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

of unused land in few hands. Moreover, small-scale farmers have been provided with social land
concessions (SLC) 11 in order to promote production and encourage diversification. Clearance
of land mines and unexploded ordnance to return land to agricultural use is a top priority for
the government to enable better access for farmers and investors to larger land and expand
production in more remote areas.
4.6. Rice
Cambodia has tried to grasp new opportunities in the rice sub-sector, particularly since
the food price increases in 2007 and 2008. Rice is not only the staple food for Cambodians, it is
also an important potential source of national revenue. As such, the government has encouraged
investment in rice, starting by waiving tariffs on seeds, fertilisers and pesticides to promote
paddy rice production. In addition, Prime Minister Hun Sen has called for further investment
by both local and foreign investors in rice mills 12 . The promotion of rice processing, especially
milling and packaging, is aimed at upgrading rice quality, reducing production costs, increasing
value-added and targeting export markets. At the time of writing, paddy rice production was
expected to reach around 7 million tonnes in 2010/11, with domestic consumption estimated
at around 3 million tonnes in the same period. This increased production is mainly a result
of investment in irrigation, expansion and intensification of cultivated land and use of better
farming techniques and improved seeds.
Recognising the important role of paddy rice in enhancing growth and reducing poverty,
the government came up with the policy on “Paddy Rice Production and Promotion of Milled
Rice Export” in mid 2010, aiming to achieve paddy rice production surplus of 4 million tonnes
and milled rice export of at least 1 million tonnes by 2015 by continuing to invest in irrigation,
encouraging private sector investment in paddy rice processing and export, and improving
procedures to facilitate export and transport. However, the rice sub-sector is challenged by weak
governance and institutional support. Ear (2009), examining the dynamics of the governance
and growth of Cambodia’s rice industry, finds that the sector’s export is markedly imperfect as
two entities, the state-owned Green Trade Company (GTC) and the National Cambodian Rice
Millers Association, headed by the director of GTC, are allowed to export milled rice above
100 tonnes without export licence. Another dominant exporter, Angkor Kasekam Roongroeung,
acquired export licence through its governmental channels.
4.7. Rubber
In rebuilding the rubber sub-sector, the government started by investing in production
for domestic consumption. Later, Cambodian rubber began to penetrate international markets,
especially in Vietnam and China. The government then introduced important institutional and
policy reforms for market-based agricultural growth with the assistance of external funding
agencies, especially from the Asian Development Bank (ADB). The government began to
withdraw from direct intervention in the production and marketing of agricultural and agrobased
products, though state-owned rubber estates continued to constitute about 80 percent
of the total rubber-exploited area of the country until 2004 when the world price of rubber
increased (ADB 2003).
11 Criteria for SLC have no time restriction with maximum 1.250 m 2 for residential use and 2 ha for agricultural
use, and it can be transformed into private property.
12 Radio Free Asia, 22 March 2011
28 Foreign Investment in Agriculture in Cambodia