Social Impact of Trade and Investment of China in Cambodia

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1 Social Impact of Trade and Investment of China in Cambodia Prof. Dr. Tang Zhimin and Miss. Nattaphat Apirungruengsakul China-ASEAN Studies Center Panyapiwat Institute of Management

2 Agenda Trade and Investment of China in Cambodia Energy Sector of Cambodia China s Hydro Power Investment in Cambodia Social Impacts of China on Cambodia

Trade and Investment of China in Cambodia Major Trade Partners of Cambodia 2013 IM: 11,674,449 EX: 10,217,630 Total : 21,892,079 Export Share of Cambodia Garment, Footwear and Agriculture

3 Trade and Investment of China in Cambodia Major Trade Partners of Cambodia 2013 IM: 11,674,449 EX: 10,217,630 Total : 21,892,079 Export Share of Cambodia Garment, Footwear and Agriculture Product (Rice, Wood and Product, Rubber Fish and Seafood) Import Share of Cambodia Fuels, Oil, Vehicles, Construction Materials and Materials Garment Industry Source: International Trade Centre (2014)

Trade and Investment of China in Cambodia Investments by Country/Region (Accumulated at 1994- February, 2014) US$ Million 10,000 9,736 8,000 6,000 4,000 4,405 3,651

4 Trade and Investment of China in Cambodia Investments by Country/Region (Accumulated at February, 2014) US$ Million 10,000 9,736 8,000 6,000 4,000 4,405 3,651 2,643 2,000 1,524 1,298 1, China Korea EU Malaysia Vietnam USA Taiwan Thailand HongKong Singapore Source: Council for the Development of Cambodia (2014)

5 Trade and Investment of China in Cambodia Investments in Cambodia by country No. Country Value (Million USD) Share (%) Country Value (Million USD) Share (%) 1 China China South Korea Vietnam Japan Thailand Malaysia South Korea Thailand Japan Vietnam Malaysia Singapore Singapore UK UK USA France Other Other Total 1, Total 1, Source: Council for the Development of Cambodia (2014)

6 Trade and Investment of China in Cambodia Key Players & Projects in Cambodia Industry Company Description CRBC China Road & Bridge Corporation - Highway No. 6 (Phnom Phen - Siem Reap) Construction SCG Shanghai Construction Group China Railway Bridge Engineering Group China Ocean Engineering Construction General Bureau - Highway, Phnom Penh port, Bridge across the Tonle Sap - Railway (Preah Vihear province - Koh Kong Province) - Port and Bridge in Koh Kong Province Financial Bank of China - Established in 2010 Telecom Huawei Technologies Co., Ltd. Xinwei (Cambodia) Telecom Co. Ltd. - operational and consulting services and equipment to enterprises, manufacturing communications devices - Telecom network: Cootel Industrial Sihanoukville Special Economic Zone (SSEZ) - Established in 2010 Estate (Hodo Group) Agriculture Guangdong Guangken Rubber Group - Rubber Plant at Kratie Province (2012) Energy Sinohydro Group Ltd. China Electric Power Technology Import and Export Corporation - Kamchay Hydro Power Plant in Kampot province (2011) - Kirirom 1 Hydropower Dam - Kirirom 3 Hydropower Dam

7 Energy Sector of Cambodia Energy Organizations of Cambodia Organization Mining and Energy of Cambodia, The Ministry of Industry Electricity Authority of Cambodia (EAC) Cambodian Power Development Plans To provide an adequate supply of energy throughout Cambodia at reasonable and a fordable price, To ensure a reliable and secured electricity supply at reasonable prices, which facilitates the investments in Cambodia and developments of the national economy, To encourage exploration and environmentally and socially acceptable development of energy resources needed for supply to all sectors of Cambodia economy, To encourage the efficient use of energy and to minimize the detrimental environmental effects resulted from energy supply and consumption.

Energy Consumption Energy Sector of Cambodia GWh 2009 2010 2011 2012 1000 800 600 400 200 0 Commercial Residential Industry

8 Energy Consumption Energy Sector of Cambodia GWh Commercial Residential Industry Government Other Total Energy Consumption , , , , Source: Electricity Du Cambodia (EDC) (2013)

9 Energy Sector of Cambodia Energy Generation in Cambodia ,626 GWh 3,319 GWh Import 268 GWh 7 Import 2,000 GWh HFO 1,182 GWh 2 HFO 746 GWh Hydro 46 GWh 11 Hydro 516 GWh Other 130 GWh Thermal Wood, COAL etc., 2 Other 57 GWh Thermal Wood, COAL etc., Source: Electricity Du Cambodia (EDC) (2013)

10 Hydro Power Site Energy Sector of Cambodia Tonlé Sap Mekong River! Large 100 MV! Medium 10 MV Coal Power Plant # Province Source: The Ministry of Industry, Mining and Energy of Cambodia (MIME) (2012).

