Development can debilitate

Vendors cross the border in Banteay Meanchey province’s Poipet town last year. A professor from Thailand’s Shinawatra University says new research indicates infrastructure projects such as Poipet’s Cambodian-Thai Friendship Bridge can facilitate trafficking. (Photo by: Steve Finch)

Monday, 10 May 2010
David Boyle
The Phnom Penh Post

In the supermarket, what can we find? Is there anything from Cambodia? There are some natural products packed in Cambodia. But the majority of the stuff is Australian or Thai, or some stuff is Chinese and some stuff is Vietnamese and so on. Almost nothing is from Cambodia.

John Walsh warns that infrastructure projects can exacerbate human trafficking

Though often touted by the government and donors as evidence of development, infrastructure projects can in some cases negatively affect the Cambodian economy while simultaneously fuelling human trafficking, said John Walsh, a professor at the school of management at Thailand’s Shinawatra University, at a regional conference on migration last week.

On the sidelines of the gathering, dubbed the “International Conference on Mobility Patterns of Cambodian and Other Nationals in the South East Asia Region”, Walsh elaborated on his research into Cambodian migrant workers.

Walsh drew from interviews with 59 Cambodian migrant workers employed in jobs he described as “3D” – dangerous, dirty and disgusting. The interviews revealed that the workers gained little long-term financial benefit from their jobs in Thailand, and that they faced both isolation and discrimination.

Could you explain in a bit more detail how you think major infrastructure projects can exacerbate human trafficking?

Infrastructure, insofar as it means roads and railways and civil aviation and so forth – in this case it means mainly roads – it’s widely thought among the [Asian Development Bank] and the kind of international development thinking people that such infrastructure will inevitably help aggregate economic activity. But there is much less knowledge specifically about who would benefit and who would not benefit – I mean, who would suffer from it.

If we look at the [Cambodian-Thai Friendship Bridge in Poipet town, Banteay Meanchey province], this road is clearly facilitating migration because it’s just making it easier for people to go from one place to another much more quickly. And since we now have greater ownership of personal transportation like motorbikes and so on, people can go seasonally from one country to another and then go back for the harvest season or so forth, so that’s facilitating what’s going on. Since human trafficking is also clearly occurring across the border, then it is abetting human trafficking. That’s just one of the unintended consequences of the infrastructure development.

You think of a big, nice, new road and bridge, you don’t think of that as the standard avenue through which people would be trafficked.

But if, as so many people here have been arguing, there are established authority figures who have been facilitating human trafficking, then it makes sense for them to use the roads over which they’ve got control rather than taking them through the roads and the jungles through which they don’t have control.

What are the economic consequences of the Poipet Friendship Bridge?

Last night, I went to the Lucky Supermarket, because like all business-teaching people I have to see what’s being sold rather than go to the tourist places. In the supermarket, what can we find? Is there anything from Cambodia?

There are some natural products packed in Cambodia. But the majority of the stuff is Australian or Thai, or some stuff is Chinese and some stuff is Vietnamese and so on. Almost nothing is from Cambodia. OK, now, in a situation where very few Cambodian firms can produce and distribute food items on a reliable, high-quality basis, then clearly Lucky Supermarket as a representative of retail is going to get its stuff from overseas. So it’s easier, presumably, to get stuff from Bangkok and drive it across the Poipet border point than it is to try and get someone up-country in Cambodia for the same products.

So in this case, again, the local people, through lack of their own capacity and ability in business and so forth, are going to lose out, and the larger producers – through economy of scale, economy of scope, all this kind of thing – are going to take advantage of the opportunity presented by the road. But that’s a one-way thing because coming to Thailand you’ll find very few Cambodian products coming the other way.

So it’s not like it’s an equal exchange. It seems, so far as I can tell, to be going just in one direction principally at the moment. Cambodia, meanwhile, is exporting labour, and the research that we did said that remittances are so low that they’re not actually making a difference for the families on a day-to-day basis.

But even if the money is just going into, for instance, paying off debts, surely they will eventually pay off that loan and thus benefit?

Yeah, but is it a loan that is going to improve their lives for the long term? Are they buying livestock, are they building a farm or are they just repairing a house in which they have to live in any case? Or is it just a loan to meet living expenses or educational expenses and so on? The sense that I got from our research was that the loans are not making a qualitative difference to peoples’ lives. They’re enabling the families to keep going, but without necessarily improving themselves.

