Idea Transcript
STUDY ON PRIVATE-INITIATIVE INFRASTRUCTRE PROJECT IN DEVELOPING COUNTRIES IN FY2011
STUDY ON THE AGRICULTURAL AND LOGISTIC INFRASTRUCTURE DEVELOPMENT IN WESTERN REGION OF MEKONG RIVER, THE KINGDOM OF CAMBODIA
FINAL REPORT
FEBRUARY 2012
Prepared for: THE MINISTRY OF ECONOMY, TRADE AND INDUSTRY
Prepared by: JAPAN DEVELOPMENT INSTITUTE IDEMITSU KOSAN CO., LTD.
Reproduction Prohibited
Preface
This report describes the results of the study, conducted by Japan Development Institute and Idemitsu Kosan Co., Ltd. under the provision scheme of “Study on Private-Initiative Infrastructure Project in Developing Countries in FY2011” by Ministry of Economy, Trade and Industry of Japan. The study, “Study on the Agricultural and Logistic Infrastructure Development in Western Region of Mekong River, the Kingdom of Cambodia”, aims to promote agriculture development of North Eastern region of Cambodia which can be realized through Mekong river use inland water transportation system development. For this matter, the study sought the feasibility of integrated projects of A. Agro-SEZ development, B. River transportation revitalization, and C. Cassava bio-ethanol production (total investment of approximately 16 billion yen.). It is hoped that this report contributes to the materialization of the project and to be a reference to the concerned people of Japan.
February 2012 Japan Development Institute Idemitsu Kosan Co., Ltd.
Map
50km
Photos
Cassava Plantation
A Cassava Root
Cassava drying (on the farm)
Cassava drying (at the dry yard)
Chipping Machine
Cassava roots being transported by a truck
A bridge at the west side of the Mekong River
Access road in the project site
Kratie ferry port (Ramptype)
20t truck crossing the river (Cassava chip)
Dredging boat taking sand from the Mekong River at Kratie
River bank protection work in Kratie
Kratie port (Pontoon type)
Kratie port (Ramp type)
Concrete navigation aid at the upper Mekong River
Upper Mekong River
Wooden boat (180t)
Tanker barge (800t)
SOKIMEX oil tanks
SOKIMEX catamarans type port for oil taker
SOKIMEX Pipeline facility
China road (Phnom Penh-Vietnam border)
MT with Waterway Department of MPWT (Phnom Penh)
MT with Waterway Department of DPWT (Kratie)
Abbriviations Abbriviation ADB BTC CDC CDM CER CH4 CIAT CLV CNMC CO2 COD CUM DGPS DO DOE DPWT EAC EDC ELC EIA EU FAO FDI FIRR GDP GIS GHG HCM HIV HP IEIA IPCC IWD IWT JBIC JETRO JICA LIBOR KAMSAB MAFF MIME MITV
Official Name Asian Development Bank Belgian Technical Cooperation The Council for the Development of Cambodia Clean Development Mechanism Certified Emission Reduction Methane International Center for Tropical Agriculture Cambodia, Laos and Vietnam Cambodia National Mekong Committee Carbon Dioxide Chemical Oxygen Dioxide Cubic Metres Differential Global Positioning System Dissolved Oxygen Department of Environment Department of Public Works and Transport Electricity Authority of Cambodia Electricity Du Cambodge Economic Land Concession Environmental Impact Assessment The European Union Food and Agriculture Organization of the United Nations Foreign Direct Investment Financial Internal Rate of Return Gross Domestic Product Geographic Information System Greenhouse Gas Ho Chi Minh Human Immunodeficiency Virus Horse Power Initial Enviornemntal Impact Assessment Intergovernmental Panel on Climate Change Inland Waterway Department Inland Water Transportation Japan Bank for International Cooperation Japan External Trade Organization Japan International Cooperation Agency London Inter-Bank Offered Rate Kampuchea Shipping Agency and Brokers Ministry of Agriculture Forestry and Fisheries Ministry of Industry, Mine and Energy Ministry of Industry and Trade of Vietnam
MOE MOU MOWRAM MPWT MRC MRCS NAL NCC NCDD NH4N N2O NSDP ODA OECD PPAP PP PPP DANIA SEZ SLC SPC SPM TEU ToT-N ToT-P TSS UNDP USD VIWA WB
Ministry of Environment Memorundum of Understanding Ministry of Water Resource and Metrology Ministry of Public Work and Transportation Mekong River Comission Mekong River Commission Secretariat National Agricultural Laboratory Navigation Coordination Committee The National Committee for Sub-national Democratic Development Ammonium Nitrogen Nitrous Oxide National Strategic Development Plan Official Development Assistance Organisation for Economic Co-operation and Development Phnom Penh Autonomous Port Phnom Penh Public Private Partnership Danish International Development Assistance Special Economic Zone Social Land Concession Special Purpose Company Suspended Particulate Matter Twenty-foot Equivalent Unit Total Nitrite/Nitrates Total Phosphate/Phosphorus Total Suspended Solids United Nations Development Programme US Dollar Vietnam Inland Waterways Administration The World Bank
Contents Executive Summary Chapter 1 : Overview of the Host Country and Sector ......................................................................... 1 1-1. Economic and Financial Status of Host Country ..............................................................3 1-1-1. Basic Information ..............................................................................................................3 1-1-2. Economy and Finance .......................................................................................................3 1-1-3. Infrastructure Development...............................................................................................4 1-2. Overview of the Sector .....................................................................................................7 1-2-1. Agro-Forestry Sector .........................................................................................................7 1-2-2. Inland Waterway Transportation Sector..........................................................................12 1-2-3. Basic Development Concept to Open Up Upper Mekong River Basin Area ..................19 1-3. Present Status of Concerned Area ................................................................................... 19 1-3-1. West Side of Kratie Province .......................................................................................... 19 1-3-2. Site Investigation .............................................................................................................22 Chapter 2 : Study Methodology .......................................................................................................... 27 2-1. Study Contents ........................................................................................................................29 2-2. Methodology and Study Team ................................................................................................30 2-3. Study Schedule........................................................................................................................32 Chapter 3 : Justification, Objectives and Technical Feasibility of the Project ................................... 