Foreign Intervention Measures and the Rural Poor in Cambodia: the Question of Effectiveness?

Introduction

After a long history of wars and conflicts, Cambodia has been slowly picking up the pieces. Over time, Cambodia has come to be highly reliant on foreign influences to aid their rebuilding. The fall of the Khmer Rouge in 1979 signified an opening of the floodgates as the number of foreign intervention measures in Cambodia intensified even further.

This essay will discuss the foreign intervention measures, which include investments as well as aid efforts. These measures range from economic intervention such as the influx of overseas investment funds and venture capitalists into Cambodia, to social intervention such as the increase in amount of foreign aid for health care services in Cambodia.

While most people will agree that these foreign initiatives have been largely beneficial to Cambodia as a whole, this paper narrows the scope by looking at the effectiveness of the foreign intervention measures on the rural poor in Cambodia. To evaluate the effectiveness of these policies, this paper will examine whether these policies truly help to improve the standard of living of the rural poor. For this paper, standard of living includes factors such as household income, quality and availability of employment, access to affordable healthcare, life expectancy, and political freedom.

This paper leans towards the stand that foreign intervention measures have limited effectiveness in improving the standard of living of the rural poor in Cambodia.

Foreign Investments

Policymakers generally believe that foreign direct investment (FDI) is beneficial for a host country’s economic development and can help to increase the standard of living of individuals in the country. While I do agree that FDI can aid economic productivity on a macro scale, I feel that the improvement of the standard of living of people might not be reflective of every single group of people in the country. More often than not, the livelihoods of the rural poor are instead being compromised by these FDI ventures.        

In 1994, the Law on Investment was passed in Cambodia, causing an inpouring of external investment funds and projects into Cambodia. In a short period of 18 years, from 1994 to 2011, the value of FDI in Cambodia totalled a staggering 6.6 billion US dollar (Index Mundi, 2012). The agriculture sector has been receiving the bulk of the foreign capital injection. In 2008 alone, agriculture accounted for 13.1% (106.7 million US dollar) of the annual FDI (815.2 million US dollar). This signifies the agriculture sector’s paramount importance to the Cambodian economy.  

In order to cater to the high level of capital investment in the agro-industry, the government freely grants large tracts of land to foreign investors, mostly from neighbouring countries Vietnam and Thailand. However, the majority of these economic land concessions are located in the North-eastern area of the country, populated in large part by the rural poor. This has left the rural poor competing for land against global conglomerates that threaten their existing livelihoods and opportunities for development.

Before the high incidence of land acquisitions by foreign companies, household incomes of the rural poor were based mainly on agricultural production and non-timber forest products (NTFP) collection. Agricultural incomes arise largely from rice production while NTFP incomes are derived from the sale of commodities such as resin, cinnamon, honey, bamboo, mushrooms, rattan, wild fruits and vegetables, and herbal medicines. Previously, locals were able to generate an average income of 212 US dollar and 115 US dollar per year from rice production and NTFP collection respectively (Prachvuthy & Van Westen, 2011).

However, ever since the overseas companies came to take over the lands, the rural poor have lesser places for rice production and their harvests have decreased by an average of 60-70% as compared to years before (Prachvuthy & Van Westen, 2011). As such, they are unable to earn as much as they did previously from the sale of rice. Similarly, as thousands of hectares of forest are being cleared by the foreign corporations, the availability of NTFP has decreased dramatically and there is a shortage of raw materials to sell for income. Clearly, this shows a decrease in standard of living for the rural poor as their traditional sources of income have suffered tremendously.

The top management of these foreign companies might argue that even though traditional income sources are taken away from the rural poor, working in the agro-industrial ventures could possibly provide an alternative livelihood for them. But, even if they choose to work for these concession companies, there are still three key points that show a decrease in a standard of living for the rural poor. Firstly, the 249 US dollar that they will earn on average per year from waged work, is a 23.8% decrease as compared to their previous average income generated from rice production and NTFP collection. Secondly, profit maximising foreign companies prefer to hire migrant workers because they have more skills and accept lower pay. Therefore, due to increased job competition in the labour market, the rural poor might have to further reduce their asking wages or risk suffering the consequences of limited employment availability. Lastly, working for a company also means that the rural poor are losing part of their freedom while carrying out their job. Due to the nature of the waged jobs and company policies, they will have to adhere to company rules such as stipulated working hours and limited meal times. Once again, comparing to their previous jobs, it might seem like the rural poor will experience a lower quality of employment if they choose to work for a foreign company.  

The policy of granting economic land concessions in the North-eastern provinces of Cambodia to overseas companies to cater to the high level of capital investment in the agro-industry has had a largely negative impact on the rural poor’s livelihood in terms of income level and availability of quality employment. Far from bringing significant economic benefits to the rural poor, the presence of foreign companies had in fact harmed their traditional livelihoods. Some wage employment has indeed been created to replace the traditional sources of employment, but local employment rate has remained limited and migrant workers actually appear to be preferred by the foreign hirers.

Therefore, this shows that while FDI is generally beneficial for a host country’s economic development, the supposed increase in standard of living might not be felt equally (if at all) around the entire country.

Foreign Aid

Based on a 2014 study conducted by researchers from the Stanford University School of Medicine, the amount of foreign aid for health care directly correlates to an increase in life expectancy and a decline in child mortality rate in developing countries. This conclusion seems true for the case of Cambodia, with the life expectancy rising from 63.91 years to 71.41 years between 2002 to 2012, and child mortality rate decreasing from 90 deaths per 1000 live births to 40 deaths per 1000 live births in the same period of time (World Bank, 2015). The significant improvements in the health status of the overall population seem to correlate with the fact that the country has been enjoying high levels of financial support from the international community for health care measures over the last decade. In 2010 alone, the sum of foreign aid for health care amounted to a hefty 199 million US dollar. This acknowledges the importance of the role of foreign assistance in boosting the performance of a local country’s health care system.