More Local Production, Less Imports

Starting on 24 December 2009 and today, 25 December 2012, the construction of the factory of the Five Star International Fertilizers (Cambodia) Co., Ltd has taken 1,096 days and we are celebrating the inauguration ceremony today. It is an investment from the Socialist Republic of Vietnam as reported by Mr. Tran Van Muoi, Chairman of the Five Star Group. It is indeed a great pleasure that the factory construction have completed in just three years and one day. Though the constructions have just completed, the company’s products have already circulated in the local markets.

Every year we have spent so much foreign exchange for imports of huge amount of fertilizerss for local market for use by our farmers. Once we have this factory built in the country, it means we no longer spend money outside the country anymore. We will have a product of our own. It is true that we still have to import various kinds of fertilizerss. However, at least we could reduce the amount of foreign exchange spent on imports of fertilizerss every year too. We will need to spend only on fertilizers that is not available locally.

According to the report by HE Suy Sem, Minister of Industry, Energy and Mines, we have factories in Banteay Meanjei’s Phnom Thom that produces between six and seven thousands tons of phosphates. Today, we have these factories of the Five Star Group that produce NPK fertilizers. We still need many more types of fertilizers. This means we will need to import only a number of fertilizerss that are not yet in production locally.

Up Curve Demand for Fertilizers in Cambodia

Please allow me to take this opportune moment to clarify a bit issue relating to fertilizers and its use before and during the war in 1970 and later from 1970 through to 1975. As for the period from 1975 through to 1979, there has not been record on that as the country was in war and genocide. In 1960, there were 2,700 tons of chemical fertilizers imported into the country. In 1966, imported chemical fertilizers had gone up to 4,500 tons. At the same time, the local production of phosphate recorded to be between 4,000 and 7,000 tons. In 1968, imported chemical fertilizers were 9,200 tons.

As you can see here, our country had a growing demand for chemical fertilizers in that period that our agricultural sector was also booming. Cambodia was one of the countries that exports agricultural products such as rice, corn, etc. It was unfortunate that the war broke out and no one had the chance to use fertilizers for cultivations anymore. People ran away from burnt villages, bombardments and abandoned their lands. Under the genocidal regime of Pol Pot, we had to produce what they called “fertilizers number one,” i.e. human waste. They gave us one fourth of a kilogram to eat but they demanded us to produce a kilogram waste.

After the liberation on 7 January 1979, the Food and Agriculture Organization (FAO) of the United Nations provided Cambodian with fertilizers for intensive farming over an area of 50,000 hectares, and then in 1990s for 300,000 hectares. We then noticed the increase in demand for chemical fertilizers too. While the amount of chemical fertilizers was 27,500 tons were used in 1970, in 1986 Cambodia recorded use of fertilizers (provided by FAO) to be 28,500 tons already.

In 1993, there was no more provision of fertilizers. We imported some 35,500 tons of fertilizers only. In 2003, imported chemical fertilizers was 43,620 tons. Import of chemical fertilizers in 2008, according to the report by HE Chan Sarun, was 162,140 tons, in 2009 was 172,020 tons and in 2010 was 258,540 tons. In 2011, the import of chemical fertilizers was 512,900 tons and in 2012 556,400 tons. This clearly shows the increasing demand for fertilizers in Cambodia.

More Fertilizers for 4.1 Million Hectares Farmland

We could imply that Cambodian farmers are no longer growing crops according to the nature-dependency method as before. They have been using fertilizers in their intensive farming of all crops. This has led us to an estimation of how much fertilizers would they need in the whole country. In 2012 alone, we have seen the increase of imported chemical fertilizers to 556,400 tons already. For the time to come – short and medium term, over an area of about 4.1 million hectares of land, not yet including the two million hectares that we are providing people with land titles, we need up to 617,000 tons per annum of fertilizers. Taking rice cultivation of three million hectares into consideration, for 2.5 million hectares that are growing rainy season rice would need an average 100 kg per hectare or 250,000 tons of fertilizers and for 0.5 million hectares that are growing dry season rice would need an average 200 kg per hectare or 100,000 tons of fertilizers.

In all for the three million hectares of land of rice cultivation, we have the need of 350,000 tons of fertilizers already. We have another 80,000 hectares under subsidiary cropping too. As I said this has yet to include the land that we are handing out titles to people in the course of new action on existing land policy. I am sure the action will stabilize people’s concerns and will enable them to concentrate on cultivation.

As far as rubber cultivation is concerned, we may trim the figure here to 251,000 hectares. The actual rubber plantation area would be bigger than this since some area indexed to be forest coverage is in fact under rubber already, which has yet to add up to the rubber plantation statistics. Now the total land area where rubbers are providing latex is 55,000 hectares. Using an average 300 kg of fertilizers per hectare means we need 16,500 tons. We have 220,000 hectares of young rubber trees. Using 250 kg per hectare would need in all another 50,500 tons of fertilizers.

Price and Quality Keys in Competition

As is reported by Mr. Tran Van Muoi, the Five Star Group are producing more of NPK fertilizers, which is mainly for rice and the initial production will be 350,000 tons per annum of more than 40 different kinds of NPK fertilizers. In the second phase, the company is aimed for half a million tons of production. We should note that as the factories are here in Kien Svay district, Kandal province, we have assured a strong base for fertilizers production for the people, reduced the amount of foreign exchange as otherwise needed to spend on import of fertilizers.

As far as price is concerned, it is a very important issue here. I would appeal to the company and advise that if they want to sell well so to prevent the import of fertilizers from outside, all they have to do is to ensure good quality and good price too. If they fail the two criteria, they could not call on the Royal Government to prevent the import of fertilizers from elsewhere. The Royal Government does not work that way. That is what I wish to inform to the Vietnamese investors, as they will come to see me this afternoon. They cannot seek the Royal Government’s intervention in obstructing import of fertilizers from other countries at all because we are following the rule of the World Trade Organization.

