Foreign Investment in Agriculture in Cambodia CDRI Working Paper ...

Canada started up a beer manufacturing project in 2010 with 100 percent fixed assets,
and Singapore has partnered Cambodia (10 percent) to produce bottled pure drinking water.
Thailand partners Cambodia (40 percent) in producing instant noodles and other instant food,
as does Vietnam (Cambodia 30 percent) in producing beer, soft drinks and drinking water.
China invested 100 percent of own capital in seafood processing in 2004. On the whole, apart
from Australia and Canada, only countries in the region appear to have an interest in food
processing.
Table 7: Approved Fixed Assets in Food Processing, 2000-June 2010 (USD million)
Country 2000 2001 2003 2004 2007 2008 2009 2010 2000–Jun 10 Share
Australia - 0.7 9.0 9.7 13.0
Cambodia - 0.8 10.1 3.7 8.5 30.2 53.3 71.3
Canada - 4.3 4.3 5.7
China - 0.7 0.7 0.9
Singapore - 3.8 3.8 5.1
Thailand - 1.2 1.2 1.6
Vietnam - 1.7 1.7 2.3
Total - 2.0 0.7 0.7 20.9 3.7 8.5 38.3 74.7
FDI - 1.2 0.7 0.7 10.8 0.0 0.0 8.1 21.5
Share in
FDI
60.0 100.0 100.0 51.5 0.0 0.0 21.2 28.7
Source: CDC (2010)
Overall, at approximately 6 percent the share of approved fixed investment in agriculture
has been minimal but stable during the past decade. Low appropriability of return on investment
coupled with ill-defined property rights could hinder private and foreign investment in the food
processing sub-sector.
3.5. Engagement of Foreign Investors in ELCs
Given the absence of CDC data on land/plantation size of foreign investments and some
discrepancies between CDC data and the MAFF website, 4 this study probed data recorded by
MAFF further in order to understand the scale of FDI in agriculture, particularly that in the
form of ELCs, so as to identify 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, 5 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 or industrial crops, livestock raising and aquaculture, construction of plants,
factories or facilities for processing domestic agricultural raw materials, or a combination of
some or all of these 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
4 Note that the CDC dataset has no record of several of the ELCs reported on the MAFF website.
5 www.elc.maff.gov.kh/laws/subdecree.html.
18 Foreign Investment in Agriculture in Cambodia