Major Banks To Provide Loans for Smaller Enterprises

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
10 June 2009

Cambodia Public Bank and ANZ Royal will provide loans to small and medium businesses, through a program with the UNDP and International Trade Center.

The loans will be available from October 2009 and will focus on 100 agricultural-related businesses. The two banks were selected from some other banks that had an interest in offering loans to small and medium enterprises, said Hin Wisal, UNDP assistant country director.

The UNDP is working with the International Trade Center to provide technical support to banks and businesses for the 18-month project. The Agence France de Development will provide credit guarantees for two partner banks.

“It is very important for SMEs to get formal loans from commercial banks to extend their growth,” Wisal told VOA Khmer. “To support policy development, we need to promote formal access to credit.”

Trade experts and economists say Cambodia’s small and medium enterprises are currently driving the economy. But these businesses lack the formal financial support they need to expand, because banking and finance in rural areas are not fully developed.

Studies show that of around 64,000 small and medium enterprises in Cambodia, only 80 percent get loans from banks. Informal loans, meanwhile, lead to financial problems down the road.

The bank-loan project will provide financial management training and guidance to enterprises. Under the project, the two banks will be able to evaluate strength and weakness of the businesses.

“More and more customers will seek a loan from a bank rather than other sources,” Stephen Higgins, chief executive officer of ANZ Royal said. “We make money, and they make money.”

Robert van Zwieten, director of capital markets and the financial sector for the Asian Development Bank, encouraged more banks to turn their eyes to small and medium businesses.

“It’s going to be far more interesting when you provide loans to SMEs, because they grow quicker, and SMEs are seen as the biggest generators of jobs,” he told VOA Khmer by phone from Singapore. “As a bank, if you have done a great service to your respective customer then you will have a long relationship for a long time to come and hopefully a profitable one. It will be beneficial for the country.”

Cambodia dispatches 52 peacekeeping soldiers to Sudan

PHNOM PENH, June 10 (Xinhua) -- Cambodia Wednesday sent 52 soldiers to clear mines in Sudan for UN peacekeeping mission to replace the old ones.

This group is the fourth batch of troops that Cambodia has sent for humanitarian affairs under the UN mission to Sudan, said Sem Sovanny, director of National Center of Peacekeeping Forces, Mine and UXO Clearance.

He said that the 52 soldiers will take turns for 135 soldiers who will come back from Sudan on Friday.

"Beside helping mines and UXOs clearance for UN peacekeeping operation in Darfur region, you all have to help other humanitarian affairs in Sudan like purified clean water, digging wells and housing for local people," Pol Saroeurn, General Commander in Chief said in farewell ceremony at Pochentong Airbase.

"You all have to display good image of Cambodia in this operation," he said.

"We all thanked for the Cambodian government that has the strong commitment for this contribution for the peace and stability of the world," said Teruo Jinnai, acting president for UN agencies and representative of UNESCO to Cambodia.

Cambodian soldiers who were sent to Sudan, as well as other ones who are prepared to be sent to Chad and Central Africa in the near future, have been trained with the UN standard by trainers from other countries, mainly the United States.

Cambodia is one of the countries suffered from the unexploded ordnance (UXO) and mines, and last year about 265 people were killed and wounded by the UXO and mines. Millions of mines and UXOs still laid under the ground of the country posting a threat to the lives of the people.

Asia: Land grabs threaten food security

Land grabbing in Asia

CAMBODIA:

• Land being leased by Kuwait for rice (in negotiations)
• 100,000ha rubber plantation secured by Vietnam

LAOS:

• 100,000ha rubber plantation secured by Vietnam

PHILIPPINES:

• 10,000ha for agro-fishery secured by Bahrain
• 100,000ha for Qatar
• 1.24 million hectares for an unknown company in China (on hold)

INDONESIA:

• 500,000ha, a $4.3 billion rice investment, secured by Bin Laden Group of Saudi Arabia (on hold)

CHINA:

• 10 poultry farms worth $300 million and pig farms for $250-300 million purchased by Goldman Sachs of USA

Source: International Food Policy Research Institute

PHNOM PENH, 10 June 2009 (IRIN) - Sam Pov, a rice farmer in Cambodia’s western Battambang Province, is very worried that his land will be taken over by a foreign investor.