35 3-1. Background and Justification of the Project ...........................................................................37 3-1-1. Potential users of the Project ...........................................................................................38 3-1-2. Present Situation, Future Projection and Current Problems ............................................40 3-1-3. Possible effects of the Project .........................................................................................44 3-1-4. Comparative analysis between the Project alternatives...................................................44 3-2. Analysis for the Planning of the Project .................................................................................45 3-2-1. Demand estimation..........................................................................................................45 3-2-2. Issues to be considered for the Project Planning .............................................................48 3-2-3. Technical Feasibility .......................................................................................................51 3-3. Project Planning ......................................................................................................................63 3-3-1. Principles of Project planning and Strategy ....................................................................63 3-3-2. Conceptual Design and Specifications of Equipment/Facilities......................................64 3-3-3. Project content (Investment, site etc) ..............................................................................72 3-3-4. Problems and Solutions in Adopting Proposed Technology and System .......................75 Chapter 4 : Evaluation of Environmental and Social Impacts ............................................................ 77 4-1. Analysis on the Environmental and Social Aspect .................................................................79 4-1-1. Present Status Analysis ...................................................................................................79 4-1-2. Future Prospect without Proposed Projects .....................................................................84 4-2. Expected Environmental Improvement................................................................................... 85 4-2-1. Waterway Logistics .........................................................................................................85 4-2-2. Biomass Electricity Generation .......................................................................................85 4-3. Analysis on the Impact ............................................................................................................86 4-3-1. Analysis on the Impact ....................................................................................................86 4-3-2. Comparison with Less Social and Environmental Impact .............................................. 92 4-4. Summary of Laws and Regulations ........................................................................................93 4-4-1. Relevant Laws and Regulations for Environmental Clearance for the Proposed Project93 4-4-2. Content of EIA ................................................................................................................94 4-5. Action plan ..............................................................................................................................95 Chapter 5 : Financial and Economic Evaluation ................................................................................. 97 5-1. Cost Estimation .......................................................................................................................99 5-1-1. Project A: Agro SEZ Development .................................................................................99 5-1-2. Project B: River transportation revitalization project .................................................... 101 5-1-3. Project C: Cassava bio-ethanol project ......................................................................... 101 5-2. Results of preliminary financial and economic analysis ....................................................... 106 5-2-1. Project A: Agro SEZ Project ......................................................................................... 106 5-2-2. Project B: River Transport Revival Project ................................................................... 108
5-2-3. Project C: Cassava Bio-Ethanol Project ........................................................................ 109 5-2-4. Entire Project................................................................................................................. 111 5-2-5. Economic Analysis........................................................................................................ 113 Chapter 6 : Planned Project Schedule ............................................................................................... 117 Chapter 7 : Implementing Organizations .......................................................................................... 121 7-1. Agro SEZ .............................................................................................................................. 123 7-1-1. Background of implementing organization ................................................................... 123 7-1-2. Scheme for Project Implementation .............................................................................. 124 7-2. River transportation revitalization......................................................................................... 124 7-2-1. Background of implementing organization ................................................................... 124 7-2-2. Scheme for Project Implementation .............................................................................. 127 7-3. Cassava bio-ethanol .............................................................................................................. 127 7-3-1. Possible Investor ........................................................................................................... 127 7-3-2. Scheme for Project Implementation .............................................................................. 127 Chapter 8 : Technical Advantages of Japanese Company ................................................................ 129 8-1. Proposed involvement of Japanese company ........................................................................ 131 8-1-1. Investment ..................................................................................................................... 131 8-1-2. Equipment supply.......................................................................................................... 131 8-2. Advantages (economic and technological) of Japanese companies in the implementation of the Project..................................................................................................................................... 132 8-3. Necessary measures for promoting participation of Japanese company ............................... 132 8-3-1. G to G assistance on Bio-energy policy for Cambodia ................................................. 132 8-3-2. Amendment of SEZ decree in Cambodia ...................................................................... 132 Chapter 9 : Financial Outlook .......................................................................................................... 133 9-1. Funding Source and Financial Plan....................................................................................... 135 9-2. Possibility of project finance................................................................................................. 136 9-3. Cash-Flow Analysis .............................................................................................................. 136 Chapter 10 : Action Plan and Issues ................................................................................................. 137 10-1. Efforts for Implementation of the Proposed Projects .......................................................... 