Global trends including high prices for oil and commodities, the biofuels boom, and now the sweeping downturn, are spurring import-reliant countries to take action to protect their sources of food.

China and South Korea, which are both short on arable land, and Middle Eastern nations flush with petrodollars, are driving the trend to sign up rights to swathes of territory in Asia and Africa.

“Today’s food and financial crises have, in tandem, triggered a new global land grab,” the Spain-based agricultural rights group Grain said in a recent report.

It said that some deals were targeted at boosting food security by producing crops that would be sent back home for consumption, while others were to establish money-making plantations like palm oil and rubber.

“As a result of both trends, fertile agricultural land is being swiftly privatised and consolidated by foreign companies in some ofthe world’s poorest and hungriest countries,” it said.

In one of the biggest deals, South Korea’s Daewoo Logistics said in November it would invest about 6.0 billion dollars to develop 3.2 million acres (1.3 million hectares) in Madagascar — almost half the size of Belgium.

Daewoo plans to produce four million tonnes of corn and 500,000 tonnes of palm oil a year, most of which will be shipped out of impoverished Madagascar — where the World Food Programme still provides food relief.

“We will build everything from ports and railways to markets on a barren and untouched area,” said Shin Dong-Hyun, general manager of the WFP’s financing and strategic planning department.

Although commodity prices have fallen from their highs earlier this year, resource-poor and heavily populated countries are still concerned about securing long-term supplies.

Walden Bello, from Bangkok-based advocacy group Focus on the Global South, said the looming global recession is not likely to halt the trend which he fears will worsen the lot of landless peasants.

“In a situation where global agricultural production has become so volatile and unpredictable, I would not be surprised if the Middle Eastern countries that are engaged in this would continue to push on,” he told AFP.

Bello said that many of the deals were struck in dysfunctional and corruption-ridden nations, and rejected claims the land being signed away is of poor quality, and that the projects will bring jobs and improve infrastructure.

“What we’re talking about is private parties using state contracts to enrich themselves,” he said. “It’s an intersection of corrupt governments and land-hungry nations.”

In Cambodia, where the WFP also supplies aid, oil-rich Kuwait in August granted a 546-million-dollar loan in return for crop production.

Undersecretary of State Suos Yara said Cambodia was also in talks with Qatar, South Korea, the Philippines and Indonesia over agricultural investments including land concessions.

“If we do this work successfully, we can get at least 3.0 billion dollars from these agricultural investments,” he said.

“With the (global financial) crisis, this is a chance for Cambodia to look to the future by pushing agriculture in order to attract foreign investments.”

But opposition lawmaker Son Chhay said he was suspicious about why a wealthy nation like Kuwait needed to lease land to grow rice rather then just import the grain.

“Cambodian farmers need the land,” he said, urging the government to limit the area under lease and ensure Cambodia was not plundered by foreign nations.

In the Philippines, another land lease hotspot, a series of high-profile deals has clashed with long-running demands for agrarian reform including land redistribution.

“It will aggravate the problem of landlessness, the insufficiency of land for Filipino peasants,” said Congressman Rafael Mariano, who also heads the Peasants’ Movement of the Philippines (KMP).

However the Philippine government is undeterred and during President Gloria Arroyo’s visit to Qatar in December, officials opened talks over the lease of at least 100,000 hectares of agricultural land to the emirate.

Bello said he expected these sorts of deals to increase, forcing peasants from rural areas and into cities where together with the global downturn they will add to the ranks of the unemployed.

“It’s particularly explosive in those countries where you have a high degree of landlessness, like the Philippines where seven out of 10 rural people do not have access to land,” he said.

In the impoverished and corrupt dictatorship of Laos, some experts estimate that between two million and three million hectares have been parcelled off in a rampant and uncontrolled process that has now been suspended by the government.

The UN’s Food and Agriculture Organisation has sounded alarm over the loss of land in a country where in rural areas, every second child is malnourished and access to land for foraging of natural resources is critical.

