PHNOM PENH, Cambodia (AP)--Japan on Thursday agreed to lend Cambodia$39.2 million to expand the impoverished country's main sea port.

Foreign Minister Hor Namhong and Japan's Ambassador Fumiaki Takahashi signed the agreement on the Y4.3 billion at a ceremony Thursday.

The money will be used to expand the 160-meter cargo container berth and upgrade cargo handling equipment at the Sihanoukville port, said a statement from the Japanese Embassy.

It said the loan has an interest of 0.9 percent per year.

Hor Namhong said the loan was the second for the port project following the previous loan of about $40 million approved by Japan five years ago.

He said the expansion project is expected to help boost the port's import-
export activities, which are important for the country's economic growth.

Sihanoukville is 185 kilometers southwest of the capital Phnom Penh.

At the ceremony Thursday, Japan also approved a grant of Y49.7 million to help
improve education in Cambodia.

Japan is Cambodia's top donor, contributing hundreds of million of dollars to
development of the war-ravaged nation.

Dow Jones Newswires 09-09-040249ET

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