Government Says Abundance of Land for Rubber Investors

The country’s controversial natural rubber industry is open for business despite a standing moratorium on new economic land concessions (ELCs), the Cambodian government said at an industry summit in Phnom Penh on Wednesday, as it also sought to allay concerns that land might be running out.

The government is aiming to make rubber a leading job creator and Cambodia’s biggest agribusiness industry after rice, with billions of dollars in exports by the end of the decade. Rights groups, however, have singled out the rubber industry as one of the key drivers of deforestation and forced evictions in Cambodia.

Amid the mounting criticism, Prime Minister Hun Sen in May 2012 announced a moratorium on the granting of new ELCs.

At Wednesday’s industry summit, which drew experts, consultants and traders from across the region, the Cambodian government’s rubber czar, Ly Phalla, said the government was making good use of the ELC freeze to clean up the sector.

The government, he said, was “conducting an inventory of the existing ELCs, [taking] legal and contractual compliance measures, especially through strengthening mechanisms for monitoring activity…to ensure the advancement of their investment plans and to take measures to rectify shortcomings.”

Mr. Phalla conceded that the industry was notorious for companies that signed contracts but failed to follow through.

Of the 1.2 million hectares in ELCs the government has granted, he said more than 80 percent had gone to rubber plantations. But by the end of last year, he added, only 135,000 hectares had been planted. And only half of those planted trees were mature enough to be tapped.

Though the government denies it, rights groups say it knowingly grants ELCs on forested land to firms that only want to turn a quick profit by logging the land and selling out.

Ranveer Chauhan, managing director of natural rubber at Singapore-based commodities trader Olam International, wanted to know what Cambodia was doing to protect the rights of locals.

“Is there a robust framework, are we ignoring the rights of local people?” he asked Mr. Phalla. “That becomes a very big concern for new investors, and it would be nice to hear what Cambodia specifically will be doing to make it more attractive, where those [questions] will not have to be answered by the new investor but that confidence is given by the government itself.”

In response, Mr. Phalla repeated the government line that “strong forest” was still off limits to rubber plantations.

As for the moratorium on new ELCs, Mr. Phalla reminded the audience that most of the 1.2 million hectares already handed out was still undeveloped, suggesting that one firm’s indifference was another’s opportunity.

“For the new investor, maybe, I think that some companies already receive the land but they cannot begin the activity,” he said. “They have [a] master plan, contract signed, but they [do] not invest. So they want to sell, or to drop, or they want to find the new investor to cooperate together.”

Ashish Govil, who heads Olam International’s rubber division, said rubber companies had to tread carefully in issues of land rights.

“All corporates have to be very, very careful,” he said. “You’ve seen this HAGL thing, which has just come up here.”

Mr. Govil was referring to Hoang Anh Gia Lai, the Vietnamese rubber firm that owns several plantations in northeast Cambodia. In May, British environmental watchdog Global Witness came out with the damning findings of a months-long investigation into land grabbing and illegal logging by the plantations.

Despite the human rights and environment concerns, and projections of a global oversupply of natural rubber for the next several years, the Cambodian government still has high hopes for its rubber industry.

In 2013, the country earned $170 million from 74,200 tons of exported rubber. With the help of nurseries already growing the next generation of increasingly more productive trees, it could be exporting nearly 1 million tons and earning $3 billion as soon as 2020, said Yin Song, a former director of the Cambodian Rubber Research Institute who now advises the National Assembly.

David Allan, who heads an NGO that works on sustainable development in Burma, said Cambodia should spend some of those earnings on solving the problems of land loss that such agribusiness projects invariably cause local communities.

“If that’s an accurate model,” he said of Mr. Song’s figures, “then the overall return should have an ability to support all of the necessary activities that are incorporated in fair and just treatment of everybody involved in the whole process.”

Instead, Mr. Allan said, ‘What we see in most instances, particularly in developing economies, we’re seeing the storing of wealth and the elite get very wealthy and the poor people become more poor.”

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