May 30th, 2008

Is Cambodia at risk with China growing presence ?

A straight-forward article from the Asia Times Online about the growing presence of China in Cambodia, pointing out two key elements any large investment project might have to deal with:

1. Impact on local communities

Who is this project harming ? What is the added value created ? How is this added value redistributed ? If you can’t provide the communities with the right answer, there are good chances you might be taught the answer the hard way, especially in a low-wages economy, following the old habit of “If you don’t give then I will take”. Don’t miss out to create a real two-ways relationship with communities and this will greatly help your project sustainability.

1. the NGOs and your Corporate Reputation

Big corporations might think they are evil but NGOs just do their job and you can’t beat them on the communication battlefield. So my advise would be don’t get them angry, involve them instead and work on your corporate reputation.

Seems that the Chinese companies are doing exactly the opposite in Cambodia…

So what’s the point ?

China, hungry for strategic influence and natural resources, is asserting itself as a major investor in Cambodia, sparking concerns that a huge inflow of Chinese cash will fuel existing corruption and exploitation in one of the world’s poorest countries.

What China is bringing at the table ?

China has become one of the biggest investors in Cambodia, with 3,016 Chinese companies making cumulative investments of US$1.58 billion to the end of 2007. Bilateral trade last year rose by 30% from 2006, to $730 million. Since the signing of an investment protection agreement in July 1996, a further $350 million has been pledged, mostly in the forestry sector, power, textiles, construction materials, and agricultural development.

Something else ?

Besides investment and assistance, China has also granted military assistance to Cambodia, providing the country’s dilapidated navy with nine patrol boats in November 2007 and five warships in 2005.

Let me guess… what it a price to pay ?

“The effect of lots of money coming in with few strings attached, going to a lot of people in the government, is generally exacerbating corruption,” Simon Taylor, director of the international anti-corruption group Global Witness, said.

“This manifests itself as land-grabbing, massive plantations and illegal logging, unregulated mining, the building of dams, and so on,” Taylor said.

Meanwhile, workers’ rights are often sidestepped in Chinese-invested factories, especially in the textile industry, activists said.

“The Chinese companies, especially garment factories, today have a lot of problems with Cambodian workers,” Chan Saveth, of the rights advocacy group Adhoc, said.

They have described an atmosphere in which they are constantly pressed into unpaid overtime, with too many financial worries and too little spare time to cause trouble for management. Unauthorized deductions from pay-packets are common, and paid sick leave is rare.

What impact on local communities ?

Chinese money has been tied up with massive agricultural and forestry exploitation projects, which are destroying traditional ways of life such as bamboo-harvesting and resin-tapping, activists said.

The Cambodian government granted a Mondulkiri forest concession of 200,000 hectares – 20 times the legal limit – acquired secretly by Pheapimex, an ethnic-Chinese owned Cambodian conglomerate with close ties to Prime Minister Hun Sen.

Pheapimex formed a joint venture with China’s Wuzhishan plantation firm to exploit the region, displacing indigenous minority people who rely on the forests for their traditional livelihoods.

Global Witness said bigger deals involving Chinese state-backed companies were likely the least transparent and the most strongly defended by government security forces, who responded with military force to anti-logging protests by villagers in Mondulkiri.

He said the outcome of such deals for people living in rural areas was disastrous. “They know nothing until the moment that the bulldozers turn up and start pushing down their houses.”

What is the government position ?

Hun Sen has banned illegal logging and called anarchic logging “the biggest mistake” of his political career, and his views have been backed up by anti-logging speeches by ministers, but with little apparent effect.

Why is China acting this way ?

Chan Sophal said China’s interests in Cambodia were clear. “They help us, but they also look into the resources we have, such as mines, oil, gold, iron, and land. They need land to grow agricultural and agro-industrial crops to meet the demands of the [China's] population.”

China wrote off significant loans to the Cambodian government six years ago, making new loans and grants worth $600 million during the visit to Cambodia of Chinese Premier Wen Jiabao in April 2006.

While no conditions were attached, analysts say Beijing is keen to secure access to the southern port of Sihanoukville for strategic reasons, particularly as a delivery point for imported oil.

This is it. Reminds me of a similar situation… Myanmar maybe ?

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