Keynote Address at the Inauguration of the “Sugarcane Factory”

Koh Kong, January 25, 2010

Your Venerable Monks,

Excellencies, ladies and gentlemen distinguished national and international guests,

Dear the compatriots,

It is my great pleasure to be here to inaugurate the sugarcane factory which is a joint investment of Koh Kong Industry Co., Ltd. and Koh Kong Plantation Co., Ltd. This factory, which is located in Chi Kor Leu Commune, Sre Ambil District of Koh Kong Province, in addition to its dynamic contribution to development effort and improved living standard, will transform this area into a production base for domestic supply and export markets and subsequently a developed border zone. In this sense, we are proud of this achievement since it will be a source of new opportunities of socio-economic development including productivity improvement, job creation, and local development.

I highly welcome the investment of both companies while Cambodia is in great demand of contribution from the private sector, as I have often said “private sector is the engine of growth”. I would also like to encourage the implementation of this investment project, both in-farm and off-farm work, so that the business will succeed. The successful operation of this factory will send a signal of favorable and predictable investment environment to international investors. I highly appreciate all companies investing and operating in Cambodia amid the global financial and economic crisis. Along with this, I would like to take this opportunity to reiterate the Royal Government’s firm stance on welcoming ad encouraging investment in Cambodia. We will strive to strengthen and expand economic cooperation and broaden industry and trade development through the elimination of trade barriers. This task will allow us to raise the capacity and quality of domestic production, and improve Cambodia’s competitiveness in the regional and global markets. Along with this, I would also like to extend my appreciation to related ministries/institutions, local authorities, government officials, armed forces and all the compatriots for their concerted effort to solve smoothly any issue arising from the construction of this factory and create a favorable environment to attract new investment projects.

Prices of agricultural products will increase both for today and tomorrow since the demand for human consumption is gradually increasing and rising oil price makes the use of some agricultural products relatively more attractive for energy production. This represents a new opportunity for a country with vast agricultural potentials like Cambodia but a threat to those without this advantage, especially poor countries. Considering this perspective, Cambodia prioritizes human consumption demand while energy production demand is also taken into account, like what we are doing in this area.

Agriculture represents a big chunk of growth but we fail to maximize gain from this sector due to underutilization of arable land, limited diversification and lack of production means and technologies. In fact, if we look at the sugar cane plantation, Cambodian farmers have practiced the mixed sugar plantation of about 13,297 hectars by receiving the yield of about 385,588 tons in 2008. But, this crop has not been processed into substantial and industrialized products yet. It is just to serve the daily need of the people’s living. Cambodia has, so far, had small enterprises for palm sugar production in order to meet the small demand of the people in their daily living. Through this, Cambodia does not have sufficient sugar to meet the need of the people nation-wide and Cambodia is necessarily importing the white sugar and many thousand tones of sweet products, in particular, from Thailand and Vietnam. According to the report in 1990, Cambodia needed the sugar of 43,000 tons, equal to 5 kg for each individual per year among the 8,6 million people and in the year 2000 Cambodia needed the sugar of 80,300 tons, equal to 7,3 kg for each individual per year among the 11 million people. Recently, based on the statistic in the year 2007, Cambodia imported the sugar and other sweet products from 18 countries in total of 30,340 tons. Based on this data it is shown that Cambodia needs to be almost totally dependent on the import of sugar and other sweet products from foreign countries while Cambodia has enough natural resources to produce those products.

Realizing that Cambodia has strong potential in growing sugar cane to be processed as white sugar, together with the strong commitment of Cambodia toward the development of private sector through promoting this kind of investment, 8 companies proposed the investment on planting sugar cane and building sugar factories. The Royal Government of Cambodia has warmly welcome this initiative by allowing those companies to receive, in principles, the investment on growing sugar cane and building sugar factories under the scheme of economic land concession, in which there are 2 companies located in Koh Kong province and 3 companies located in Utdor Meanhey province, 1 company located in Kratie province and 2 companies located in Kampong Speu province with the total economic land concession of 66,000 hectars. At the same time, the Sugar Industry Company Limited is to invest on the economic land concession of 9, 700 hectars in Sre Ambel district of Koh Kong province, and according to the report by December 2009, the Company has claimed the land for about 5, 288 hectars, which is above the plan of 2, 488 hectars, and with the plantation of 2, 910 hectars, equal to 103 % of the implementation plan. As for the Koh Kong Plantation Company Limited, it has to invest on the economic land concession of 9, 400 hectars in Botum Sakor district of Koh Kong province, and according to the report by December 2009, the Company has claimed the land for about 4, 621 hectars, which is above the plan of 1, 506 hectars, and with the plantation of 4, 421 hectars, equal to 140% of the implementation plan. At the same time, both companies have cooperated to build the sugar factory on the land of 60 hectars in this area with the ability to absorb the fresh sugar of about 6, 000 tons per day and ability to produce 600 tons of sugar per day. However, the company can only produce the fresh sugar to support the factory of only 2, 000 tons per day due to the shortage of labor forces. In fact, during the growing and harvesting season, starting from January to April 2010, both companies need 5, 000 to 6, 000 contracted workers for daily operation, in which the companies have only 4, 000 workers. Each worker will receive about 10,000 Riel to 20,000 Riel per day. Also, these companies do need employees, skilled workers and contracted workers of 350 people to work in the factories and their salary will range from USD 80 to 120 USD. This statistic shows that the companies will contribute to solving employment opportunities and income generation for the people, which is responding to the objective of poverty reduction through expanding additional jobs. When our people have enough income for their living we can reduce the migration of the people from this area to the cities or other urban areas.