139 10-1-1. SEZ Developer and Logistic System Developer ......................................................... 139 10-1-2. Cassava Plantation and Ethanol Refinery Developer .................................................. 139 10-1-3. Confirmation of the Land Lease Concession for 50,000 hector SEZ Site .................. 139 10-1-4. Environment Issues ..................................................................................................... 139 10-2. Efforts for Implementation of the Proposed Projects by the Host Country’s Government Agencies ....................................................................................................................................... 139 10-2-1. Cambodian Regional & Sector Development Policy .................................................. 139 10-2-2. Confirmation of the Re-Opening of Mekong River Transport System ....................... 140 10-2-3. Tentative Result of Feasibility Study and Conclusion ................................................ 140 10-2-4. Key Actions and Time Schedule ................................................................................. 140 10-3. Legal and Financial Constraints of Host Country ............................................................... 141 10-3-1. Expansion of SEZ Decree ........................................................................................... 141 10-3-2. Dredging for Navigation Improvement ....................................................................... 141 10-4. Necessity of Further Detailed Study ................................................................................... 141 10-4-1. Remaining Necessary Actions are as follows: ............................................................ 141 10-4-2. Waterway study ........................................................................................................... 141
Tables Table 1: Infrastructure development plan for Agro SEZ in Kratie………………………….……….vii Table 2: Investment plan of the Agro SEZ………………………………………………………….viii Table 3: Estimation of the dredging volume proposed by the study team………………………….viii Table 4: Proposed navigation channel improvement plan……………………………………………ix Table 5: A Production Plan of Cassava Chips and Ethanol…………………………………………...x Table 6: Investment cost of the Cassava Bio-ethanol Project………………………………………..xi Table 7: The total investment costs of the whole project…………………………………………….xi Table 1-1: Basic information ................................................................................................................3 Table 1-2: Economic indicator..............................................................................................................4 Table 1-3: Sector wise public investment .............................................................................................4 Table 1-4: Electricity source development plan ...................................................................................6 Table 1-5: Product wise Agriculture Production Area..........................................................................8 Table 1-6: Land use of Kratie, Stung Treng and Kampong Cham provinces ..................................... 10 Table 1-7: Production and Export/import of Woodchip .....................................................................11 Table 1-8: Future potential of Agricultural development in upper Mekong River basin area ............12 Table 1-9: Waterway Transport Ports in Cambodia ...........................................................................14 Table 1-10: Cargo Type Distribution at PPAP (Oct 2010 to Mar 2011) ............................................14 Table 1-11: Monthly Volume of Import/Export at PP Port ................................................................14 Table 1-12: Maximum Navigable Vessel size in the Mekong River basin by section .......................16 Table 1-13: Waterways of Mekong River system in Cambodia .........................................................17 Table 1-14: Relevant Action for Navigation from Master Plan Action 2011 .....................................17 Table 1-15: Responsible Agencies for Inland Water Transportation an Their Responsibilities .........18 Table 1-16: Electricity Supply in Kratie Province .............................................................................. 21 Table 3-1: Incentives in SEZ .............................................................................................................. 37 Table 3-2: Profiles of ELCs in Kratie province .................................................................................. 38 Table 3-3: Profiles of ELCs in Stung Treng province ........................................................................39 Table 3-4: Volume of Maintenance dredging for Phnom Penh Autonomous Port .............................42 Table 3-5: The location of river stretches where improvements have taken place .............................42 Table 3-6: Cassava production by province in 2010...........................................................................43 Table 3-7: SWOT analysis of existing logistic infrastructure in the upper Mekong River region .....45 Table 3-8: Cost comparison between waterway and land (truck) transportation ................................45 Table 3-9: Example of 50,000ha development plan ...........................................................................46 Table 3-10: Oil Product Demand Forecast in Vietnam.......................................................................46 Table 3-11: Bio Ethanol Refinery Projects in Vietnam (Ongoing / Plan) ..........................................47 Table 3-12: Barges to be used during different months of the year (without dredging) .....................53 Table 3-13: Cost assumptions of river transportation by barge size and type ....................................56 Table 3-14: Cassava plantation plan ................................................................................................... 56 Table 3-15: Transportation plan of Chips and Ethanol .......................................................................56 Table 3-16: Soil Analysis Result (Average of 18 sampling locations) ...............................................58 Table 3-17: Rainfall in Sambor district, Kratie province....................................................................58 Table 3-18: Monthly Temperature in Kratie ....................................................................................... 59 Table 3-19: Main cassava varieties and their yields and starch content .............................................60 Table 3-20: Cultivation calendar and labor requirements ...................................................................61 Table 3-21: Operation plan of cassava cultivation in the proposed plantation ...................................61 Table 3-22: Estimation of Cassava Cultivation cost ...........................................................................63 Table 3-23: Comparison of plant location .......................................................................................... 64 Table 3-24: Infrastructure development plan for Agro SEZ in Kratie ................................................68 Table 3-25: Proposed dredging plan by PPAP/MOWRAM ...............................................................69 Table 3-26: Comparison between dredging plan proposed by MPWT and Study team .....................70 Table 3-27: Investment plan for the whole project ............................................................................. 73 Table 3-28: Investment plan for Agro SEZ ........................................................................................ 73 Table 3-29: Suggested navigation improvement ................................................................................74 Table 3-30: Bio-ethanol investment.................................................................................................... 75 Table 3-31: A Production Plan of Cassava Chips and Ethanol ........................................................... 75