11 China s Hydro Power Investment in Cambodia No. Project Country of Supplier Type Energy (MW) Year of Operation 1 Lower Sre Pok (Se San) III + IV Hydro Power Plant - Hydro Sambor Hydro Power Plant China Hydro Lower Se San II / Lower Sre Pok II China + Vietnam Hydro Coal Power Plant (III) or Gas Power Pant - Coal / Natural Lower Stung Russey Chhrum Hydro Power Plant China Hydro MW Coal Power Plant in Sihanoukville (II) (Phase 2) - Coal Stung Tatay Hydro Power Plant China Hydro Add 700MW Coal Power Plant at Offshore - Coal Kamchay Hydro Power Plant China Hydro MW Coal Power Plant in Sihanoukville (I) (Phase 2) Malaysia + Cambodia Coal Stung Atay Hydro Power Plant China Hydro Stung Chhay Areng Hydro Power Plant China Hydro MW Coal Power Plant in Sihanoukville (I) (Phase 1) Malaysia+ Cambodia Coal MW Coal Power Plant in Sihanoukville (II) (Phase 1) - Coal MW Coal Power Plant in Sihanoukville (II) (Phase 3) - Coal MW Coal Power Plant in Sihanoukville (II) (Phase 4) - Coal MW Coal Power Plant in Sihanoukville(II) (Phase 5) - Coal Kirirom III Hydro Power Plant China Hydro Source: The Ministry of Industry, Mining and Energy of Cambodia (MIME) (2012).

12 Social Impacts of China on Cambodia What are Social Impacts community development and empowerment, capacity building, & social capital development way of life culture community political systems environment health & wellbeing personal & property rights fears and aspirations how they live, work, play and interact with one another shared beliefs, customs, values and language cohesion, stability, character, services and facilities participation in decision making air, water, food, sanitation, access to and control over resources physical, mental, social and spiritual wellbeing entitlement of civil liberties & property perceptions about their safety and self realization in the future Vanclay, F. (2014) Developments In Social Impact Assessment London, Edward Elgar,

Social Impacts of China on Cambodia Social Impact of Hydro Power Investment of China in Cambodia Owners: Case: Lower Se San II Royal Group (Cambodia) joint

The project s construction is expected to take 5 years. After 40 years of operation Operator: The Hydro Power Lower Se san 2 Co. Ltd.

13 Social Impacts of China on Cambodia Social Impact of Hydro Power Investment of China in Cambodia Owners: Case: Lower Se San II Royal Group (Cambodia) joint Hydrolancang International Energy (China) Hold 90% and Electricity Vietnam International Hold 10% Note: Lower Se San II is a build-operate-transfer (BOT) project. The project s construction is expected to take 5 years. After 40 years of operation Operator: The Hydro Power Lower Se san 2 Co. Ltd. Description: Located: the Se san River, Stung Treng Province Construction cost : $781 million Opening date: in 2019 Installed capacity: 400 MW Reservoir size: 33,560 ha Source: (2013)

Social Impacts of China on Cambodia Case: Lower Se San II Social Impact Source: http://fivas.

Treng and RatanaKiri provinces in northeastern Cambodia peacefully gathered to protest the

lost approximately 25% (1,290 ha) of total agricultural land in the Se san district.

lead to problems and impacts to communities and local cultures.

14 Social Impacts of China on Cambodia Case: Lower Se San II Social Impact Source: Protest against the Lower Se san Dam II: over 500 mainly ethnic minority villagers from Stung Treng and RatanaKiri provinces in northeastern Cambodia peacefully gathered to protest the construction of Lower Se san II Dam Estimated that more than 50,000 people agricultural land will be lost approximately 25% (1,290 ha) of total agricultural land in the Se san district. Labors to build the dam and many of these people are likely to come from outside provinces which may lead to problems and impacts to communities and local cultures. There will be a loss of the number and quantity of different fish species, as the dam will block fish passage to upstream Se san and Sre pok Rivers. Health problems may also arise.

Social Impacts of China on Cambodia Framework of Impacts of China on Cambodia 1 government aid 2 government support Chinese Government 1 Cambodian Government 3 3 development project 4 government

15 Social Impacts of China on Cambodia Framework of Impacts of China on Cambodia 1 government aid 2 government support Chinese Government 1 Cambodian Government 3 3 development project 4 government policy Chinese Firms Foreign Competition 8 7 Local Communities in Cambodia 5 competition pressure 6 cooperation 7 impacts of foreign firms 8 impacts of Chinese firms 9 response of community

16 Social Impacts of China on Cambodia Social Impacts of Chinese Firms Low cost consumer products imported in by trading firms Direct Impact Employment: purchasing power & new life style CSR projects for education, infrastructure (road & power station) indirect benefit form tax revenue of government Positive Externality indirect benefit form foreign exchange earnings of export indirect benefit form training of skilled labor opportunities from supporting business, higher income customers Negative Externality depletion of natural resource & pollution relocating of local households

17 Chinese firms will be more awareness about social impacts and local communities to prevent the same problem occurred. Kamchay Dam, in Kampot province China-ASEAN Studies Center, Panyapiwat Institute of Management (PIM)

CAMBODIA - UPDATING INVESTMENT AND BUSINESS ENVIRONMENT AND OPPORTUNITIES FOR ENHANCED CONNECTIVITY OF VALUE-SUPPLY CHAINS IN THE MEKONG SUB-REGION

1 The 2 nd Mekong Republic of Korea Business Forum Hanoi, VN, 29 March 2014 CAMBODIA - UPDATING INVESTMENT AND BUSINESS ENVIRONMENT AND OPPORTUNITIES FOR ENHANCED CONNECTIVITY OF VALUE-SUPPLY CHAINS IN