Interview by David Boyle

Inside Business: Juice maker struggles to turn healthy profit

The Khmer Mekong Foods processing factory in Phnom Penh. (Photo by: Souen Say)

Wednesday, 27 May 2009
Written by Soeun Say
The Phnom Penh Post

PICH Chan, general manager of Khmer Mekong Food Enterprise, walked into a supermarket in Phnom Penh in 2003, and he was dismayed.

He counted 90 different products that had been imported from neighbouring countries that could have been made in Cambodia.

"I wanted to see a Khmer product at markets," he said. "My friends and my relatives said my juice was good, so I started to think about producing juice for the market."

In late 2005, Pich Chan invested US$40,000 in a fruit-juice processing enterprise, and now four years later, his business produces juice from mangoes, pineapples, tamarind and guavas.

With eight workers, Khmer Mekong Foods is a small business only producing about 50 cases of juice a day. A case, which holds 24 bottles, is sold to retailers for $7, according to Hok Sovanna, Khmer Mekong Food's marketing manager.

But Hok Sovanna says Cambodians are starting to acquire a taste for fruit juice after initially shunning it.
"Now Cambodians have started to accept its flavour with up to 80 percent natural fruit," he said.

But despite increasingly positive feedback about the product, in 2007, Khmer Mekong Food lost $60,000.
Pich Chan blames the losses on his own lack of marketing expertise.

"I only have skills at producing not at selling, that's why poor marketing is our weak point" he said.

Also, as a small enterprise, Pich Chan says it has been impossible for his company to break into the international market because he cannot produce enough bottles to fill a shipping container, which is necessary to supply countries like the United Arab Emirates, Canada and the United States.

"I was sad to hear that they need one big container per month. I regret that I could not meet their demands," he said, adding many other Khmer agricultural products face the same limitations.

In the next one to two years, Pich Chan hopes to expand his company so he will be able to export his product overseas.

But the economic crisis has hit his company hard. Since late 2008, sales have dropped between 30 and 40 percent from the same period last year. Nevertheless, Pich Chan says that by continuing to improve the quality of his juices and diversifying his product line he will be able to increase Khmer Mekong Foods' market share in Cambodia.

In order for him to follow through with his expansion plan, however, Pich Chan says the company will need to borrow money. But, he says, Cambodian interest rates are too high at up to 12 percent per year.

"There are a lot of things to produce, but I don't have the capital. I need to find which bank has a low [interest] rate," he said.

Pich Chan said that he wished Cambodia had a bank with an especially low rate for small and medium-sized enterprises.

"I need a chance to borrow money to improve my business," he said.

Inside Business is a new section every Wednesday that will profile Cambodian small and medium-sized enterprises.

Cambodia Seeks Trade, Export Development [-It's about time!]

By Chun Sakada, VOA Khmer
Original report from Phnom Penh
23 March 2009

The Ministry of Commerce launched a trade development project Monday, announcing nearly $12 million toward helping build institutional capacity and promote export products.

“This amount will be used to promote the trade sector, based on the small projects identified by the government,” Commerce Minister Cham Prasidh told reporters Monday. “What is important is that the money will be spent on the priorities identified by the government in the trade sector. Importantly, we are the owner of the projects.”

The project is being financed by the European Commission, the Danish International Aid Agency and the UN Industrial Development Organization.

The money will be spent according to a direction set by the government, Cham Prasidh said. The project will be based on three pillars: solving cross-cutting issues; promoting of export production and a focus on services; and improving institutional capacity.

“This fund will be managed in accordance with the World Bank’s procurement procedures and financial procedures,” said Qimao Fan, Cambodia’s director for the World Bank, which is administering the project.

The European Union, one of Cambodia’s trade partners, will promote different products for Cambodia to export, said Rafael Dochao Moreno, charge d’affaires for the European Commission in Cambodia.

“This project will build the capacity of Cambodia to be able to promote the different products and production exports to the EU,” he said.

Yim Sovann, spokesman for the opposition Sam Rainsy Party, said Monday the project would be important for the promotion of Cambodian agricultural exports. However, he said he had little confidence that corruption would be controlled in the project.