Table 4-1: Water Quality in Stung Treng and Kratie..........................................................................82 Table 4-2: Population in Sambor District ........................................................................................... 83 Table 4-3: Occupation in Sambor District .......................................................................................... 83 Table 4-4: Fuel Consumption and GHG Emission by Different Mode of Transportation..................85 Table 4-5: Emission Factor Ranges of Biomass Electrification .........................................................86 Table 4-6: List of Items to be Considered ..........................................................................................87 Table 4-7: List of Related law and regulation data ............................................................................. 93 Table 5-1: Initial investment cost of Agro SEZ project ......................................................................99 Table 5-2: Cost of dredging and navigation aid................................................................................ 101 Table 5-3: Estimated costs of Cassava plantation ............................................................................. 102 Table 5-4: Estimated costs of Chipping plant and warehouses......................................................... 103 Table 5-5: Estimated costs of Ethanol plant ..................................................................................... 104 Table 5-6: Transport Cost between Sanbor, Kratie and Ho Chi Minh.............................................. 105 Table 5-7: Sales of products ............................................................................................................. 105 Table 5-8: Cash flow of Agro-SEZ project....................................................................................... 107 Table 5-9: Cash flow of River transportation revitalization project ................................................. 108 Table 5-10: Cash flow of Cassava bio-ethanol project ..................................................................... 110 Table 5-11: Cash flow of the Entire project...................................................................................... 112 Table 5-12: Financial profitability of the Project.............................................................................. 113 Table 5-13: Conversion from the financial cost to the economic cost of Agro-SEZ Project............ 113 Table 5-14: Conversion from the financial cost to the economic cost of River Transportation Revivalization Project ............................................................................................................... 114 Table 5-15: Potentiality of agricultural development in Kratie Province ......................................... 114 Table 5-16: Economic benefits of river transportation revitalization Project ................................... 114 Table 5-17: Conversion of financial costs to economic costs of Plantation ..................................... 115 Table 5-18: Conversion of Financial Costs to economic costs of Dry Chipping plant ..................... 115 Table 5-19: Conversion of Financial Costs to economic costs of Bio-ethanol Plant ........................ 115 Table 5-20: EIRR of the Entire Project............................................................................................. 116 Table 7-1: A Suggested Scheme ....................................................................................................... 123 Table 7-2: Profile of the key investor company ................................................................................ 123 Table 10-1: Key Actions and Time Schedule ................................................................................... 140 Table 10-2: Estimation of bathymetric survey cost (Phnom Penh to Stung Treng).......................... 142
Figures Figure 1: Project Concept…………………………………………………………………………….vi Figure 2: Ramp type feeder port for cassava chips…………………………………………………..vii Figure 3: Catamarans type feeder port for bio-ethanol………..…………………………………..…vii Figure 4: Agro SEZ project implementation scheme………………………………………………..viii Figure 5: River transportation revitalization project implementation scheme…………………………x Figure 6: Project Schedule…………………………………………………………………………..xii Figure 1-1: Crop Products Production (Left) Crop Cultivation Area (Right) .......................................8 Figure 1-2: Agriculture development status of Kratie, Stung Treng and Kampong Cham................. 10 Figure 1-3: Production of Main Crops in Cambodia .......................................................................... 11 Figure 1-4: Comparison of Costs and Fuel Consumption of Transport Mode....................................13 Figure 1-5: Cross-border Traffic on River Vessels ............................................................................. 15 Figure 1-6: Cross-border Traffic on Sea Vessels ................................................................................ 15 Figure 1-7: Production of Major Crops in Kratie ............................................................................... 22 Figure 1-8: Cassava Production in Kratie ........................................................................................... 22 Figure 2-1: Study team ....................................................................................................................... 32 Figure 3-1: Present situation and plan of road development in West Kratie ......................................41 Figure 3-2: Present situation and plan of power development in West Kratie ...................................41 Figure 3-3: Overhead view of a ship loaded with logs .......................................................................54 Figure 3-4: Cross-section view of logs (loaded with a ship) ..............................................................54 Figure 3-5: Soil types of West Kratie ................................................................................................. 57
