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

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Conclusion
Agriculture has been a constant contributor to the national economy, employing a
significant proportion of the rural workforce and generating substantial foreign exchange
earnings. In its fourth legislature, the Cambodian government has focused even more strongly
on promoting the sector by relaxing taxes related to agricultural products and developing
rural infrastructure such as roads and irrigation. New measures have been taken to help
local communities, including opening access to big fishing lots that used to be under private
ownership.
The government has undertaken forestry reform to facilitate investment in forestry and
crops through the establishment of legislation on concessions, forestry community formation
and environmental protection. The Sub-decree on Economic Land Concessions, adopted in
2005, has facilitated the granting of land concessions to foreign and local investors to exploit
unused and/or infertile land.
Laws relating to sanitary and phyto-sanitary issues and animal health have been enacted
to control livestock production, prevent animal losses and contain animal diseases. Recently,
the government, through MAFF, prohibited the import of livestock from neighbouring countries
to prevent swine flu and reduce the risk of animal disease pandemics.
The government, with the support of its development partners, has provided technical
assistance in rice farming, fisheries (aquaculture) and livestock production. The government
has also renewed efforts to develop the irrigation system so as to reduce farmers’ dependence
on rain, particularly in rice farming, and increase resilience to climate change.
As the agriculture sector is one of the main drivers of Cambodia’s economic growth, a
market mechanism has been set up to promote trade and channel agricultural products to local
and international markets. To boost the sector’s competitiveness, soft infrastructure related
to rules and regulations, red tape and costs of doing business has been improved. Attracting
investment in the energy sector has also been prioritised because the price of electricity in
Cambodia is still formidably high compared with other countries in the region.
The share of total agricultural investment to total investment is small, at around 6 percent
between 2000 and June 2010, despite growing interest from investors from countries such
as Thailand, China, Vietnam, Korea, Singapore, Japan, Malaysia, Canada, America, India,
France, the UK, the USA and Denmark. Investors engage mainly in crops, namely rubber,
cassava, maize, sugarcane and cashew nuts, and forestry, such as teak and acacia. The dramatic
rise in interest in more recent years has sparked concern from various stakeholders as to the
potential effects of foreign ELC projects on community livelihoods, local environment quality
and national food security.
This preliminary examination using data from both CDC and MAFF reveals both beneficial
and adverse effects from FDI projects. Some projects have created significant employment
opportunities for local communities, yet others have not. Notably, land conflict, largely as a
result of the weak land tenure system and limited consultation with local communities prior
to the granting of ELC projects, has been commonplace. Moreover, some projects involved in
forest clearance have eliminated traditional sources of community income generated through
collecting non-timber forest products, such as vines, wood resin, bamboo and rattan, and
CDRI Working Paper Series No. 60
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