TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

of the discrepancies between CDC data and the
MAFF website, 6 this study probed data recorded
by the MAFF further in order to understand the
scale of FDI in agriculture, particularly in the form
of ELCs, which could shed some light on the
potential effects of FDI on the socioeconomic
situation, the environment and food security
in the country. Public investment through the
leasing of state private land in the form of
ELCs to private domestic and foreign investors
has been in evidence since 1995, prior even
to the promulgation of the Land Law in 2001.
According to the Sub-decree on Economic Land
Concessions, dated 27 December 2005, 7 ELC
refers to a mechanism to grant state private land
through a specific contract to a concessionaire
for use in agricultural and industrial agricultural
exploitation, namely, the cultivation of food
crops or industrial crops; raising animals and
aquaculture; construction of plants, factories or
facilities for processing domestic agriculture raw
materials; or a combination of some or all of the
above mentioned activities.
The principal aims of such initiatives are to
develop intensive agricultural and industrial
agricultural activities; to generate employment and
diversify livelihood opportunities in rural areas; and
to generate government revenue (US$1–10 per
hectare per year based on four land categories).
Table 8 indicates that private domestic as well as
foreign investment in ELCs was not as considerable
from the mid-1990s to the early 2000s as it
has been from the early 2000s to the present.
Cambodia’s newfound peace and stability, along
with a better investment environment and rising
global demand for industrial crops like rubber and
cassava, could be driving factors.
It should be noted, however, that the scale
of concessions between 1995 and 2003 was
massive. In 1999, 2000 and 2001, concessions
were granted for 20 000 hectares, 315 028
hectares and 100 852 hectares, respectively.
That such large-scale investment models were
permitted before the adoption of the Land
Law in 2001 and the Sub-decree on Economic
6 Note that the CDC dataset has no record of several of
the ELCs reported on the MAFF website.
7 www.elc.maff.gov.kh/laws/subdecree.html
Part 4: Business models for agricultural
investment: Impacts on local development
Land Concessions in 2005, meant they were
implemented in the absence of sound regulations
and governance mechanisms, putting resources
and local stakeholders at risk.
By the end of 2009, the MAFF had granted
86 ELC projects (excluding 12 which were
cancelled); all but nine have profiles on MAFF’s
website. Article 59 of the Land Law in 2001
states that land concession areas shall not be
more than 10 000 hectares. In response, the
MAFF has been negotiating with companies that
have a land area larger than 10 000 hectares,
and are slow in implementing their business
plans. Overall, 12 projects have been revoked,
two of which have a land area above 10 000
hectares. The three mega projects mentioned
earlier remain underway.
However, it is vital to note that, in order to
secure larger tracts of state private land, some
companies use two different names to obtain
ELCs. For instance, Koh Kong Plantation Limited
and Koh Kong Sugar Company Limited in Koh
Kong province have secured land areas of 9 400
hectares and 9 700 hectares, respectively. This
creates a total land size of close to 20 000
hectares. Even more importantly, the Council of
Ministers can grant exemptions to the required
reduction of concessions covering over 10 000
hectares, under conditions set out in Article 39 of
the Sub-decree on Economic Land Concessions.
As of late 2009, the total land size of reported
ELC projects was 1 024 639 hectares. Ngo and
Chan (2010: 6) indicate that approximately
500 000 hectares of ELC projects have been
granted by and are under the administration of
the Ministry of the Environment (MoE) but are not
included in MAFF data. This pushes the total size
of ELC projects up to around 1.5 million hectares,
close to the size of the area under paddy rice of
2.7 million hectares in 2009 (MAFF 2010: 16).
As Table 7 shows, ELC projects are mainly under
private domestic ownership, according to data
from the MAFF website. Foreign investors have
acquired an ELC land size of 355 914 hectares,
which is around 35 percent of the total and
equates to 13 percent of the total paddy rice
area in Cambodia in 2009. China is the dominant
player among foreign investors, with 17 projects
covering a total land size of 186 935 hectares
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CAMBODIA