PHNOM PENH, June 30 (Xinhua) -- Cambodia's agricultural sector has the potential to compete regionally if commercial banks loan the money needed to modernize, local media reported Monday, citing senior government figures.

Commercial banks are being encouraged to assist farmers through loans, Sun Kunthor, a government advisor and general director of the Rural Development Bank of Cambodia (RDBC), was quoted as saying in the Mekong Times newspaper.

"We needed commercial banks' participation in providing loans to the sector and we are urging them to cooperate," he said.

Nearly all of the RDBC's loans last year went to the agricultural sector, Sun Kunthor said, but even the bank's 20 million U.S. dollars of working capital would bring little improvement alone.

Bu Ros, chief of Canadia Bank's loan department, said his bank also strongly supports loans to the agricultural sector and will provide as many as possible.

"We were advised by the president of the bank to focus mainly on offering loans to the agricultural sector and we are prepared to give 10 percent of the total loan which is 430 million U.S. dollars for the year 2008," he said, adding that around 6 percent of Canadia's loans were to farmers last year.

Cambodian Prime Minister Hun Sen has recently urged the Ministry of Economy and Finance and the National Bank of Cambodia to consult with commercial banks to provide the credit needed to modernize Cambodian agriculture.