Cambodia: Fertile Lands for Overseas Investment

Via The Economist, an interesting report on a dispute over Kuwait’s plans to invest in Cambodia’s agricultural sector.  This follows a similar investment made last year by Qatar.  As the article notes:

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.

This entry was posted on Monday, April 27th, 2009 at 8:20 am and is filed under Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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About This Blog And Its Author
Seeds Of A Revolution is committed to defining the disruptive geopolitics of the global Farms Race.  Due to the convergence of a growing world population, increased water scarcity, and a decrease in arable land & nutrient-rich soil, a spike of international investment interest in agricultural is inevitable and apt to bring a heretofore domestic industry into a truly global realm.  Whether this transition involves global land leases or acquisitions, the fundamental need for food & the protectionist feelings this need can give rise to is highly likely to cause such transactions to move quickly into the geopolitical realm.  It is this disruptive change, and the potential for a global farms race, that Seeds Of A Revolution tracks, analyzes, and forecasts.

Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has long held a keen interest in natural resource policy and the geopolitical implications of anticipated stresses in the areas of freshwater scarcity, biodiversity reserves & parks, and farm land.  Monty has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas.  Monty writes about freshwater scarcity issues at and frontier investment markets at