Kingdom of Cambodia

Nation Religion King

Closing Remarks

by

Deputy Prime Minister Keat Chhon, MP

Minister of Economy and Finance

At the Closing Ceremony ofthe Cambodia Rice Forum 2011

Phnom Penh, 17thOctober, 2011

1- Today I am very pleased and honored to join as the chairmanship at the closing ceremony of the “Cambodia Rice Forum 2011”. I think that this forum really offers a golden opportunity for all including the Royal Government and all stakeholders in the production chain of paddy-rice, especially Cambodian farmers in the entire country, rice millers and rice exporter as well as rice buyers, who are coming from abroad to share knowledge and information on the status of paddy-rice market in Cambodia and the world including market condition, particularly on the export potential of Cambodia’s “Rice – White Gold”. In this sense I would like to extend my complement and high appreciation to LokOknha Te Taingpor, President of the Federation of Associations for Small and Medium Enterprises of Cambodia who has initiated this “Cambodia Rice Forum2011” and run the whole day of the forum with fruitful and profuse success.

2- At the same time, I would like to highly appreciate all speakers from the ministries and institutes of the Royal Government, research institutes and the private sector that have made invaluable presentations, and all participants who actively debated and provided constructive comments, so that the “Cambodia Rice Forum 2011” went on smoothly with fruitful outcomes as reported by LokOknha Te Taingpor on the outcome of this forum. At the same time I would like to express my sincere gratitude to ladies and gentlemen, who are coming from more than 30 countries for taking part in this forum as buyers and wish you all a happy stay in Cambodia. Meanwhile, I would like to encourage ladies and gentlemen to seek possibilities to extend your stays in Cambodia in order to visit main tourist sites as well as to view scenery of the long stretch of green rice fields. I strongly believe that all friendly foreign buyers will have a better understanding about the potential of rice sector in Cambodia whenever you see the spectacular scenery of the rice fields along the roads.

3- Under the clear vision of our statesman, Samdech Akka Moha Sena Padei Techo HunSen, Prime Minister of the Kingdom of Cambodia, the great potential of the rice sector which was hidden under the tremendous challenges is now revealed and transformed into a rare and great opportunity for the development of Cambodia through setting out the Policy Paper on the Promotion of Paddy Production and Rice Export. As Excellencies, LokOknha, Ladies and Gentlemen are already well aware, the Policy Paper on the Promotion of Paddy Production and Rice Export was adopted by the Council of Ministers on 25th June 2010 and officially launched on 17thAugust 2011 under the high chairmanship of Samdech Akka Moha Sena Padei Techo HunSen, Prime Minister of the Kingdom of Cambodia. The goal of this Policy Paper is to promote the development of the agriculture sector in a new speed and scale in order to expand and strengthen the foundation of the economic growth as well as to speed up the poverty reduction and promote the living standards of the people. The vision and strategy of the Royal Government in promoting the paddy production and rice export is to turn Cambodia into a rice bowl and an exporting country for “Rice-White Gold” on the world market. In this regard, the Royal Government set 2015 as the target year for: (1)- to promote the paddy production surplus to more than 4 million tons of which at least one million tons of rice will be exported, (2)- to make Cambodia’s rice to be internationally recognized through two main strategies: first- in the short and immediate terms is to promote the production of paddy, which is demanded by the markets and to promote the rice export through improving paddy processing and export facilitation and Second- in the medium and long terms is to focus on strengthening the competitiveness of the rice export.

4- Until now, the Policy Paper on the Promotion of Paddy Production and Rice Export has been implemented in full one year. Pertaining to this first year implementation, the Royal Government strongly believes that the Policy Paper on the Promotion of Paddy Production and Rice Export is a realistic, effective and highly efficient policy tool for the Government in diversifying the the foundation of the economic growth and reducing poverty as well as promoting living standards of the people, especially for all farmers in the entire country. I would like to take this opportunity to publicly announce that the Committee on Economic and Finance Policy which is responsible for monitoring, evaluating, and coordinating at the policy level in the implementation of the Policy Paper on the Promotion of Paddy Production and Rice Export has established a special working group in order to prepare assessment report on the implementation of this Policy Paper in the framework of one whole year (2010-2011). This assessment report will be officially launched at the 16th Government-Private Sector Forum which will be held on 23rdNovember, 2011.

5- In the 2010 season, Cambodia cultivated on the total area of 2.79 million hectares and harvested on 2.77 million hectares as well as achieving 8.25 million tons of paddy, which increased by 8.75% compared to 2009. This growth is the result from the increase in cultivated area in which the rainy-season paddy increased by 56 thousand hectares and dry-season paddy by about 20 thousand hectares. The growth of this cultivated area is the result of the increase of cultivated seasons due to massive investment of the Royal Government on the irrigation system and the change of farmers’ attitudes in utilizing the seeds of long maturity to medium and short maturities. In yield term, the rainy-season paddy grew by 5.3% compared to 2009 and the dry-season paddy increased by 1.7% compared to the same year. However, the current flood, which is primarily evaluated to be more serious than the year 2000, affects rice fields up to 390,000 hectares and destroys approximately 190,000 hectares, could cause the paddy production of the 2011 harvesting season to fall.