Figure 3-6: Shares of Cassava varieties planted in Thailand as of 2009.............................................60 Figure 3-7 Estimation of labor requirement in the proposed plantation and chipping factory ...........62 Figure 3-8: Conceptual Design of Agro SEZ in West Kratie .............................................................65 Figure 3-9: Image of ramp type feeder port (View from the downstream).........................................66 Figure 3-10: Image of ramp type feeder port (View from the upstream) ...........................................66 Figure 3-11: Image of ramp type feeder port (Enlarged view) ...........................................................67 Figure 3-12: Image of catamarans type feeder port (View from the downstream) .............................67 Figure 3-13: Image of catamarans type feeder port (Enlarged view) ................................................. 68 Figure 3-14: Proposed dredging location by PPAP/MOWRAM (Vietnam border-Kampong Cham) 69 Figure 3-15: Conceptual Illustration of the Bio Ethanol Project ........................................................71 Figure 3-16: Wastewater Treatment Facility ...................................................................................... 72 Figure 3-17: Agro SEZ implementation scheme ................................................................................73 Figure 3-18: River transportation revitalization project implementation scheme ...............................74 Figure 5-1: Cassava price trend ........................................................................................................ 105 Figure 6-1: Project Schedule............................................................................................................. 120 Figure 7-1: Agro SEZ implementation scheme ................................................................................ 124 Figure 7-2: Organizational chart of MPWT...................................................................................... 126 Figure 7-3: River transportation revitalization project implementation scheme............................... 127 Figure 8-1: Bio-ethanol Production Projection ................................................................................. 131 Figure 9-1: JBIC Investment Loan Mechanism ................................................................................ 135
Maps Map 1: Agriculture Development Potential of Upper Mekong River Region……………………..…iii Map 2: Candidate sites for dredging………………………………………………………………….ix Map 3: Project Location Map………………………………………………………………………..xiv Map 1-1: Population distribution ..........................................................................................................3 Map 1-2: Road and bridge rehabilitation status ....................................................................................5 Map 1-3: Electricty transmission master plan .......................................................................................6 Map 1-4: Land Use Map .......................................................................................................................7 Map 1-5: Potential Agriculture Development in Upper Mekong Region .............................................9 Map 1-6: Waterway Transport in Cambodia....................................................................................... 13 Map 1-7: West Side of Kratie Province .............................................................................................. 20 Map 1-8: Location of Ferry/Port in Kratie Province ...........................................................................23 Map 3-1: Locations of bio-ethanol ethanol plants in Vietnam ............................................................47 Map 3-2: Navigation route from Kratie to Kampi and Sambor ..........................................................49 Map 3-3: Candidate location of dredging ........................................................................................... 70 Map 3-4: Project Location Map .......................................................................................................... 72 Map 4-1: Kratie Province, Samborur District ..................................................................................... 80 Map 4-2: Conservation zone between upstream Sambor and upstream Kratie ...................................81
Photos Photo 1-1: Kratie ferry port ................................................................................................................. 24 Photo 1-2: Road condition of Preak Prasab across Kratie...................................................................24 Photo 1-3: Kratie Sambor port ............................................................................................................ 25 Photo 1-4: Access road in the site ....................................................................................................... 25 Photo 3-1: MH Bio Energy ethanol plant in Kandal Province ............................................................44 Photo 3-2: Kampi area of the Mekong River, Kratie province ...........................................................49 Photo 3-3: Navigation aid constructed by the French ......................................................................... 50 Photo 3-4: Land clearance ................................................................................................................... 51 Photo 3-5: Access road in the site ....................................................................................................... 52 Photo 3-6: Dredging for sand taking purpose ..................................................................................... 55 Photo 3-7: Cassava production at the site ........................................................................................... 57 Photo 3-8: Cassava chipping and drying ............................................................................................. 61
Photo 4-1: Sambor district in Kratie province .................................................................................... 84
Appendices Appendix 1-1: IWT ports in Cambodia Appendix 3-1: Soil Analysis Results Appendix 3-2: Navigation Aids List Appendix 3-3: Dredging Plan (MPWT) Appendix 4-1: EIA Process Appendix 5-1: Agro SEZ Project FIRR Appendix 5-2: Cassava Bio-ethanol Project FIRR Appendix 5-3: Sensitivity Analysis
Executive Summary
i
ii
1. Background and Necessity of the Project 1-1. Cambodian Regional and Sectoral Development Policy This study focuses on Kratie province among other north eastern province. The North-Eastern provinces (Kratie, Stung Treng, Ratnakiri, Mondulkiri, Prea Vihear) has been designated as the 4th “Economic Development Zone” in order to narrow the economic gap between the North east and the other regions, according to an announcement by Prime minister Hun Sen in December, 2011. In this development plan, the Agro-forestry sector and mining sector are considered as the priority sectors due to the potential of the region. The Cambodian government also set high priority for processing and exporting agro-forestry products directly from Cambodia to the international market instead of supplying unprocessed products to neighboring countries at low prices.. Map 1: Agriculture Development Potential of Upper Mekong River Region Catchment area of Mekong River transportation (Rice, Cassava, Woodchips etc)
West side of Upper Mekong River
Mekong River
(Source: Study Team) 1-2. Need for Re-Opening of Mekong River Transport System One of the major issues in north-eastern region of Cambodia, especially the western side of the upper Mekong River is its limited accessibility to the major transportation network. Poor road connection and neglected waterway transportation system have impaired the competitiveness of the agriculture of the region. In the past, however, inland water transportation (IWT) was the major means of logistic system in the region. Utilization of the waterway transportation started after the installation of navigation system in the French period. Industrial use was mainly for the transportation of logs until the ban of illegal logging and exportation of logs. Since then, due to the absence of marketable commodity from north-eastern region, water transportation was overtaken by the road transportation. Considering the bulky agro-forestry product transportation, re-opening of Mekong River transportation as efficient logistic system will be the key for the development of the entire north-eastern region. 1-3. Need for Successful Large Scale Agro-Forestry Project In terms of agriculture development, north-eastern region of Cambodia including Kratie still practices rain fed subsistence farming in the limited area therefore left with significant scale of iii
