TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

3.2 FDI in agriculture by nationality
Table 3 shows a significant contribution of FDI to
agriculture in Cambodia between 2000 and 2010,
with an average share of fixed assets of 78.4
percent, along with a slow but stable growth of
private domestic investment, which averaged 21.6
percent in the same period. The significant rise
in both private domestic and foreign investment
has been more evident in recent years. This can
be attributed to steep rises in global demand for
natural rubber, particularly from China, India,
Japan and the United States, as a result of a
hike in the price of synthetic rubber after the
petroleum price spike in late 2007 and 2008; for
bio-fuel refined from common crops like palm oil
and corn; and for food, such as rice, from foodimporting
countries in the region and the world.
Although the monetary value of foreign
projects looks small compared with total FDI
in the three major sectors of tourism, industry
and services, the total size of secured land in
agriculture may be substantial and thereby have
negative implications for the environment and
food security.
Looking at data for the period 2000 to
2010, illustrated in Table 3, China stands out
as the second-largest investor in agriculture
FIGURE 2
Share of approved investment by sector,
2000–June 2010 (Million US$)
percent (%)
100
18
24 14
7
14 25
29 37
80
60
49 36
20
5
59
81
19
8
45
82 68
3
35
40
37
41
20 46
2
12
0 0
2000
14
29 49
46
10
38
10
23 6 2
26
5 8
11 8
0
1
2002 2004 2006 2008 2010
Service
Agriculture
Tourism
Industry
Source: CDC, 2010 Source: CDC, 2010
Part 4: Business models for agricultural
investment: Impacts on local development
with a share of fixed assets of 17.6 percent,
following Thailand, with the largest share of 21.7
percent. There is also evidence of rising interest
in agriculture in Cambodia from such countries
as Viet Nam (14.8 percent), Republic of Korea
(6.5 percent), Singapore (4.8 percent), India (4.4
percent), United States (3.6 percent) and Japan
(1.8 percent). All of these countries are mainly
involved in crops and forestry, as discussed in
the following section. Although this dramatic
surge in foreign engagement in agriculture
could be favourable at the macro level, negative
trends could arise at the micro level if there is
an absence of sound and prudent investment
coordination mechanisms, environmental impact
assessments and regular on-site investigations
that are pro-poor, environmentally aware and
consider food security as a priority issue.
3.3 Subsectoral breakdown of
investment in agriculture
The CDC does not have a template giving
a sectoral breakdown of agriculture data;
categorization must be done instead, using
different data sources. This study breaks
agriculture down into crops, livestock, fisheries,
forestry, fruit, food processing and others. This
FIGURE 3
Share of approved investment by sector,
2000–June 2010
Tourism
58%
Industry
17%
Service
19%
Agriculture
6 %
165
CAMBODIA