The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Kim Yong-hwan, “Korea Eximbank”) announced on May 24 that it signed an Economic Development and Cooperation Fund (EDCF*) loan agreement with the Cambodian government to extend USD 37 million in credit for the Sala Ta Orn Dam Construction Project.

Chairman Kim of Korea Eximbank and Cambodian Deputy Prime Minister Keat Chhon signed the loan agreement to that effect on May 23.

The project involves constructing a multipurpose dam in the northwestern state of Bat Dambang, Cambodia’s largest rice-producing region.

* The Economic Development Cooperation Fund (EDCF) was established by the Korean government in 1987 to promote economic exchanges and to assist developing countries in achieving industrialization and economic stability through the provision of long-term, low-interest credit. Korea Eximbank currently manages the fund as its trustee. As of the end of 2012, EDCF has supported 289 projects in 50 countries with KRW 9.11 trillion.

The Sala Ta Orn Dam Construction Project is a major pillar in Cambodia’s National Strategic Development Plan 2009-2013, its principal development roadmap.

Agriculture is an important industry in Cambodia accounting for 40% of its GDP and involving 70% of its economically active population.

However, only 3% of Cambodia’s cultivated land is suitable for double or triple cropping in the dry season (lasting from November to April) due to water shortages.

The Sala Ta Orn Dam, once completed, is expected to resolve such shortages and thereby increase rice production by 100 thousand tons (generating an income of USD 6.2 million) through triple cropping.

Power shortage mitigation and flood control also count among the expected benefits.

Cambodia currently imports a considerable amount of electricity from neighboring Vietnam and Thailand to counter its chronic power shortages. Moreover, it is afflicted by floods of increasing frequency and intensity since the heavy flooding of Phnom Penh in 2011.

The completed dam would provide electricity to approximately three thousand households in the vicinity and help control floods.

A Korea Eximbank official remarked, “This project will not only accelerate Cambodia’s economic growth by boosting agricultural productivity, but also provide an opportunity for Korean constructors hit by the slump in their domestic market to capture new markets overseas. It is a win-win model for both the donor and recipient countries.”