Economy

Investment Or Imperialism? Tracking China's Big Ambitions In Cambodia

Poverty and commerce in Cambodia
Poverty and commerce in Cambodia
Gabriel Gresillon

PHNOM PENH - A few years ago this scene would have played out in China. More specifically, it would have played out in a Chinese coastal region to which millions of rural folks had arrived looking for work. A huge hangar, piles of fabrics of all colors at both ends, and some 200 heads lowered over sewing machines set up one behind the other.

The atmosphere is not oppressive, just focused. But the workers here are too dark-skinned to be Chinese – though there are some: the managers of this clothes factory on the outskirts of the Cambodian capital Phnom Penh.

From his office next door, He Enjia directs operations at Sunkind Textile. He left China in 1996 to set up his first factory in Cambodia. At the time, he was a pioneer. He moved for one reason – to get around export quotas on Chinese fabrics.

Sixteen years later the sector has exploded. It generates over $4 billion of revenue a year, which makes it Cambodia’s biggest export by far. In a country of only 14 million inhabitants, the textile industry employs over 300,000 in the Phnom Penh region and plays a major role in the annual growth of 7% on average that the kingdom has been experiencing over the past decade.

Attracted by the legal framework, which is very favorable for investors, the Chinese have taken the lead. “Cambodia is the easiest Asian country to invest in,” says Daniel Zarba, Director General of the Franco-Cambodian Chamber of Commerce. What’s more, the cost of production is lower in Cambodia than it is in China. “Here a worker costs on average $150 a month compared to $600 in China. Even if you take into account the fact that Cambodians are less productive, it still means your labor is two times less expensive,” says He Enjia.

Over 80% of the textile factories here are managed by the Chinese,” says Chea Mony, who heads one of the few independent unions in the country. He adds that things are far from easy with these bosses who “don’t speak Cambodian and are often unpleasant.” Sunkind Textile however appears to be the perfect counterexample. A 19-year-old worker confirms this. She says she’s happy to have left her former Chinese employer “who paid better but treated us much less well.”

The textile industry is part of a much wider phenomenon. In Cambodia, in the logging, mining, farming, construction, and energy sectors, the Chinese are filling their pockets. The six hydroelectric dams presently being built? All by Chinese companies. The mines in the north? Often run by Chinese groups. “I even saw Chinese soldiers guarding the entrance to a mine,” says a European man living in Phnom Penh. At the recently created Phnom Penh Stock Exchange, where only one – state-owned – company is listed, the Chinese presence is freely acknowledged. “In many sectors, Chinese investors are essential for us,” explains Charles Lu, deputy director of Phnom Penh Securities, adding that Chinese groups invested $9.1 billion in Cambodia between 1994 and 2012.

Political dimensions

But that’s nothing compared to what has just been announced – two Chinese groups have signed a $9.6 billion deal. The colossal sum is to build a steel factory that will produce a million tons of steel and iron a year, 400 kilometers (249 miles) worth of railroad tracks, and a port from which the metal can be exported. There were no calls for tender prior to the signing of this deal.

Investment of such magnitude has political dimensions. Chinese money is not only a boon for the regime because it gives them the means to build infrastructure that improves daily life for Cambodians – it has become indispensable for the country’s finances. Cambodia’s fiscal system is rudimentary and with government spending in the neighborhood of $3 billion and revenue around $2 billion, the country loses money every year.

Sok Chenda Sophea, Secretary General of the Council for the Development of Cambodia sums the situation up like this: “China has become our main lender. For a long time it was Japan, with loans amounting to $120-$130 million a year. But over the past three or four years, Beijing has taken the lead with annual financing from $300-$350 million.” He adds: “I don’t deny that there are political reasons for the steel contract.”

This is where the problem lies. Having opened its doors wide to Chinese investors, Cambodia is suspected by some of its neighbors of having sold its soul.

However Sok Chenda Sophea is visibly annoyed at the idea that the Chinese are dominating his country. “I don’t feel dominated. I am not subjected to a horrible pressure. However, I do my utmost for Westerners to be a part of this, to maintain a balance,” he says. If most of the investors in the natural resources sector are Chinese that’s because they got here first. “Some people arrive after the rice is cooked,” he jokes with regard to Japan and South Korea.