“If the environment is changed, with the trees cut and replaced with industrial crops,” said FAO representative in Laos, Serge Verniau, “they can face serious danger”.

Source: AFP

Nearly every morning over the last few weeks, owners of construction companies around Phnom Penh have gathered at their sites, looking sadly on under-constructed homes they’ve been unable to sell. These investors worry constantly over how to collect the large sums they need to pay back loans they made for real estate investment.

Experts worry that this inability to repay loans on large mortgages will lead local banks into their own economic crisis, echoing the global downturn that was itself caused by the failure in part of the US housing market.

Nearly 50 percent of Cambodian real estate investors, from almost 20companies, depend heavily on borrowed money from local banks, which had until recently provided them with great benefits in a booming sector, real estate agents say. But after the global financial crisis,the price for land and houses in Cambodia fell dramatically.

Somaly, who owns a self-named company, told VOA Khmer recently she owed the banks around $500,000, which must be paid back at the end of the year. Unfortunately, she said, she can’t even pay the interest,about $5,000 per month.

“A lot of houses got stuck [and] can’t be sold because there are many sellers and no buyers,” said Somaly, who only gave one name. “If so,how can we find the money to pay them back?”

Investors like Somaly worry that their properties will be seized by the banks if they have no money to pay the interest.

Equity loans rapidly emerged at the end of 2006, as several large commercial banks competed with each other for investors. Land prices were high and rising, and by the end of 2007, property development loans reached $100 million, according to statistics gathered by the National Bank of Cambodia.

The market slowed in 2008, with a sharp drop in the final quarter, and investors will face collection from the banks in the first four months of 2009.

“Those who used bank credit, they now have no choice,” said Sung Bunna, head of the Bunna Realty Group. “That will cause our land market even more silence.”

In such a climate, economists worry that banks will not only fail to collect debt but can ruin their own credit in the process, as they collect confiscated property instead of cash.

Kong Chandararoth, president of the Cambodian Institute of Economic Study and Development, said banks in Cambodia could face a financial crisis if they couldn’t get their loans back in cash.

“If [investors] are not unable to pay back the banks, mortgaged property will be confiscated,” he said. “So the banks will face theirown financial crisis, because what they get back is not liquid cash.”

“There will be a problem,” said Sam Genthy, a banking expert at the Royal University of Law and Economics and former adviser to the National Bank. “We’ll wait and see what happens. If the bank can’t find resources to replace their ruined credit, they will suffer.”

Economists worry Cambodia’s banks will suffer the same fate as US and European banks that offered up nearly 100 percent of their credit to real estate loans and are now bankrupt, despite a regulation put out by the National Bank in July that permitted only 15 percent of total credit to be loaned to real estate borrowers.

Stephen Higgins, chief executive officer for ANZ Royal bank, said his bank had been insulated from the crunch through the selection of valued customers.

“We have some loans, property development loans, but they are from very good customers who have plenty of cash flow,” he said. “So for ANZ Royal bank, we don’t have a problem.”

However, representatives of other local banks confessed anonymously that some of their resources were already stuck with real estate loans in collection.

Tal Nay Im, general director of the National Bank of Cambodia, saidshe hasn’t received any reports of crisis, but she said banks thatface market downturn difficulties will have to sort the problems forthemselves.

Source: VOA News

Kang Chandararot, president of the Cambodia Institute for Development Study, told the Phnom Penh Post that he expected the real estate market will rebound in two years, largely on the strength of foreign aid.

"If the government uses the aid to develop the country…then I think real estate may begin to stabilize," he was quoted as saying by the Post.

But he cautioned that aid would not boost prices to the unprecedented levels seen last year.

Local real estate peaked in 2007 and 2008, partly driven by South Korean investment.

The market started to drop in September, although low transaction volume and scant figures make the depth and impact difficult to assess.

Kang Chandararot said foreign investment would be key to rebuilding the sector, but that other factors, such as the global economic crisis and border tensions with Thailand, could remain obstacles to growth.

