Petrodollars v smallholders

Apr 23rd 2009 | BATTAMBANG
From The Economist print edition

 

Disputes erupt over plans to invest millions in rice farming

 

IT SEEMED like the perfect match. Kuwait has a lot of money and needs to import food. Cambodia has a lot of fertile land and wants to attract foreign capital. So, as has been happening around the world since the food-price spike of 2007-08, the government of a poor farming country is planning to hand over vast tracts of land to a richer, oil-producing one.

In a whirlwind courtship, Cambodia and Kuwait have exchanged prime ministerial visits and initialled deals on everything from opening embassies and boosting energy co-operation to opening direct flights and holding football friendlies. Kuwait has now reportedly agreed to offer loans totalling $546m to finance a dam on the Stueng Sen river for irrigation and hydropower and to build a road to the Thai border. The Cambodian government says it has not yet decided what exactly the Kuwaitis will get in return but the speculation in Phnom Penh is that they may be offered 50,000 hectares (124,000 acres) of farmland, possibly on 99-year leases. Kuwait is not alone. Last year the prime minister of another rich Gulf statelet, Qatar, also visited Phnom Penh, with plans to invest $200m in Cambodian agriculture.

Such deals have a way of turning sour because of disputes over details. The Cambodian one seems to be conforming to type. Agreements ratified by the rubber-stamp parliament contain sweeping generalities and less detail than most people would expect when they rent an apartment. Son Chhay, an opposition MP and chairman of the National Assembly’s foreign-affairs committee when the deals were initialled, said he could not now obtain copies. But if foreigners want Cambodian rice, he says, they should buy it, not seek to control vast tracts of land.

The other problem with such deals is that they are made in national capitals and often run into opposition on the ground. Cambodia’s rice-farmers are suspicious enough because the government has a record of throwing them off their land in opaque deals involving rich cronies. Villagers in Battambang province, where the Kuwaiti road will run, say they know almost nothing about the scheme. They concede that a new road, built on what is currently a dirt track being measured by surveyors, would help them get crops to market. And according to one happy rumour, Kuwait has agreed to buy all their produce. But they are worried that their land will be confiscated—as has happened before.

The government insists the deal would be good for the country and for economic growth. Cheam Yeap, the chairman of the parliamentary economics and finance committee, says that “somehow we have to attract investors for national development.” He argues that land conflict is the fault of farmers as well as the government and that farmers have to be realistic.

This is not merely self-serving. Cambodia’s rice yields are about half those in neighbouring Thailand and Vietnam. Many people—not just the Kuwaitis—are seeking to modernise farming, which is the largest employer in Cambodia.

International donors are hoping to improve the lot of small-scale farmers by helping them take advantage of world markets by investing in productivity, food processing and transport infrastructure. Other international businessmen, including some from Israel, are seeking to bring foreign technology and capital into Cambodia’s fledgling agri-business sector.

So the question is not whether investment by Kuwait or anyone else is in Cambodia’s long-term interest. It is whether the terms of the particular deal are beneficial. Alas, it is far from clear in this case whether Cambodia’s rulers have been influenced by economic development—or by the prospect of another quick payday.

**************

Link: http://www.economist.com/world/asia/displaystory.cfm?story_id=13527987

Shared by BT.

Dragon's shadow lengthens over Cambodia

Economic activity between the two countries is being stepped up in the sectors of trade, industry, and tourism. China also offers military assistance, while the percentage of students studying Mandarin is increasing. But the Chinese influence is also bringing corruption and the exploitation of manual labour.

Phnom Penh (AsiaNews) - Chinese influence is growing in Cambodia: the Asian giant, thirsty for energy and raw materials, and interested in extending its influence in the region, is stepping forward as the country's leading investor and trade partner. This influence is not limited to trade and industry, but extends to the social and cultural level, since the Chinese language has become an essential point of reference in the business world, surpassing even the monopoly held until now by English.

Relations between the two countries date back to the end of the 1950's, and were reinforced two decades later during the bloody regime of the Maoist dictator Pol Pot, actively supported by China, in spite of the genocide of the Khmer people, which caused the death of more than one million Cambodians in less than five years. Sources for the Chinese News Agency say that China is one of Cambodia's main trade partners, thanks to the 3,016 Chinese businesses operating in the territory, which produced 1.58 billion dollars at the end of 2007. Last year, bilateral trade grew by 30% compared to 2006, for a total volume of investments of 730 million dollars. This support is not limited to economic exchange, but is also reflected in the country's defence system: China is providing military assistance to Cambodia, strengthening its marine fleet with nine patrol boats in 2007, and five warships in 2005.

But there is another side to the Chinese presence: human rights and anti-corruption activists denounce an exponential growth in illegal logging, land-grabbing, and worker exploitation, and a dizzying increase in corruption levels. According to Simon Taylor, director of the international group Global Witness, "the effect of lots of money coming in with few strings attached, going to a lot of people in the government, is generally exacerbating corruption".

In the meantime, the Cambodian government has approved the construction of two hydroelectric power plants, to be built by Chinese companies. Work will begin by the end of 2008. The project is opposed by environmentalists, who denounce "serious damage to the country's ecosystem, and risks to the lives of thousands of people". The dams will be constructed in the province of Koh Kong, in the southwest of the country. The project will bring an investment of 540 million dollars from the China National Heavy Machinery Corp., and 495.7 million dollars from the Michelle Corp. It is expected to produce 338 megawatts of electricity.

Investments from Chinese companies are also prompting students in the country to study Mandarin over English (which nevertheless remains the most widespread foreign language), because it is becoming indispensable for business: it represents a fundamental resource for finding a better position in the professional arena, in the sectors of industry and tourism. The most important Chinese school in Cambodia is the Duan Hoa Chinese School in Phnom Penh, subdivided into two different sectors with more than 7,000 enrolled students; the second, the Chhung Cheng Chinese School, is fairly popular among Chinese-Khmer families, and numbers about 2,000 students. The government, finally, expects to add Chinese to the obligatory curriculum of its universities.

*************

Shared by BT