Low interest rate and increase in loans are important to boost agriculture sector
Monday, February 2, 2009 9:01Agriculture sector has expanded gradually thanks to productivity gains, reflecting an increase in the area under irrigation, the use of improved agricultural inputs and greater commercialization of farming. By the way, without financing, farmers cannot adjust to changing market conditions or capitalize on opportunities to commercialize their existing agriculture activities.
Increase in loans is important for agriculture sector
Increasing agricultural loans is in a bid to cushion the country from the global economic slowdown. Loans will provide extra money to expand the agricultural sector and help with the development of the economy.
Microfinance contributes significantly to Cambodia’s development since it is used primarily to support Small and Medium Enterprises (SME) as well as the agricultural sector. Although limited, credit for small farmers and for large entrepreneurs in agriculture exists and is available, mostly from microfinance institutions and specialized banks. Besides borrowing money from banks or micro-credit, Cambodian people are still depending on family, friends or individual lenders who charge high interest rates than banks.
In Channy, president of ACLEDA bank, said that he will increase agricultural lending to US$114 million next year, more than double the $56.4 million ACLEDA has loaned so far in 2008, The Phnom Penh Post reported.
Yang Sang Koma, president of the Center for the Study and Development of Cambodian Agriculture, said that “the credit that is currently available to Cambodian farmers is too restrictive. To help the agricultural sector grow, interest rate for loan to Cambodian farmers need to be lower and maturity period longer,” The Economic Today reported.
“The bank has issued $22 million in loans to support the agricultural sector, principally short-term loans at eight percent interest to farmers, Son Koun Thor, president of the government-owned Rural Development Bank, quoted by the Phnom Penh Post.
The government budget for agricultural in 2009 was small compared to other ministries and did not allocate sufficient resource to provincial level authorities for implementation of agricultural program, said Yang Sang Koma, quoted by the Cambodia Daily as saying.
Low interest loan targets individual farmers and farming association
Lending loans with low interest rate for agriculture sector is affordable for farmers. Prime Minister Hun Sen recommended the Ministry of Finance to encourage commercial banks to use the loans to boost national economic growth.
Economic Institute of Cambodia’s “the Cambodia Economic Report 2008” reported that “Interest rates on loans in Cambodian riels (CR) remained stable during the first half of 2008, varying between 19 percent and 22.46 percent in June depending on the length of the loan compared to from 19.01 percent to 22.26 percent in March.”
Microfinance entities reported an increase in credit volume and customers in the first semester of 2008. Micro Finance Institutions (MFIs) and Rural Credit Operators provided a total of CR 851 billion in credit and the number of borrowers reached about 672,725 people, which is a 25 percent increase over the second semester of 2007. MFIs and Rural Credit Operators received close to CR 23 billion in deposits from about 166,588 people, which is a 17 percent increase over the figure registered at the end of 2007, the report read.
bunlin says:
February 5th, 2009 at 12:15 am
សួស្តី មិនដែលឃើញទេ គេហទំព័រមួយនេះ ទើបតែថ្ងៃនេះឯងបានឃើញ។ តើសុខហើយនិងទុក្ខយ៉ាងណាដែរ?
Cambodia economy says:
February 5th, 2009 at 7:35 am
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