Hang Choun Naron, secretary general for the Ministry of Economy and Finance, agreed that the sector was poised to recover.

"I (think) the real estate market will return to normal within the next two or three years," he told the Post.

Source: Xinhua

The four were charged following a complaint brought by officials of RCAF Division 31.

The courts sentenced Nhek Chantha, 52, to six months with time served, from June 23, and released Nov Kakda, 19, Nov Sopheak, 18 and Vong Ma, 47, all from Cheysena village in Kampot’s Chhouk district.

“We’ve already made a decision, but we don’t know if the prosecutor will file a complaint against it or not,” presiding judge Pich Chhoeut said.

The charges stem from a dispute between 313 families in the area and Division 31 over 20 hectares of land, where residents had built a center for the disabled but where the military planted posts to demark its land.

Residents removed the posts, prompting the lawsuit from Division 31 officials, who could not be reached for comment.

The rights group Adhoc, which is filing suit against a number of judges to the Supreme Council of Magistracy, has said at least 146 people were arrested nationwide in 2008 over land disputes, some of them in an abuse of power by the courts.

Source: VOA News

Ground was broken in June for the International Finance Complex(IFC) but construction on the site will be postponed more than one year, said Woo Mu-hion, chief of the business division in Cambodia for the project’s developer and sole financer, the Seoul-based GS Construction and Engineering.

Construction was halted earlier this month, he was quoted by English-Khmer language newspaper the Cambodia Daily as saying.

“The market has changed. Due to such uncertainty, we think it is not clever to continue construction right now. We want to change our design, but we will maintain 52 storeys,” he said.

The project will only include two 51-storey condominiums and a mixed-use 52-storey building, which will be the tallest in Cambodia, he said.

Construction on the complex could restart in early 2010, but first the company needs to redesign it and get government approval for the new plan, he added.

Source: Xinhua

Last November Mr Kim moved with his wife to Phnom Penh, the Cambodian capital, using the proceeds from the sale of his photo shop in Seoul to open Luk Studio. The business has made “a really good start” as more and more Cambodians turn to professionals to capture their union, he says.

Although his business is still in its infancy, Mr Kim has already hired three people to help manage bookings and photo shoots.

“I had my company in Korea for three years, but demand wasn’t growing any more and there was simply too much competition,” says the 32-year-old. “I can already say that I am the number one here because nobody was really offering this [service] professionally.”

Mr Kim is making a grassroots contribution to a much more substantial flow of South Korean money and expertise entering Cambodia.

Last year South Korean investments there grew fivefold, making Cambodia the second-biggest recipient of Korean investment after China, according to the Korean International Trade Association. South Korea briefly overtook China two years ago as the biggest source of foreign direct investment, accounting for 23 per cent of projects approved by Cambodian authorities that year. Although China regained its leadership, several large-scale Korean projects are in the pipeline, in sectors including construction and finance.

Observers find it hard to explain exactly why Koreans have zoomed in on a country that is not particularly close to them, either geographically or culturally. “A lot of Korean businessmen are looking to invest abroad and somehow Cambodia seems to be now better known, particularly among small and medium-sized businesses, than other countries,” says Anh Ho-young, South Korean deputy trade minister.

One suggestion is that the historic disconnect between the countries has helped. Decades of war have fuelled a profound distrust in Cambodia of its neighbours.

Also, “Koreans are Asia’s most adventurous frontier market investors right now”, says Douglas Clayton, who has been investing in south-east Asia for two decades and manages Leopard Capital, a Cambodian fund.

“They understand how Korea itself was rapidly developed from a frontier market into a developed society and see the possibilities to repeat that process in transitional economies like Cambodia.

“For historical reasons, Koreans are not eager to place all their bets on China, so they are interested in alternative low-cost production centres,” he adds.

The most visible sign of South Korean investment in Cambodia is the redrawing of Phnom Penh’s skyline. Two Korean construction companies are erecting skyscrapers that will be the city’s tallest buildings.

