Cambodia Rice Federation (CRF) vice-president Chan Sokheang plans to negotiate with his Chinese counterpart for cash-settlements in riel and yuan currencies for exports of milled rice.
The move is intended to facilitate payments and boost exports.
Sokheang told The Post on Tuesday that since exports to China have sharply increased in recent years, it is important that the CRF and its members work with the National Bank of Cambodia (NBC), the central bank, to facilitate payments in the local currencies.
“All members agreed to request that the NBC coordinate cash settlements in riel and yuan,” said Sokheang.
“We typically buy paddy in the local currency and then we export in US dollars, which requires us to exchange yuan to US dollars and US dollars to yuan and then into riel. This makes both sides lose money on the exchange rate.”
He said time and money would be saved if payments could be made directly in yuan via banks in China and Chinese-owned banks in the Kingdom.
“We’ve asked the NBC to coordinate the issue but we need to ensure that banks in China can adjust their interest rates in consonance with the forecasted fixed exchange rate between the riel and the yuan during a given period.
“If we can do that, we can expedite a Memorandum of Understanding [MoU] over the cash-settlement,” he said.
Cambodia exported 300,252 tonnes of rice to the international market in the first four months of this year – equivalent to $210 million, the CRF said in a report. This is the highest export volume in the past decade.
The export volume is 40.46 per cent over the 213,763 tonnes reported in the same period last year.
China accounted for 41 per cent of exports or 122,094 tonnes, said the CRF. The EU and the UK accounted for 32 per cent or 97,337 tonnes. ASEAN countries made up 13 per cent or 37,428 tonnes and other countries 14 per cent or 43,339 tonnes.
Sokheang, who is also a chairman and CEO of Signatures of Asia Co Ltd, said that his exports to the Chinese market have gradually increased to 15 per cent of his firm’s total exports.
“If we can make the payments smoothly, we will see a sharp increase in [exports of] our milled rice to China.”
“And Cambodia will become a model of yuan cash settlement for international trade so that China’s leaders can promote it [yuan cash settlement services] to the world.
“Then we will get more market access for other products into the Chinese market.”
Cambodia and China have concluded their third round of negotiations for a free trade agreement (FTA), the Ministry of Commerce said last week.
Both sides have solved the remaining issues in the agreement text and approved in principle the market access of goods and services, it said. It is expected to be signed by the end of the year.
Source: Phnom Penh Post