He also sends a little jibe in the direction of lesson-giving Westerners. “Our dear Europeans are very sensitive to human rights, sexual equality, the sorts of subjects people like to discuss in the great cafés of Paris,” Sok Chenda Sophea says. “I believe in democracy too. But my first task is to see to it that my fellow Cambodians don’t die of hunger, that they have access to basic healthcare and electricity. You can criticize all you want, but China is helping us by building infrastructures, dams and roads.”

Suspicions of corruption

However, there is also a downside to China's Cambodian ambitions. The $9.6 billion steel deal is considered by many as much too high. Corruption? The issue deserves to be raised.

Recently, the construction of a dam was awarded to a Chinese company even though a European company with better references had offered a better deal, which included “teaching and training for Cambodians, environmental protection measures and even financing solutions,” according to someone close to the deal. This person says the Chinese deal can be summed up in one word: "bribe."

“I have seen many corrupt countries, but never in these proportions,” says an observer. There are plenty of stories to illustrate this, in a country where the elite share the riches among themselves, without qualms, abusing their prerogatives, while the rest live in utmost poverty. A European manufacturer who was hesitating between Cambodia and Laos for his new production center chose the latter because he couldn’t believe the bribes he was been asked in Cambodia.

The Chinese did not create this context, they are just making the most of it. By reproducing here what they have done at home – unabashed development with no regard for the environment or workers – they “are not helping Cambodia’s development,” says an economist. He regrets that the Chinese investors “have not done here what has helped other Asian countries to develop: investing in the education sector, which is totally neglected, and helping the country become a leader in one specific industrial sector.”

And while all this money flows in, Phnom Penh has no incentive to start the difficult development process. Meanwhile, business will continue to boom for Chinese investors in Cambodia.

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Green

Ecological Angst In India, A Mining Dumpsite As Neighbor

Local villagers in western India have been forced to live with a mining waste site on the edge of town. What happens when you wake up one day and the giant mound of industrial waste has imploded?

The mining dumpsite is situated just outside of the Badi village in the coastal state of Gujarat

Sukanya Shantha

BADI — Last week, when the men and women from the Bharwad community in this small village in western India stepped out for their daily work to herd livestock, they were greeted with a strange sight.

The 20-meter-high small hill that had formed at the open-cast mining dumpsite had suddenly sunk. Unsure of the reason behind the sudden caving-in, they immediately informed other villagers. In no time, word had traveled far, even drawing the attention of environment specialists and activists from outside town.

This mining dumpsite situated less than 500 meters outside of the Badi village in the coastal state of Gujarat has been a matter of serious concern ever since the Gujarat Power Corporation Limited began lignite mining work here in early 2017. The power plant is run by the Power Gujarat State Electricity Corporation Limited, which was previously known as the Bhavnagar Energy Company Ltd.

Vasudev Gohil, a 43-year-old resident of Badi village says that though the dumping site is technically situated outside the village, locals must pass the area on a daily basis.


"We are constantly on tenterhooks and looking for danger signs," he says. Indeed, their state of alert is how the sudden change in the shape of the dumpsite was noticed in the first place.

Can you trust environmental officials?

For someone visiting the place for the first time, the changes may not stand out. "But we have lived all our lives here, we know every little detail of this village. And when a 150-meter-long stretch cave-in by over 25-30 feet, the change can't be overlooked," Gohil adds.

This is not the first time that the dumpsite has worried local residents. Last November, a large part of the flattened part of the dumpsite had developed deep cracks and several flat areas had suddenly got elevated. While the officials had attributed this significant elevation to the high pressure of water in the upper strata of soil in the region, environment experts had pointed to seismic activities. The change is evident even today, nearly a year since it happened.

It could have sunk because of the rain.

After the recent incident, when the villagers raised an alarm and sent a written complaint to the regional Gujarat Pollution Control Board, an official visit to the site was arranged, along with the district administration and the mining department.