Meanwhile, a joint venture between Korean and Cambodian companies is developing a satellite city, appropriately named Camko City. The $2bn (€1.4bn, £1bn) project is financed by Shinhan, a Korean bank, and is also due to house Cambodia’s future bourse – again with financial as well as training assistance from the Korean stock exchange.

In the six years since he arrived in Cambodia, Won Jong-min estimates the Korean community has grown from less than 500 to about 10,000. He settled there “not because of business but because I fell in love with the beautiful nature” around the temples of Angkor Wat, Cambodia’s cultural treasure.

Mr Won has since founded K-Channel, a Korean-language broadcaster that is expanding rapidly and is expected to break even after just two years on the air.

His success owes much to the fact that Koreans remain close-knit and rarely learn Khmer, even though many marry Cambodians or form property partnerships with locals to circumvent restrictions on foreign land ownership.

“Demand for more Korean [TV] content and entertainment is very strong,” says Mr Won.

Some pundits date the flourishing of business ties between the two countries to a state visit by Roh Moo-hyun, the former South Korean president, in late 2006, accompanied by a cohort of Korean executives.

Hun Sen, Cambodia’s long-standing prime minister, has also encouraged an open door policy. Last year, when a Cambodian chartered aircraft crashed on a domestic flight with 13 Koreans among its 22 passengers, he headed the search-and-rescue team, a gesture that did not go unnoticed in Seoul.

“It’s very rare for any prime minister to lead this kind of rescue, and I think it shows just how close this prime minister feels to Korea,” says Mr Anh.

Source: Financial Times

Some of the deals would be finalised “in coming months”, said Suos Yara, under-secretary of state responsible for economic co-operation.

The revelation comes as impoverished countries rich in fertile land and water such as Cambodia, but also nations in east Africa, seek agriculture investments from resource-poor but capital-rich countries.

Kuwait and Qatar were “very strongly interested” in securing more farming land, he said, with South Korea and the Philippines, which suffered from rice shortages this year, among potential Asian investors.

“Food prices have recently fallen but that really makes little difference because the food supply issue will be there for the long term,” he said. “With this financial crisis, we need to seize this opportunity to develop our farming and switch [foreign] investment from construction to agriculture.”

Kuwait has already agreed to give Cambodia loans totalling $546m (€436m, £369m) to develop agriculture, the second largest aid pledge ever received by Cambodia, after aid and loans totalling $601m offered by China last year.

This week, Daewoo Logistics of South Korea secured a landmark deal with Madagascar to grow food crops to send back to Seoul on a 99-year lease. Daewoo hopes to farm its Madagascar lease for free but is promising local jobs and infrastructure investments in road and irrigation.

Suos Yara would not detail the terms of the potential deals but said leases would run between 70 and 90 years. He did not say how much investors will pay for the leases, with the $3bn more likely in infrastructure investments than rent.

Phnom Penh calculates that Cambodia has 6m hectares available for farming, of which 2.5m are under cultivation. By comparison, the Korean deal with Madagascar covers 1.3m hectares.

Apart from boosting farming acreage, Suos Yara said the deals would make an equally significant contribution in terms of infrastructure and technology upgrades in a country that has emerged from decades of war and a 1970s genocide.

Last year, Cambodia produced 2.5m tonnes of rice, of which about 1.3m was exported, from a sector that relies on a single annual harvest and family-run farms. “With better technology and irrigation, rice production could double in some areas,” he said.

Cambodia’s farming push comes as the government faces an abrupt economic slowdown after averaging growth of 9 per cent over the past decade, as Korean property developers and other cash-strapped foreign investors start to shelve real estate projects.

Cambodia attracted about $3bn of foreign direct investment in 2007, of which 45 per cent was in real estate projects and 25 per cent in agriculture. Suos Yara said the land deals would help maintain foreign investment at such levels but with about half of the total coming from farming investments.

The country has suffered a food crisis, with the Asian Development Bank providing $35m in emergency food assistance last month. However, Suos Yara said conditions had returned to normal. “It was a distribution problem and not a food shortage problem,” he said.