unutilized land. Effective utilization of available land has been an effort for the Cambodian government from the introduction of Economic Land Concession (ELC) scheme in 2005, a land lease system to the investors for the purpose of agro-industry use. Up to now, despite nearly 100 ELCs have already been granted, there are very few successful cases of large-scale agriculture projects since the land was utilized not for the development purpose but for the brokerage purpose without concrete project plans or finance. Also although large scale land was obtained, lack of infrastructure impedes the materialization of the project. These issues are the major reason for limited agro forestry investment in the region. 1-4. Private-Public Partnership for Project Implementation The proposed project envisages regional development of the upper Mekong river region through agriculture development supported by Mekong river revitalization with the channel improvement effort. The study targets western region of the upper Mekong River to formulate and investigate the viability of the integrated project of agriculture and river transportation system development together with cassava bio-ethanol project as the first pioneer project. In order to materialize the project, it is important that the Cambodian government’s effort in water transportation infrastructure development and private investments in agriculture development related project proceed simultaneously. For this matter, concrete investment project is addressed for both public and private to have the same vision and commitment in this project. Since the aim of the project matches with the Cambodian vision of North-eastern region development policy and has the potential of being the catalyst for the policy, the proposed project can be promoted as the Public Private Partnership (PPP) project.
2. Principle of the Project Contents In this study, for the purpose of formulating competitive agriculture investment project together with river transportation system, an integrated project scheme was investigated consisting following five components. A. Plantation, Chipping factory, related infrastructure B. River port infrastructure C. River transportation (river channel improvement) D. Navigation aid E. Ethanol production plant In formulating the project, the basic approach to the successful project development was considered as the competitive transportation system development which is the value addition at the production site to reduce the transportation cost and the development of production base equipped with related infrastructure for the agriculture investment attraction. Based on this recognition, the project was formulated as an integration of the following three projects. A. Agro SEZ project which offers agricultural, industrial and logistic infrastructure as a package, B. River transportation revitalization project which improves the river channel to enable large scale and cost effective transportation, and C. Cassava bio-ethanol project which includes plantation, chipping factory and ethanol plant as the first pioneer project
iv
The principle of the each projects are as follow. A. Agro SEZ project The principle of the Agro SEZ project is to provide basic infrastructures within Agricultural Special Economic Zone (Agro SEZ) to reduce initial investments and risks of each investor to be operated in the zone. Infrastructure includes access road, plantation roads, workers house, school, health center, water supply and power generation for promoting export-oriented agro-forestry industry development in the region. This SEZ program is now successfully attracting FDI to the country providing favorable environment to the investors including necessary infrastructures and tax incentives and one stop service for the administrative procedure. Current SEZ decree formulated in 2005 is applied only to manufacturing sector therefore SEZ framework shall be amended and extended to agriculture sector. Based on the experience of law amendment (sub-decree formulation) in Cambodia, the process starts with the submission of the concrete investment projects. Firstly, the project shall be submitted to the SEZ board in Cambodia Development Council (CDC) which will be discussed in the Council of Ministers and upon the permission from the Prime Minister, the sub-decree will be formulated and SEZ board issues SEZ application to the project. The study team has been discussing this matter with SEZ board and the legal expert in Council of Ministers and confirmed that if the project application was submitted, most likely the sub-decree passes. The study team plans to apply in 2012 summer so that the evaluation process and the law amendment completes within 2012. B. River transportation revitalization project Since upper Mekong River inland transportation is for the public usage, the law positions Ministry of Public Water and Transportation (MPWT) as the responsible agency for the improvement and maintenance of the river transportation. Mekong river transportation was developed in the French era but it decreased rapidly since the ban of logging as the demand declined. The river transportation development master plan formulated by Belgium Technical Cooperation (BTC) in 2006 bases its demand forecast of upper Mekong river region based on the current low demand transportation. Therefore the master plan focuses mostly from the downstream of Kampong Cham. However, considering the agriculture production potential in the northeastern region, increasing need for the river channel improvement will be also expected in the upper Mekong River. Therefore, the principle of the River transportation revitalization project is to improve river channel through dredging work led by MPWT to allow navigation of 1,000-2,000t barge (approximately depth 5m, width 100m) to keep the pace with the logistic demand from agriculture development in the region. This improvement revitalizes the river transportation in the upper Mekong River and enables cheaper means of transportation for bulky agro-forestry products and contributes to the promotion of agricultural development in the upper Mekong river basin area. C. Cassava bio-ethanol project The principle of the Cassava bio-ethanol project is for the first 4 years during the cultivation of 20,000ha will be cassava dry chip business. After 4 years, ethanol plant investment shall start when the ethanol market in Vietnam and Thailand is favorable. The proposed project assumes investment decision is to be made during 2015-16 and plant construction starts during 2017-18. For the ethanol plant location, from the perspective of transportation cost, Kratie is the most competitive location. Therefore the proposed project plans to construct feeder port at Kratie (to be the part of Agro SEZ) to be able to efficiently handle large bulk cargo. Until the dredging is to be v
conducted, cassava chips are to be transported mainly during the rainy season. By the time ethanol exportation starts in 2018, dredging shall be finished to navigate 1,000t tanker barge all year around.
