Australian agro-deal in Cambodia carries risks, rewards (Feature)

By Robert Carmichael Feb 1, 2010, 3:14 GMT

Phnom Penh - As a former finance minister of Australia, Peter Costello is comfortable with large numbers. The latest is his proposal on behalf of an Australian fund to invest 600 million US dollars into at least 100,000 hectares of land concessions in Cambodia.

The concessions would see private equity investors pumping money into plantations of teak, palm oil, sugar, rice and bananas. In return, Cambodia would get 150,000 jobs, the government said after Costello met with Deputy Prime Minister Sok An.

Significant investment, plenty of jobs plus the promise of improved agricultural methods? Such a deal should be good for Cambodia on all three counts.

But human rights workers said they worry the country's ongoing problems with corruption and poor governance combined with often-violent land evictions mean it is less certain that ordinary people would benefit.

And as veteran opposition legislator Son Chhay made clear, transparency in investment deals is hardly the order of the day.

Son Chhay has plenty of experience in how the ruling Cambodian People's Party (CPP) operates when it comes to investments. He headed parliament's foreign affairs committee until 2008 but said his deputy, a member of the CPP, regularly prevented him from getting information on deals.

'It's still the case that we are not able to get our hands [on investment documents], and that's a cause for great concern,' he said.

In the past two decades, much of rural Cambodia has been carved up into economic land concessions (ELCs). The UN's human rights office released a report three years ago that said 59 large concessions totalling almost 950,000 hectares had been granted to private companeis to develop agricultural-industrial plantations.

The report made it clear that the true figure was certainly higher because data on smaller ELCs were not available. What was clear, it concluded, was that the concessions had 'adversely affected the human rights and livelihoods of Cambodia's rural communities.'

In the intervening three years, government figures showed it has approved 33 more agricultural-industrial projects worth 837 million dollars although they did not indicate how much land is involved. State-to-state deals, however, are not on that list, and Qatar, Kuwait and South Korea have so far expressed interest in, or signed deals for, ELCs.

Human rights workers said risks to the rural poor over such deals are significant because they are regularly evicted to make way for foreign investors. The government's often-brutal approach to evictions and its disregard for its own laws in doing so have raised concerns abroad.

Such government behaviour was one of the items discussed by the UN's special rapporteur on human rights during a recent two-week visit. Surya Subedi asked the government to suspend all land evictions until proper legal safeguards are in place.

The government denied the request, citing the need to develop the country. It told Subedi that national guidelines on evictions were being drafted but did not say when they would appear.

The UN envoy expressed cautious optimism in telling reporters that the UN Human Rights Council has adopted a resolution that requires guidelines be put in place to protect the vulnerable.

'So it is now becoming an international requirement,' Subedi said.

One relevant regulation recently approved by Cambodia's parliament was a much-criticized expropriation law. Subedi criticized parts of the law for being far too vague.

'For example, what do we mean by public interest?' he asked. 'If land can be acquired in the public interest, how do you define it? Who defines it?'

Acceptable compensation measures for those affected were absent, too, he said.

Those concerns are shared by many in Cambodia, including Son Chhay although he did welcome one of the benefits touted by Costello: new ways of farming to boost production.

The opposition lawmaker said new methods could help 80 per cent of the 14 million people who rely on outdated farming techniques. The country's rice yield of around 3 tons per hectare, for example, is far below that of some of its neighbours.

But the primary motive for Costello's investors is financial. Investors want a return on their money, and the food crisis of 2008 when prices rocketed showed that food can be profitable.

'I think agriculture is going to come back into its own as an investment in the decades that lie ahead, and of course, that's a great opportunity for Cambodia,' Costello told the Phnom Penh Post.

For his part, Son Chhay would prefer investment from countries like Australia rather than from Cambodia's more traditional investors, such as China and Vietnam, whose companies, he said, are uninterested in improving local skills.

Yet he insisted that a transparent, corruption-free approach is vital to ensure the Cambodian people benefit from the deal.

'A lot of concessions have caused problems to our farmers and indigenous people who have no knowledge of what is in the contracts,' he said.

But he called on Costello to make public the full details of any contract with the government.

'He should act upon his word [to do so],' Son Chhay said. 'We would hope that this kind of investment from a society like Australia would be done in a proper manner.'

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