Chinese President Xi Jinping’s visit to Cambodia next week will likely lead to an increase in agriculture exports to China, Prime Minister Hun Sen said.
Speaking at a graduation ceremony for law and economics students in Phnom Penh on Thursday, Hun Sen said that 28 bilateral cooperation agreements are due to be signed by Xi during his two-day state visit, the first for a standing Chinese leader, the Khmer Times reported on Friday.
“[The agreements] are an endeavour to open markets in China, which is a huge market for Cambodia’s agriculture sector,” Hun Sen told the students.
“Besides milled rice and cassava and other agricultural products, which are existing exports to China, we are trying to boost exports of other agricultural products, including bananas.”
He did not go into detail about what these agreements were.
Xi’s second visit to Cambodia -- he first visited the Kingdom in 2009 as a vice-president -- comes at a time of huge pressure on Cambodia’s rice sector.
The government recently requested a $300 million loan to address issues in the industry, which include falling prices, cash-flow challenges and a lack of suitable storage facilities.
During Hun Sen’s visit to Quangxi province’s Nanning City last month, he announced that the Chinese government had agreed to double its imports of milled rice from Cambodia, to 200,000 tonnes per year.
Hun Lak, the vice-president of the Cambodia Rice Federation, expressed his hopes for Chinese assistance in the country’s rice sector following President Xi’s visit.
“I think that Chinese President Xi Jinping will announce [the loan],” Lak said.
“The special loan of about $300 million will ensure that rice millers will have a regular supply of paddy rice from farmers.
“Farmers, in turn, will be able to sell their paddy rice at government-approved prices. The $300 million loan is also related to China importing 200,000 tonnes of milled rice annually from Cambodia.”
Last week, during a meeting with newly-appointed Chinese ambassador to Cambodia, Deputy Prime Minister Hor Namhong asked the Chinese side to accelerate purchases of milled rice from Cambodia, as the two countries agreed on the 200,000-tonne rice quota.
Hor Namhong also said that the $300 million loan that Cambodia requested from China will be used to install paddy rice dryers and warehouses to upgrade the rice sector.
Mey Kalyan, a senior advisor to Cambodia’s Supreme Economic Council, told the Khmer Times that Xi’s visit will further strengthen the already close relationship between both countries.
“It is good for Cambodia to have a visit from the giant country’s president, and we hope that if the requested $300 million loan is not disbursed now, it will be in the near future.”
However, Kalyan said he was worried about Cambodia’s ability to increase export quotas to meet Chinese demands.
“China is one of Cambodia’s big markets. If we have [potential] markets, we must have products available to sell to them.
“If we don’t have the products to sell, and our prices are high, they will not buy from us,” he warned.
The World Bank’s International Finance Corporation (IFC), in a recent report, said Cambodian rice millers should also work hard to develop quality and lower costs.
“Mills should have farmers under contract to provide consistent rice quality and aim for near 100% capacity utilisation at the mill. It is clear that ensuring high quality and a reliable supply form the basis for increased trade,” said the IFC report.
“As Cambodia is essentially a price-taker in the global marketplace, it will also be important to ensure processing costs are minimised and exporters are able to provide quality business services to their customers,” it added.
According to government figures, Cambodia exported about 64,000 tonnes of milled rice to China in the first nine months of the year as part of its existing 100,000-tonne annual export quota. This is a small decline of 2.1% over the same period last year.