Foreign Direct Investment in Agriculture

Report on Foreign Direct Investment
Paper author: 
Paper publication date: 
Thursday, August 22, 2019

Foreign Direct Investment (FDI) has been a major source of development funding for Cambodia. The Royal Government has successfully created an open investment environment which has resulted in substantial increases in FDI. If conducted and regulated responsibly, FDI is widely recognised as a source of economic development, modernisation, income growth and employment. However, it can also bring about significant negative impacts if poorly managed, with issues such as land disputes, cultural loss and environmental degradation possible.

Agriculture remains a key driver of the Cambodian economy. In 2017, 78.8% of the country’s total population lived in the countryside, agriculture represented 26.7% of total employment1, and contributed 23.4% of Cambodia’s GDP2. Foreign investors have recognised the importance of the sector. From 1994 to 2017, foreign companies have invested over US $34.6 billion into the country,3 of which approximately 11.45% was directed into the agricultural sector4. Much of the FDI into Cambodia’s agricultural sector has taken the form of 267 Economic Land Concessions (ELCs)5.

Cambodia’s policies relating to ELCs have changed frequently since their introduction – and this report recognises that they are still being improved. Perhaps the most notable change was Order 01 of 2012 on the Measures Strengthening and Increasing the Effectiveness of the management of Economic Land Concessions, which placed a moratorium on new ELCs being granted, and called for a review of those already issued. The Royal Government is now working to improve legislation related to agricultural FDI in sub-fields such as Environmental Impact Assessments (EIA), public consultation, compliance auditing, and monitoring and evaluation of ELC projects by relevant government entities.

This report was commissioned by Oxfam to contribute to constructive public debate and to invite feedback on development policy issues. The report was authored by an independent international research team, led by Thomas Hesketh, with support from Guillaume Maltaverne, and with substantial inputs from Cambodian research staff. The views and recommendations expressed in this report were based on the synthesis of primary and secondary data obtained via interviews, desk research and a validation workshop, and as interpreted by the research team. 

Reproduction of any part of this publication for any purposes beyond fair use requires prior written approval of Oxfam.

Published June 2019 by Oxfam in Cambodia
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