DEG invests in Cambodia
Press Release from 2015-06-24 / DEG
- USD 15 million for a local rice producer
- Safeguarding income for small-scale farmers
- Rice husks for producing renewable energy
DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH is investing in rice production in the future market of Cambodia, and providing a quasi-equity loan amounting to USD 15 million to the company, Angkor Kasekam Roongroeng Co. LtD (AKR), for expanding a rice mill. The Cambodian family-owned company set up in 2000 purchases paddy rice from local farmers, before processing and trading it.
The company is specialised in the production of high-quality fragrant rice and owns a modern rice mill which can process up to 250,000 tonnes of rice per annum. The planned investments should help to exploit this capacity even better going forward, and increase the added value. Above and beyond, the company is extending its drying and warehousing capacities. The total investment volume for the project amounts to USD 22 million.
"Our financing is supporting a local company in its expansion activities and playing a key role in ensuring that numerous farmers earn a steady income as suppliers," explains Dr Herbert Baumgartner, Director of the DEG representative office in Bangkok, at the contract signing ceremony. Chieu Hieng, founder and Managing Director of AKR, added: "In DEG we've found a competent and reliable partner for furthering our company sustainably."
The company purchases the husked rice from tens of thousands of farmers under contract located in four provinces. Premium rice which is growing in popularity, makes up around 35 percent of the production, with plans to increase this share.
The rice husks which are produced during processing are used by the company's subsidiary, Angkor Bio Cogen, for generating renewable energy. In doing so, it is the first project within the framework of the Clean Development Mechanism (CDM) Cambodia, which aims to reduce climate-damaging emissions.
In addition to the investment financing DEG offers the company accompanying measures, for example within the context of cooperation with farmers, or for introducing organic types of rice.
Financing companies in future markets such as Cambodia is a strategic priority of DEG, a subsidiary of the KfW Group. In 2014 alone, it provided finance totalling EUR 855 million to facilitate progress and provide prospects for local populations in Africa and future markets.