The regional pollution board officer Bhavnagar, A.G. Oza, insists the changes "aren't worrisome" and attributes it to the weather.

"The area received heavy rain this time. It is possible that the soil could have sunk in because of the rain," he tells The Wire. The Board, he says, along with the mining department, is now trying to assess if the caving-in had any impact on the ground surface.

"We visited the site as soon as a complaint was made. Samples have already been sent to the laboratory and we will have a clear idea only once the reports are made available," Oza adds.

Women from the Surkha village have to travel several kilometers to find potable water

Sukanya Shantha/The Wire

A questionable claim

That the dumpsite had sunk in was noticeable for at least three days between October 1 and 3, but Rohit Prajapati of an environmental watchdog group Paryavaran Suraksha Samiti, noted that it was not the first time.

"This is the third time in four years that something so strange is happening. It is a disaster in the making and the authorities ought to examine the root cause of the problem," Prajapati says, adding that the department has repeatedly failed to properly address the issue.

He also contests the GPCB's claim that excess rain could lead to something so drastic. "Then why was similar impact not seen on other dumping sites in the region? One cannot arrive at conclusions for geological changes without a deeper study of them," he says. "It can have deadly implications."

Living in pollution

The villagers have also accused the GPCB of overlooking their complaint of water pollution which has rendered a large part of the land, most importantly, the gauchar or grazing land, useless.

"In the absence of a wall or a barrier, the pollutant has freely mixed with the water bodies here and has slowly started polluting both our soil and water," complains 23- year-old Nikul Kantharia.

He says ever since the mining project took off in the region, he, like most other villagers has been forced to take his livestock farther away to graze. "Nothing grows on the grazing land anymore and the grass closer to the dumpsite makes our cattle ill," Kantharia claims.

The mining work should have been stopped long ago

Prajapati and Bharat Jambucha, a well-known environmental activist and proponent of organic farming from the region, both point to blatant violations of environmental laws in the execution of mining work, with at least 12 violations cited by local officials. "But nothing happened after that. Mining work has continued without any hassles," Jambucha says. Among some glaring violations include the absence of a boundary wall around the dumping site and proper disposal of mining effluents.

The mining work has also continued without a most basic requirement – effluent treatment plant and sewage treatment plant at the mining site, Prajapati points out. "The mining work should have been stopped long ago. And the company should have been levied a heavy fine. But no such thing happened," he adds.

In some villages, the groundwater level has depleted over the past few years and villagers attribute it to the mining project. Women from Surkha village travel several kilometers outside for potable water. "This is new. Until five years ago, we had some water in the village and did not have to lug water every day," says Shilaben Kantharia.

The mine has affected the landscape around the villages

Sukanya Shantha/The Wire

Resisting lignite mining

The lignite mining project has a long history of resistance. Agricultural land, along with grazing land were acquired from the cluster of 12 adjoining villages in the coastal Ghogha taluka between 1994 and 1997. The locals estimate that villagers here lost anything between 40-100% of their land to the project. "We were paid a standard Rs 40,000 per bigha," Narendra, a local photographer, says.

The money, Narendra says, felt decent in 1994 but for those who had been dependent on this land, the years to come proved very challenging. "Several villagers have now taken a small patch of land in the neighboring villages on lease and are cultivating cotton and groundnut there," Narendra says.

They were dependent on others' land for work.

Bharat Jambucha says things get further complicated for the communities which were historically landless. "Most families belonging to the Dalit or other marginalized populations in the region never owned any land. They were dependent on others' land for work. Once villagers lost their land to the project, the landless were pushed out of the village," he adds. His organization, Prakrutik Kheti Juth, has been at the forefront, fighting for the rights of the villages affected in the lignite mining project.

In 2017, when the mining project finally took off, villagers from across 12 villages protested. The demonstration was disrupted after police used force and beat many protesters. More than 350 of them were booked for rioting.

The villagers, however, did not give up. Protests and hunger strikes have continued from time to time. A few villagers even sent a letter to the President of India threatening that they would commit suicide if the government did not return their land.

"We let them have our land for over 20 years," says Gohil.

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