If you want to sell well your product must be of good quality and good price too. Since Vietnam is also a free-market country I hope that will not be an issue, and I will not apply policy of protectionism since I am the one who is against it. In Los Cabos I brought the policy of protectionism up and I talked about it in the ASEAN Global Dialogue too. That is my advice and warning if you cannot sell your product, you cannot blame the Royal Government for not preventing the import of fertilizers from other sources at all.

In the old days, Lok Chumteav Ho Noan was Minister for Industry among many factories she managed there was only one factory that operated with profit – cigarette factory. This is not factory of those times. I may recall a story. There was a Cabinet meeting at the Council of Ministers. The Ministry of Industry, represented by Lok Chumteav Ho Noan, HE Ith Prang, HE Sok Eisan, made a report about industry. She proposed to me to abolish the handicraft workshops that produced outer cover, inner tube for bicycles and motorcycles, or the state factory in Takhmao would have to close down. I rebuked the idea and made the point that we cannot apply protectionism while we are undergoing reform.

I told them yes close it down because the factory produced outer covers that were lacking quality, did not go well with the wheels and inner tubes that were easily blown up. When the same products made by private workshops were of better quality and good looking too. Then it was better to close it down. I have also made this point in my book “Ten Years of Cambodia’s March” to let the state factory close down and to encourage private sector to take over. There has never been a profit made by state company. In Vietnam too, I read the news and I noticed that the state factory operated at loss. Cambodia changed this before Vietnam.

Fertilizers Use Instructions, More Organic Fertilizers Better

As far as competition is concerned, if you want to sell out your products, you have to take into consideration the price factor so that it will be competitive with the price of imported products. In addition to that, the factory should attach instructions for use of fertilizers too because people in various places have no idea how to use fertilizers. The factory and related agricultural institutions should collaborate in teaching our people to use (fertilizers). I am sure that it is now easier to seek their understanding and cooperation. Formerly it was harder to seek their understanding and change their minds. I am sure that people involved in agronomy and agriculture, as well as those in the fertilizers-making field, should have a note on use of fertilizers rather than for them to spread them out.

Aside from chemical fertilizers, I would appeal to our people to go on using organic fertilizers where and when chemical fertilizers cannot be of help, or you can avoid using it, take for instance, in places where there is silt that is far richer in nutrients already. I am so happy to see that our people continue to either use organic fertilizers alone or combine with chemical one. We still see that in various places our people collected cow dung and placed them in the fields before actually plowing them. This is a good practice and I encourage them to go on doing that and to make compost matter as well. In Europe, the markets forbid chemical fertilizers used products. We have a strong push for the markets in Europe because we do not apply chemical fertilizers. For consumers too, they try to avoid as much as they can products that are grown or made using chemical fertilizers and/or products.

About 50,000 Jackets for the Soldier/Police, Promising Season

I do not want to take too much of your time. I highly appreciate all efforts and hope that the company will continue to expand its products to serve the need locally. I also thank all concerned authorities for cooperation to allow large-scale factories happen in the Kandal province. In fact, I frequently advised many companies from outside to invest in factories in this area. However, they seemed to pay no attention to it. Now we have this Five Star Group coming. This is a great location where there is both land and water access. I wish some company will set up a special economic zone here because there will soon be the bridge of Neak Loeng in place. That would be great to have a SEZ.

Please allow me to say a few words about the weather condition this year. The Year of the Dragon came to its end with a small flooding, which is not normal. The normal cool weather that normally happens in late October has now come in late December. Because of the different weather pattern, I am calling on all of you to take care. I just ordered the release of some 40,000 to 50,000 jackets for the soldiers stationed along the Thai Cambodian border and islands. I hope the distribution process proceeds smoothly under the supervision of HE Pol Saroen and Dul Koeun so that these jackets will get to the soldiers as quickly as possible.

As it may not be a big issue for soldiers and police along the border and islands, we also have to be careful as far as elderly people and children are concerned. I urge local authorities to look for and provide helps to those without sponsors, especially elderly people from cold weather. I also seek your attention with regard to fire disaster as it is now starting the dry season and some fires already broke out already. I strongly urge people to be careful when they celebrate rituals, especially the coming Chinese New Year. I also advise people who frequently work in the forest to be careful of their cigarette butts as they may cause fire to the forest.

It was Christmas already last night. I am not Christian so I did not do anything. In Cambodia, we observe many New Years. During the International New Year, we also do it and we do it again when it is the Chinese/Vietnamese New Year. We have our own New Year in April. That is human rights. We are not against any religions that are present in Cambodia at all. I have observed TVs on many channels at the same time. My wife asked how I could understand anyone of them. I told her yes I could and I could even concentrate on one while it is more important.

We are now approaching the season of making promises. Some people said that for people from 64 years up they would provide money. Now if the number of elderly people is four millions and each one could get 10 USD, that would be 40 million USD per month or 480 million USD per year. Making promise is easy. The key is how you could believe it to be true when the one who promises to offer a concrete house is in fact living in a cottage. However some people made a joke that they would not accept Moeun (tens of thousands) but Sen (hundreds of thousands), for which they mean Hun Sen. I would like our people to get  more than that but our economy is not that strong yet. It is not yet time but ok you can campaign. I just advise not to scold to much as it is now the end of the year and we are still in mourning for our late monarch too.

Well about the fertilizers again, I urge the related components of the Ministry of Trade to take swift measures against the intellectual property right, as there has a report about fake formula of fertilizers. Please take action to help contribute to protecting the reputation and effectiveness of the factory’s true products. Fake products would not only dishonor the name of the company but also destroy the people’s farmlands too./.