Infrastructure, funding still inadequate
Chinese investors are rushing to invest in agriculture in Cambodia, drawn by ideal farming conditions and the sound relationship between the two countries, although there are challenges such as Cambodia's underdeveloped infrastructure and limited fundraising channels, insiders said Sunday.
Shanghai-based businessman He Jianping worked in garment manufacturing in Cambodia for seven years before getting into agriculture in the country in 2014. He established Run Hao Modern Farming (Cambodia) Development Co to breed crocodiles in northwestern Cambodia's Siem Reap province.
"Cambodia's farming industry is promising. It is one of the pillar industries of Cambodia and the land has not been overdeveloped. The farming sector has attracted lots of investors from East China's Zhejiang Province and Shanghai, South China's Guangdong Province and South China's Guangxi Zhuang Autonomous Region," He told the Global Times Sunday.
His company has 5,000 crocodiles at present, but he said the number is expected to reach 150,000 in three years. "My goal is to organize Cambodian farmers in breeding crocodiles, standardize the industry and make it stronger," He noted.
Besides He, domestic businessman Chang Weiguo has invested in paddy plantation in central Cambodia's Kampong Thom province.
"Our company bought 1,200 hectares of cropland in 2014. We have planted nearly 100 hectares of paddy fields. Our production is 4,500 kilograms per hectare, higher than the local average production of 3,000 kilograms per hectare," said Chang, who is executive deputy general manager of Wan Hexing Farming (Cambodia) Development Co.
Favorable factors including fertile cropland, relatively low factor prices and the good relationship between the two nations encourage domestic companies to invest in the farming sector in Cambodia, experts said.
"Located in the tropical zone, Cambodia has abundant rainfall and its vast fertile cropland is suitable for farming," Chen Xiaochen, head of the Department of International Studies with the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times Sunday.
Also, Chinese investors can get access to Cambodia's cropland at low prices, Xu Feng, chairman of the Cambodia-Chinese Association for Development, told the Global Times Sunday.
For example, cropland costs about 1,000 yuan ($150) per mu (0.067 hectare) in Guangxi Zhuang Autonomous Region, while it costs only 30 yuan per mu in Cambodia, he explained.
Furthermore, Cambodia's economy has been growing quickly and its society and politics have become more stable in recent years, Xu noted. Cambodia's economic growth rate is expected to stay around 7 percent, according to a report on the website of the Economic and Commercial Counselor of the Chinese Embassy in Cambodia in May.
There is also a strong trading relationship between the two countries, Chen noted.
Trade between China and Cambodia reached $2.34 billion in the first six months of 2016, up 10.2 percent year-on-year, Chinese Ambassador to Cambodia Xiong Bo said in September, adding that the trade volume is expected to reach $5 billion in 2017.
However, Chinese companies in Cambodia still face challenges.
Chang said that water conservancy facilities in rural areas are underdeveloped, which impacts the planting of paddy fields during dry season. "We have to construct water conservancy facilities before large-scale planting, which indirectly increases our costs," he said. "We constructed water conservancy facilities across 200 hectares of our land in 2015."
According to He, other major challenges include language difficulties, a shortage of funding and inadequate communication with the local authorities. "As we have to invest a big sum of money, our biggest challenge is the shortage of funding. Also, the lack of transparency in Cambodian policies and insufficient communication with the Cambodian government cause problems for foreign investors who are unfamiliar with the country's tax policies," he noted.
Xu said he hopes the Chinese government can expand its imports of agricultural products from Cambodia. China has agreed to increase its purchase of Cambodian rice to 200,000 tons for the harvest season of 2016-2017, up from 100,000 tons, the Xinhua News Agency reported in September.
Chen, the expert with Renmin University, said that Chinese investors should develop sound relationships with local people to boost the smooth operation of their businesses, as investment in farming is a long-term project.