While most of the potential investors were seeking to bolster their food reserves, Phnom Penh had also been talking to biofuel producers, including Indonesia, about ceding land for crops such as jatropha, a succulent plant becoming increasingly popular in the production of biofuels.

Source: Financial Times

The global financial crisis, the Thai-Cambodia border standoff and loan restrictions set out by commercial banks were all contributing to a fall in prices, said Sung Bonna, president of the National Valuers Association of Cambodia.

“The drop may continue for a long or short time,” he said in opening remarks at a real estate investment training course in Phnom Penh. “It is up to the reform of the Cambodian situation. Some crises will be solved.”

Between June and October, values in property fell between 10 percent and 20 percent, he said.

“When the decline is going on and on, we are very concerned about the real estate price in Cambodia,” he said. “But we hope it will recover soon.”

Cambodia in recent years has experienced a boom in property prices, leading many rural and urban residents to sell off their land at very high prices, raising rents and values, and boosting the construction sector.

But the property bubble was now of concern, especially considering the bust of the US housing market, which has led to a global financial crisis, said Finance Minister Keat Chhon.

“The real estate market in Cambodia is also indirectly affected by this world crisis,” he said. “Starting from this bad experience facing the world, Cambodia is paying her critical caution in the process of the developing real estate sector in Cambodia.”

The falling property prices are expected to stunt Cambodia’s economic growth, he said, acknowledging that both the economic crisis and the border standoff, which has continued since mid-July, were factors in the drop.

Neither were in the hands of Cambodia to fix, he said.

“Cambodia is a political hostage to Thailand’s internal conflict,” he said, referring to a mass movement of opposition supporters who are calling for a change of government in Bangkok.

Source: VOA News

“Our property markets are closely connected with the stock markets in South Korea and other Asian countries. If these markets fall, we are affected,” Kang Chandararot, the head of the economists at the Cambodia Institute of Development Study, was quoted by the Phnom Penh Post as saying.

“We will see a recession in the short term, perhaps in six to 12 months,” he said.

The South Korean government issued a statement this week urging banks to sell foreign assets to increase liquidity, the Post said.

South Korea is Cambodia’s biggest investor and a fall in South Korea would be especially harmful to local growth, it said.

“South Korean and other Asian markets are very closely connected to the U.S., and these countries are our biggest investors,” said Kang Chandararot.

Cambodia’s real estate sector has enjoyed unprecedented growth since 2007, but began to slide in mid-2008, industry sources say.

No figures on the depth of the declines were available, but industry experts said the crisis’ impact could be felt soon.

Meanwhile, Cheam Yeap, a lawmaker with the Cambodian People’s Party and chairman of the National Banking and Finance Committee, said the U.S. crisis might affect the Kingdom’s real estate market, but not the economy as a whole.

He said Cambodia’s economy is sufficiently diversified in tourism, agriculture and garment manufacturing to withstand the global crisis.

Source: Xinhua

“Our operations continued to benefit from the political stability and economic development of Cambodia,” the NagaCorp report said. After decades of turmoil, Cambodia has emerged as a rising economy in Southeast Asia – posting an average of 11 per cent growth over the past three years on the back of strong tourism and garment sectors.

Nagacorp reported its revenue soared 68.5 per cent from the same period last year to approximately 109.1 million dollars, in a country hosting several casinos popular with gamblers across the region.

The Malaysian-owned company is registered on the Hong Kong Stock Exchange and runs the largest casino in Cambodia’s capital Phnom Penh. The government awarded it a gambling license in 1994 to promote international tourism.

More than a dozen casinos operated by other companies dot Cambodia’s borders with Vietnam and Thailand, raking in an estimated tens, if not hundreds of millions of dollars each year.

The industry fuels the economies of several hard-scrabble Cambodian cities, though the country remains desperately poor with more than 30 per cent of its 14 million population living in poverty.

Source: The Economic Times