3. Summary of the Project 3-1. Project Component A. Agro SEZ project The study proposes a conceptual design of the Agro SEZ project as below. The main components of the Agro SEZ are (1) Plantation zone, (2) Processing Zone, (3) Residential zone with power and water supply, (4) Feeder port. Figure 1: Project Concept
(Source: Study team)
vi
The followings are conceptual designs of the proposed feeder ports. Figure 2: Ramp type feeder port for cassava chips
(Source: Study team) Figure 3: Catamarans type feeder port for bio-ethanol
*A catamarans is a the shape of two boat joined together. It is flexible to the change of water level. (Source: Study team) The development will take place in 3 phases assuming 3 companies will be the tenants. In principle, a package of infrastructures such as access roads, land clearance, processing zone, residential zone shall be developed as a new company decides to invest and develop a plantation. Below shows the basic assumption of phase based development schedule. Table 1 shows the basic specification of the Agro SEZ. Table 1: Infrastructure development plan for Agro SEZ in Kratie 1st phase: 2013-2017 2nd phase: 2018-19 3rd phase: After 2020 Land clearance
20,000ha
20,000ha
10,000ha
Processing zone
30ha
40ha
30ha
Road construction
45km
40km
15km
one Ramp type
one Catamarans type
-
Feeder port construction Biomass Power Plant
1MW 4MW (Source: Study team) vii
2MW
The investment plan for the Agro SEZ is summarized in the table below. Table 2: Investment plan of the Agro SEZ （Unit: USD million） 1st phase: 2013-2016
2nd phase: 2017-18
3rd phase: 2019
Land clearance
20.6
20.6
10.3
Processing zone
6.5
14.0
8.5
Road construction
0.3
0.3
0.2
Feeder port construction
0.5
0.7
-
Biomass Power Plant
2.0 8.0 (Source: Study team)
4.0
Figure 4 shows the implementation scheme. Local private company will be a part of Agro SEZ developer (SPC) and investors including Japanese will invest in agriculture production and processing in the Agro SEZ. Development assistance may be required for the construction of public infrastructure of new village to be developed in the Agro-SEZ. Figure 4: Agro SEZ implementation scheme Japan Gov/ JICA
MOEYS/MOH
MAFF
CDC
ODA Public facilities in new village
Land Fee
License
Project Approval
Land and Infrastructure Investor (Japanese)
Agro SEZ Developer (SPC) Lease Fee (Source: Study team)
B. River transportation revitalization project The project estimates dredging will be conducted by MPWT by 2017. Based on the local hearing information, dredging cost is USD 1/m3. With this figure, with estimated dredging volume of 10million, dredging cost will be USD 10million. Maintenance dredging from 2018 will be conducted once in 2 years according to MPWT. Table 3: Estimation of the dredging volume proposed by the study team Locations for dredging Length (km) Dredging Volume (m3) 1. Kratie: Kampi and near the existing Kratie ferry port site 2. Chhlong: 67 km upstream from Kampong Cham 3. Krouch Chhmar: 47 km upstream 4. Kaoh Samrang: 78 km upstream from Kampong Chang Total (Source: Study team)
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5.5 23.5 1 13 45.5
1,000,000 5,500,000 500,000 3,000,000 10,000,000
Below shows the phase based improvement project. Table 4: Proposed navigation channel improvement plan Phase 1: 2013-2017 Phase 2: After 2018 Maintenance dredging should be Dredging 4 shallow locations in the upper Mekong River should be dredged to secure the water made at 4 dredged locations every 2-3 depth of 5m and the channel width of 100m. years in order to maintain the depth The total dredging amount of 10,000,000 m3 and width of the channel is roughly estimated for the route between Kampong Cham and Kratie (Sambor). Navigation Floating buys along the navigational Maintenance of navigation aids aid channel. Allocation of buoys will be decided especially after rainy season. Missing after a sounding survey. buoys will be supplied immediately *Based on the sounding survey conducted in 1999. New set of survey is required for the accurate calculation. (Source: Study team) The map below shows the locations of the proposed dredging. Map 2: Candidate sites for dredging
(Source: Study team) Figure 5 shows implementation scheme. Cambodian government agencies formulate Mekong River navigation improvement plan with the assistance official development assistance. The dredging shall be contracted out to the private company with the permission of the license which allows exportation of the soil from the dredging.
