacturers – largely with support from parent companies in Hong Kong
and Taiwan – finance themselves, Van Sou Ieng told the Post yesterday,
adding that smaller local companies without ties abroad often find
themselves without resources.
While Cambodian banks and the
Ministry of Economy and Finance need to increase dialogue with the World
Bank and the US Ex-Im Bank, stronger sources of credit need to be
developed domestically, he said.
“For local companies and the future of Cambodia, the finance system needs to be anchored in Cambodia,” Van Sou Ieng said.
While
Cham Prasidh offered the establishment of an export-import bank for
Cambodia as a possible solution to the finance deficit, WTO deputy
director-general Valentine Sendanyoye Rugwabiza said there should not be
contention over the credit records of garment importers in the United
States.
At the discussion yesterday, she said the WTO can
discuss what she called “the very least risky finance” with Asia
Development Bank for future financing solutions.
A local
solution, however, is already developing for rice finance as banks do
away with a collateral system based entirely on land titles, Canadia
Bank vice president Dieter Billmeier said yesterday.
Loans based on land titles are being replaced by the financing of equipment and warehouses, as well as leasing, Billmeier said.
“In
the past, banks in Cambodia only gave loans against land titles. But
this is going to change,” he said, adding that during the past 15 months
Canadia’s agriculture financing has increased by $100 million.
But the change is coming slowly, Billmeier said.
While
some of Cambodia’s bigger banks, as well as a few Malaysian banks, have
reconsidered their financing strategies, many smaller banks have yet to
take up the unfamiliar practice, he said.
Consolidation among
rice millers is also needed to amass collateral, Ung San Ol, senior vice
president of trade finance at ACLEDA Bank, said yesterday.
“Every rice miller wants to export individually, but if they want finance they must get together,” he said.
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