The land of heroes
Our heroes
Our land
Cambodia Kingdom

Wednesday, January 11, 2012

Cambodia to call for lifting of economic sanction against Myanmar

SIEM REAP, Cambodia (Kyodo) -- Cambodia will call for the lifting of economic sanctions against Myanmar, acting in its capacity as new chair of the Association of Southeast Asian Nations, Cambodia's top diplomat said Tuesday.

Cambodian Foreign Minister Hor Namhong told Kyodo News in an interview that a statement calling on the removal of sanctions will be made when Cambodia hosts the 20th ASEAN summit in April.

"Myanmar has made good progress in democratization and, therefore, we (ASEAN) and as well as the international community should have a new position on Myanmar," Hor Namhong said.

Hor Namhong made the pledge after he met Myanmar's Foreign Minister Wunna Maung Lwin in Siem Reap.

Hor Namhong and Wunna Maung Lwin were in Siem Reap for an informal ASEAN ministerial meeting.
Read more!

Justice officials in GMS countries meet in Cambodia to strengthen human trafficking co-op

PHNOM PENH, Jan. 11 (Xinhua) -- Criminal justice practitioners from the Greater Mekong Sub-region (GMS) countries gathered here on Wednesday to strengthen international cooperation on human trafficking investigations and prosecutions.

Speaking at the opening ceremony, Ang Vong Vathana, Cambodia's minister of justice, said that the meeting was very important to accelerate inter-governmental efforts in collaboration with local and international organizations to fight against human trafficking in persons.

"It is essential to develop realistic and effective cooperation in the criminal justice system to remove impunity for traffickers and to provide justice for victims," he said.

"It was also crucial to urge member states to strengthen cross- border cooperation in law enforcement among the six GMS countries to combat trafficking through criminal justice process," he added.

The minister said that the meeting was held under the framework of the COMMIT (Coordinated Mekong Ministerial Initiative Against Trafficking) Memorandum of Understanding that was signed in 2004 by the ministers representing the six member states of the Greater Mekong Sub-region (GMS) including China, Myanmar, Thailand, Laos, Cambodia and Vietnam.

The 3-day meeting was attended by senior justice officials from the GMS countries including Han Xiaofeng, division chief of the investigation department of China's Supreme People's Prosecutoriate, police captain Soe Tint at the department of transnational crime of Myanmar Police Force, Police Lt. Col. Paisith Sungkgahapong, senior special case inquiry official at the Supervising Anti-Human Trafficking Center of Thai ministry of justice.

Also attending the meeting were Thoummaly Vongphachan, director of Lao's Counseling and Protection Center for Women and Children, Ith Rady, undersecretary of state at Cambodia's ministry of justice, and Truong Thi Huong Mai, deputy head of section at Vietnam's department of prosecution service for felony cases.
Read more!

Debt fears for farmers Calls for lower microfinance rates

By Don Weinland and May Kunmakara

Government officials yesterday said high interest rates at Cambodia’s microfinance institutions were unsustainable and posed risks for social instability among the country’s farming population.

MFIs, however, said loanees were well informed of default risks, and that the institutions provided a service unavailable elsewhere in the Kingdom.

Small loans at Cambodia’s MFIs carry monthly interest rates as high as 4 per cent, Kalyan Mey, a senior advisor to Cambodia’s Supreme National Economic Council, told the Post yesterday.

At the highest, yearly rates on the loans can hit nearly 50 per cent without compound interest, which is unsustainable for Cambodia’s rural economy, he said.

“It’s too high to justify any productive gain from the farmer who raises pigs or grows rice,” Kalyan Mey said of the more than US$500 million MFI industry.

“Most farmers can’t assess the associated risks, and they don’t foresee the [possibility] of losing the property they have mortgaged,” he said.

“At the end of the day, many farmers will lose their houses and land. It can become a big social problem for the rural community.”

While some rural borrowers take loans for farming inputs such as fertiliser and rice seeds, others go into debt on hospital bills and wedding expenses, said Kalyan Mey.

Default in the countryside translates into social instability as some farmers become landless. MFI operating costs are high. Each individual farmer must be consulted for loans, which average at about $500. In addition, a majority of Cambodia’s microfinance has foreign backers who demand higher profit margins.

These free-market forces are a “very big problem” for farmers who take loans from MFIs, Son Koun Thor, president of Cambodia Rural Development Bank, said yesterday.

Given the Cambodian government’s commitment to an open market, increased competition among MFIs, and continued decreases in rates, is a solution to debt pressure on farmers, he said.

Cambodia Rural Development Bank was originally established to fund MFIs, and it is negotiating with the 10 institutions it supports to continue lowering rates, Son Koun Thor said.

A stronger government hand in the industry may be required to keep interest rates down, he said.

Sim Senacheert, general manager at Prasac Microfinance Institution, denied that rural borrowers were unaware of lending-practice risks.

During a consultation process, as well as at the time of lending, the MFI reviews the details of the loan, he said.

“I don’t believe they are uninformed. Our clients have been taking loans from us for 10 years,” Sim Senacheert said, adding that 30 per cent of Prasac’s loan portfolio was in agriculture. The default rate across Prasac’s entire loan portfolio was 0.14 per cent, he said.

“They know how to calculate the interest rate.”

Although interest rates have fallen since 2004, Sim Senacheert said operating costs still kept MFI rates high. Prasac has 24-per cent annual interest rates with an average loan size of $900, he said. If interest was too high, he said customers would go to other lenders.

Some farmers do go to unofficial lenders who are more accessible in their communities.

Ly Thet, a corn and cassava farmer in the Stung Kach commune of Pailin province’s Sala Krao district, said he recently borrowed $350 with an interest rate of about 48 per cent from a local businessman.

Farmers in the community are generally unaware of borrowing practices and often take to the simplicity of high-interest loans from unofficial lenders, according to Ly Thet.

“People here normally receive loans from businessmen because it is easy,” he said.

Many farmers who borrow from MFIs have seen profits disappear this year, a source familiar with the industry told the Post on condition of anonymity.

“In a good year, [farmers] might be making 40 per cent return, which is then eaten up with interest repayments. If you have a really bad year you could conceivably get a negative return,” the source said.

Floods in September and October threatened to push higher the rate of nonperforming MFI loans in the fourth quarter of 2011, the Post reported last year, although some industry insiders said diversified portfolios at big institutions would mitigate the effect.

Efforts to reform MFI lending have been “slow and inadequate”, Kalyan Mey said.

Farmers need more education regarding the benefits and risks of MFI lending. MFIs must make sure loans will lead to productive increases in the agriculture sector. Commercial banks should also be encouraged to pay more attention to rural finance, he said.

Farmer associations could reduce MFI and commercial bank operating costs. As the number of loans processed by banks falls, so will transaction costs, and the market would become more attractive to commercial banks, Kalyan Mey said.
Read more!