Toyota joins in Cambodin rice scheme

Toyota Tsusho, the trading arm of Japan's Toyota Motor Corporation, has joineddwith Thailand's Huay Chuan Rice Co help develop Cambodia's growing rice industry.

The alliance, which includes Malaysian investors, has been in talks with Cambodian businessmen for a venture that would initially set up a rice mill and processing plant for export.

Chookiat Ophaswongse, managing director of the Huay Chuan Group, said Takeo province on the Vietnamese border is being considered. Takeo is about 150 kilometres east of Sihanoukville, Cambodia's deep-water seaport, which would facilitate shipments.

Cambodia's rice industry has grown rapidly in recent years following the government's policy of promoting exports once local production is sufficient for local consumption.

Mr. Chookiat said Cambodia should have 4 million tons of unmilled rice for export this year - 3.5 million tonnes to Vietnam and the rest to Thailand.

"The Cambodian government has opened the market wider to foreign investors, especially those bringing in new technology and R&D for improving the local rice industry," he said.

Cambodia reportedly shipped 900,000 tonnes of rice in 2010, almost double the 500,000 tonnes in 2008. However, the actual volume may be even higher due to inefficient data gathering.

Mr. Chookiat said the proposed venture will also consider the next phase - a fully integrated rice operation.

It would develop quality jasmine and glutinous rice seeds, promote higher-quality farming and process the rice for both consumption and use as an ingredient in a vinegar factory.

"The Japanese firm already produces vinegar in Vietnam, but supply problems are prompting them to seek new sources," said Mr. Chookiat.

Toyota Tsusho earlier met with Huay Chuan Rice to discuss a possible joint investment in rice-based products such as flour and crackers for domestic consumption and export to Japan.

But last year's political unrest in Bangkok put that project on hold. As well, Japanese investors are unsure of Thailand's rice policy. "There's a risk the new government could reinstitute the rice price pledging scheme, which could result in market and cost instability," said Mr. Chookiat, who is also honorary president of the Thai Rice Exporters Association.