Along with the white sugar factory, which is to be inaugurated now, we will also receive a number of sugar factories in Utdor Meanchey province, which is planned to be completed by 2011, with the ability to absorb the fresh sugar cane of about 7, 000 tones to 11, 000 tons per day, and ability to produce sugar from 700 tons to 1,100 tons per day. The sugar factories in Katie province, which will be completed in 2013, can absorb the fresh sugar cane of 5, 000 tons per day and is able to produce 500 tons per day. Therefore, based on the above projects, Cambodia can produce 7, 2000 tons of sugar in 2010 and could be increased to 156, 000 tones to 204, 000 tons in 2011, and in the year 2013 we will be able to produce white sugar from 216, 000 tones to 264, 000 tones. The quantity of these products can make Cambodia able to fully supply the local demand and is also able to export more.

In this regard, the establishment of this sugar factory will make the farmers, who plant sugar cane, have new markets; and this factory will respond to the local sugar demand by substituting the import. This clearly shows the attention made by the Royal Government by not just only setting out the national development strategy and fully promoting the local resource potential to receive economic efficiency, but also expanding and strengthening the Cambodian competitive productivity and capacity in the context of globalization to ensure sustainable economic growth.

In fact, this factory would be the largest sugar factory in Cambodia for meeting domestic demand and exports, which will increase the domestic production of import substitution goods and increase market competitiveness.

Beside those direct benefits as mentioned above, this sugar factory will create abundant opportunities for the entire socio-economy in Cambodia. Our people could directly earn their income from this factory through wholesaling or retailing sugar at provinces, cities, urban and rural areas, providing transportation services, repairing and maintenance services, establishing handicraft or other supporting industries, encouraging farmers to plant sugarcane to supply to this factory. The other significant benefit that Cambodia gains from this factory which is a long-term development strategy include knowledge, skills and technology transfer to the country for the development of the agro- industry and those industries that support agriculture sector. Evidently, in its Capacity Building Program, this factory has sent 52 of its staffs to attend technical training overseas. This program will increase the flow of knowledge and skills to Cambodian people, which is the strong foundation for industrial development in Cambodia.

The inauguration of such large scale factory is another proof among other achievements that the Royal Government of Cambodia has achieved during the Fourth Legislature of the National Assembly. It reflects the righteousness and successes of the government in implementing the Rectangular Strategy-Phase II as adopted in this mandate.

I also would like to take this opportunity to advice relevant Ministries, local authorities, the company and people living in this area to continue to pay high attention with great accountability, contribute to the project development and progress, and ensure the sustainable operation of this factory as follow:

1^st : Relevant Ministries, institutions, especially the Ministry of Labor and Vocational Training must cooperate, coordinate and disseminate information to all people about the labor needs of the company to reduce the unemployment of people.

2^nd: Relevant Ministries and competence authorities, especially the Ministry of Industry, Mines and Energy must strongly cooperate with the company by having a clear monitoring program and consistently control the program to ensure that the production and outputs are in compliance with the industrial standard.

At the same time, the Ministry of Environment must take a lead in controlling the industrial waste and cooperate with the company in implementing the principle of Clean Technology to reduce waste and other negative impacts to the environment and people, as well as creating a good environment to build trust from new investors.

3^rd: All levels of local authority must cooperate with the company to ensure good security, and order in the area.

4^th: The company must try its utmost to ensure that its products complies with the technical standard, strengthening and upgrading capacity to promote the image of Cambodian products and resolve all challenges relating to the market competition. Moreover, the company must respect the Labor law, Environmental Law and other existing regulations. The company must adhere to the principle of environmental and social responsibility by cooperating with the Ministry of Industry, Mines and Energy and the Ministry of Environment in enforcing the Law on Factory and Handicraft Management, Environment Protection Law, for the welfare, safety, and try to avoid any negative impacts on social environment, that may cause from the operations of this sugar factory. Additionally, the company must continue to expand its production as agreed in the contract, by ensuring reasonable competitive market price for agro-products, providing sugar cane seeds, tools, planting techniques, soil laboratory to improve soil quality for local farmers and other areas that have potential for sugar cane plantation, which the company can rely upon for supplying for this factory.

At the same time, the company must help develop this area and take care of the welfare of its employees and their families, by building houses, health centers, Buddhist Temples, schools, water ponds, wells and other infrastructures as the foundation for facilitating the working and living condition of its employees and their families to raise their living standard and to develop this area.

5^th: Other enterprises, handicrafts, industries and all people must show stronger support for local products to motivate entrepreneurs and producers to produce more products for the socio-economy of Cambodia. When we do that, we will have a mechanism of mutual support, create the equilibrium of demand and supply, promote national competitiveness of Cambodia which is the key factor for accelerating economic growth and national development.

6^th: People living in this area and other nearby areas, must stop hunting wildlife and encroaching forest. You should turn to sugarcane plantation, find job in this sugar farm factory to raise your living standard, to avoid danger jobs, preserve the forest and wildlife to attract more tourists to visit this area.

In this spirit, I firmly hope that all relevant ministries, local authorities, company and all people will continue to carry out their duties with high accountability.

Last but not least, I wish the company success and fast progress in its production, distribution, and sales with strong support from customers nationally and internationally.

Finally, with the inauguration of this “Sugarcane Factory” in Koh Kong province, May I wish Your Venerable Monks, Excellencies, Ladies and Gentlemen, Distinguished National and International Guests, Compatriots the Four Gems of Buddhist Blessings.