"I've heard the rumours about [Kuwait and Qatar]. I heard they might get our land because they need food," he said.

"The commune leaders haven't talked to us yet, and I don't think they will if the time comes. This is a good time for them to get paid and get huge benefits."

Last year, delegations from oil-rich Kuwait and Qatar visited the impoverished nation, eyeing leases on land to export food back home - a move that could leave many Cambodians without enough food, say activists and NGOs.

Kuwait has reportedly offered US$546 million to the Southeast Asian nation in loans for dams and roads, while Qatar will invest $200 million in agriculture.

And while the government has not yet announced what the Gulf States will get in return, they have publicly expressed interest in the country’s farmland.

"Cambodia has plenty of farmland and forests but has been suffering from land grabbing by the government as well as influential people for years," Jin Ju, a food rights activist at the Asian Human Rights Commission (AHRC) , told IRIN from Hong Kong.

"I doubt that [either] government would consider the villagers and farmers as equal decision-makers," she said.

Evictions

Forced evictions, mostly to build hotels and high-end apartments, have been a problem in Cambodia since the UN peacekeeping force left in 1993.

Adhoc, the Cambodian human rights watchdog, estimates 50,000 people were evicted to make way for development projects in 2006 and 2007 alone.

The problem arose because most land documents were destroyed under the Khmer Rouge regime between 1975 and 1979, making it unclear who owns what.

Yet the practice in Cambodia of leasing land to Gulf States for farming - and the rate at which the land is being siphoned off - is new, say food rights groups.

"The governments [Kuwait and Cambodia] should select appropriate land through discussion with the villagers, and combine the traditional farming in Cambodia and new technology for farming," Ju added.

Food insecurity

The problem of land grabbing by foreign investors and governments, however, extends well beyond the confines of Cambodia.

Elsewhere in Asia similar examples can be seen, as well as in Africa. According to the Washington-based International Food Policy Research Institute (IFPRI), between 15 and 20 million hectares of farmland in such countries have been subject to transactions or negotiations since 2006.

IFPRI estimates the value of such deals at up to $30 billion.

Ever since high food prices in 2007 and 2008 raised the prospect of food insecurity for countries without much farmland, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates (UAE) have scoured Asia for land.

China, which has to feed more than one billion people, is also looking to Southeast Asia to sustain its breakneck growth.

"Not only will it displace small farmers as such investments have done in Indonesia," said Amitava Mukherjee, head of the UN Asian and Pacific Centre for Agricultural Engineering and Machinery in Beijing, "but it will also have serious environmental consequences … [and] given that UAE and Kuwait are leasing land, not buying it, [they] would have no interest in long-term development of the farmland they are seeking access to".

He added that the comments were his own and did not reflect the views of the UN.

In Kamukhaan village in the Philippines, such effects have become well documented, according to the AHRC.

Since a Filipino company took over 613ha in the village to build a banana plantation in 1981 - to supply US-based fruit company Dole - hundreds of villagers have suffered skin and respiratory ailments from pesticide use, the group claims.

"The farmers had lost their farmland, their children, their natural sources, their health and their future," Ju said.

Photo: Stacey Winston/ECHO
Myanmar has "considerable" agricultural potential, according to Welt Hunger Hilfe, a German NGO

"Now the Philippines' food sovereignty is absent and the self-sufficiency is almost zero," she claimed.

In the Philippines this year, Bahrain secured 10,000ha for agro-fishery, Qatar leased 100,000ha, and an unknown company from China leased 1.24 million hectares, though the deal has been put on hold, according to an April policy briefing by IFPRI.

Such deals are often done in secret, it says, stopping civil society groups from overseeing the terms and defending the rights of local farmers.

In Myanmar, Chinese companies have driven farmers off their land to cultivate an oil plant, according to Welt Hunger Hilfe, a German NGO.

The farmers already faced seasonal changes that threatened food security, but had their last source of food taken from them by the government, the group says.