Government aims to create first export-import bank

Written by CHUN SOPHAL AND HOR HAB

Tuesday, 11 November 2008 Phnom Penh Post

Under the plan, local exporters would have access to below-market credit to help with high-risk transactions, as government seeks to boost rice exports Photo by: HENG CHIVOAN A ship waits to be unloaded in Sihanoukville port. The government hopes to boost exports with an export-import bank. CAMBODIA is looking to launch its first government-backed export-import bank to boost trade, officials said, with the UN Development Program being asked to help with the project. Cambodia's ex-im bank would offer loans to companies exporting abroad, with a special focus on the rice industry. Officials hope to launch the bank in two years. Export-import banks, such as the one in the United States, help exporters obtain credit in transactions that private lenders deem too risky. "We are optimistic that this bank can be established soon," Mao Thora, a secretary of state at the Ministry of Commerce, said Monday. He said the government is waiting for a response from UNDP. "I think it will help Cambodia increase exports and imports because the bank can provide additional loans to traders." He added that the necessary legal framework - particularly legislation covering trade insurance, was passed in 2007. Authorities are still determining whether the new bank would be run privately, by the government, or as a private-public partnership. David Van, a senior trade development adviser with the UNDP's Trade Project, told the Post that an export-import bank would boost trade in Cambodia. "The bank will encourage exports and imports by providing low-interest loans to rice millers," he said. "The establishment of the bank depends mainly on the Cambodian government, and we need at least one to two years to do it because ... we need time to raise awareness among the public and the government, and to advertise its importance," Van said. He added that the UNDP would approach the World Bank and the Asian Development Bank to secure grants to supplement Cambodian government funds. Tal Nay Im, director general of the National Bank of Cambodia, said Monday that she had no information about the proposed bank. THE BANK WILL ENCOURAGE EXPORTS AND IMPORTS BY PROVIDING ... LOANS. "We can't really comment on the bank because we have not been informed about the plan," she said. Sisowath Pheanuroth, project coordinator with the Cambodia Sector-Wide Silk Project and a member of the Trade Project development group in Cambodia, said the trade sector faces growing challenges because business people lack the necessary capital to fund exports. "We welcome the establishment of this bank and hope that it will push rice exports," he said. "It is an opportunity for local traders to compete with traders from neighbouring countries, who regularly come to buy husk rice from farmers in Cambodia," he said. Song Hong, vice president of the Cambodian Rice Millers Association in Battambang, said that the industry was in need of below-market loans. "We want to export more rice, but we have to make sure traders have credit throughout the year," he said. He estimated that Cambodia needs US$200 million to $300 million to support the rice trade annually.