6- In the meantime, the uses of agricultural machinery and inputs have been increased remarkably. In fact, farm tractors increased from 8,139 in 2008 to 9,250 in 2009 and up to 10,135 in 2010. Handy Tractors increased from 110,000 in 2008 to 130,000 in 2009, and up to 160,000 in year 2010. Particularly threshing machines also increased to 25,243 in 2010 compared to just 23,000 in year 2008. Meanwhile, there are 57% of farmers using fertilizer and around 30% using pesticide. The growth in the uses of agricultural machinery and inputs reveals the gradual change of farmer’s mindset from traditional to standard farming and presents the transformation from “Farming for a Living” to “Commercial Farming”.

7- At the same time, rice export has also increased significantly since 2009 due to the increase in food prices and the opening up of the markets from European Union, particularly after the promulgation of Policy Paper on the Promotion of Paddy Production and Rice Export. In 2009, the official amount of official rice export increased by 236% compared to 2008. In 2010, the quantity of rice export reached 51,000 tons compared to 15,000 tons in 2009, which is an increase about 251%. As of June 2011, the quantity of rice export rose to 85,000 tons, which amounted around 370% increased against 2010 at the same period. According to the calculation, quantity of rice export can rise up to 180,000 tons in 2011. At the same time, the number of rice exporters has increased from only 9 companies in 2009 up to over 30 companies in 2010 and 2011.

8- The progress in paddy-rice sector and in particular the high growth of rice export of Cambodia is not a coincidence. However, this progress is the outcomes of the implementation of measures and policies as stated in the Policy Paper on the Promotion of Paddy Production and Rice Export. Indeed, the implementation of measures related to paddy production, the Royal Government reduced import tax rate to 0% and imposed Value Added Tax as the government expenses for the tools and farm machinery to be used in the paddy production, which includes agricultural tractors, handy tractors, water pumping machines as well as all kinds of agricultural machinery and tools. Moreover, the Royal Government decided in principal to impose VAT rate at 0% for all supplies of rice production,and input taxes related to purchasing and producing rice are allowed to be a credit or to be reimbursed. The rice producing and processing manufacturers shall be granted the maximum period of tax exemption on profit in which there are prime period of 3 years plus 3 years of the priority period as well as minimum tax exemption.

9- The Royal Government has invested 101.43 million USD in 2009 and 188.79 million USD in 2010 to continue expanding and developing irrigation system. The government will be continued investing around 220 million USD in 2011. Also, the Royal Government through the Ministry of Economy and Finance has arranged financing under the credit without interest with the amount of 80 million USD in 3-year-period (2011-2013) to Electricité Du Cambodge to invest in the construction sub-grid system to expand the electricity supply coverage to allow more people access to Electricité Du Cambodge as well as connecting to paddy producing areas and rice processing mills.

10- In order to implement measures related to the purchasing and processing rice, the Royal Government has doubled the amount of Agricultural Sector Support and Development Fund under the Rural Development Bank from the initial amount of 18 million USD to 36 million USD and then added up another 7 million USD for the Rural Development Bank. This fund has been implemented by the Rural Development Bank to provide credit to 251 Rice Mill Associations throughout 10 provinces. Through Ministry of Economy and Finance, the Royal Government of Cambodia has created Credit Guaranteed Scheme with the amount of 105 billion Riels which equals to 25 million USD in order to encourage commercial banks in providing loans related to the purchase of rice for stocking and processing for export. As expected, the Credit Guaranteed Scheme is able to attract commercial banks’ credit worth 200 million USD for the purchase of rice for stocking and processing for export. Meanwhile, the Ministry of Economy and Finance has also signed the Financing Cooperation Agreement on the Risk Sharing for the agricultural and agro-industrial projects with International Finance Corporation for amount of 25 million USD in order to expand loans to agricultural projects including paddy-rice sector. This agreement is guaranteed and attractive to commercial banks that hold enough qualifications to provide credit to small and medium enterprises in agriculture, agro-industry sector as well as to guarantee credit worth 50 million USD in pady-rice sector.

11- At the same time, legal procedures related to the export has been improved and the export fees, both formal and informal, have been gradually reduced and eliminated, which further contributes to strengthening Cambodia’s competitiveness.

12- The goal to achieve the paddy surplus of more than 4 million tons in which at least 1 million tons of rice to be exported and to make Cambodian rice to be recognized internationally in 2015 is an ambitious goal. But this is achievable goal. In this sense, I would like to request the private sector to continue support, and respond more actively in order to achieve the above goal.

13- Once again, I would like to express my congratulation to LokOknha Te Taingpor, President of the Federation of Associations for Small and Medium Enterprises of Cambodia, who have initiated the “Cambodia Rice Forum 2011” for the first time in Cambodia. In the meantime, I would like to express my high appreciation to the Supreme National Economic Council, the Ministry of Agriculture forestry and Fishery, the Ministry of Industry Mine and Energy, and the Ministry of Commerce for providing useful and valuable cooperation, so that the “Cambodia Rice Forum 2011” has taken place successful as expected. On behalf of the Royal Government, I would like to strongly encourage the Federation of Associations for Small and Medium Enterprises of Cambodia to continue organizing this very important forum for year 2012.

14- Finally, I would like to wish Excellencies, LokOknha, Ladies and Gentlemen who are present on this occasion, success and prosperity in all duties and businesses.

I would like to officially close the “Cambodia Rice Forum 2011” from this moment on.

Closing Remarks for DPM Keat Chhon at the Cambodia Rice Forum2011 Page 1 of 6