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Figure 5: River transportation revitalization project implementation scheme MIME
MOWRAM
Market
Navigation Development Plan Navigation Aid Development
License
Money
Japan Gov/ JICA
MPWT (Water Dept)
Private Dredging Company Sand (Source: Study team)
C. Cassava bio-ethanol project Phase 1: Cassava chip business 20,000ha will be developed in 4 years and the first 5 years will be cassava chip business. This study realistically assumes cassava yield to be 30ton/ha with modern production techniques and inputs based on the rainfall data, soil analysis, topography of the site and the investigation at the site. Harvested cassava roots are chipped and dried at the chipping factory. Cassava chip will be stored in the factory during dry season and transported with 1,000t barge in the rainy season. Phase 2: Ethanol business After the development of 20,000ha, ethanol plant will be constructed during 2017-18 and start production from the end of 2018. Produced ethanol will be transported by 1,000t tanker barge to Ho Chi Minh. The basic specifications of the cassava plantation, chipping yard and bio-ethanol production are as follows: y Own Plantation: 20,000ha y Yield: 30t/ha/y (Raw potatoes) y Fresh roots: 600,000t/y y Dry chip: 300,000t/y y Drying yard: 60ha y Chippers: processing capacity of 2,000t fresh roots/d y Bio-ethanol production: 10,000kl/y Table 5: A Production Plan of Cassava Chips and Ethanol Year Land clearance (ha) Cultivation (ha) Ethanol Plant Export Chip/Pellet (t) Ethanol (kl)
2019 2020 2013 2014 2015 2016 2017 2018 5,000 10,000 15,000 20,000 20,000 20,000 20,000 20,000 5,000 10,000 15,000 20,000 20,000 20,000 20,000 20,000 Const. Const. Opera. Opera. Testing 90% 100% 75,000
150,000
225,000
300,000
(Source: Study team)
x
300,000
300,000
300,000
300,000
90,000
100,000
Table 6: Investment cost of the Cassava Bio-ethanol Project (Unit: USD million) 2013-2017 2018-2019 Land acquisition Plantation 20 Ethanol plant 9 Construction Plantation (road) 1.8 Chipping plant 10 Ethanol plant 30 32 Total (including other investments) 107.8 (Source: Study team) Implementation scheme is as shown in Figure 4 Agro-SEZ project. 3-2. Financial Analysis The initial investment costs of each projects and the total are shown in the following table. Table 7: The total investment costs of the whole project Project contents Project cost (million USD) A. Agro SEZ 79.7 B. River Transportation Revitalization 11.9 C. Cassava Bio-ethanol 108.1 Total 199.7 (Source: Study team) The financial rates of return (FIRR) of A. Agro SEZ project and B. Cassava bio-ethanol project are 40.5% and 63.8% respectively, which is high enough for private sector to initiate the large scale project in Cambodia. The EIRRs are 132.2% and 100.2% respectively, which show the effects of using biomass generators in Agro-SEZ project, and of new employment in the plantation. B. River transportation revitalization project to revive the waterway of 5m depth and 100m width is estimated to be USD 12 million, which shall give a great economic impact in the region by reducing the transport costs and promoting the agricultural development drastically. Since the project is public project, no income will be generated thus FIRR cannot be calculated. However, the EIRR of the Project B is 33.2%, which means that the project shall have a good effect on the regional economy. The FIRR of the whole project A, B and C is 51.3% evaluated as a financially viable project. 3-3. Environmental Analysis This Environment and Social Impacts have been conducted under JETRO Guideline on Environment and Social Impacts. Key considerations for the project are (1) Navigation improvement within Kratie －Sambor area, and (2) Relocation of nearby village. According to the existing regulation within the conservation zone between Kratie－Lao border, navigation improvement as well as development project is allowed within the area only the speed limit of 30km/h ship or intensive large ferry river crossing is prohibited, which will not be an issue. Dredging is also allowed for the navigation improvement purpose and the impact on the aquatic creatures is limited due to river bottom characteristics is mostly sand can be washed away with constant current. However, the location and the volume shall be studied and timing of dredging activities shall be examined to avoid adverse impact before the implementation.
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In terms of relocation of nearby village, currently 60 families are identified near the project site planned to be accommodated in the new residential zone provided by the SLC from the government. Together with the immigrant labours, access to necessary needs including electricity, water, common waste management and health care facilities will be secured and employment in the plantation or processing within the Agro SEZ with relevant trainings will be proposed. Basic upgradation of their living condition will be expected from the resettlement.
4. Project Schedule Development of 1) 50,000ha Agro-SEZ, 2) River transportation revitalization, and 3) 20,000ha cassava bio-ethanol project shall proceed simultaneously in order to materialize the project in a timely manner. It is important to coordinate and to meet the milestone targets when the various development components are in one project and this is especially true in case of implementing Public Private Partnership scheme. Currently, the Project is expected to be carried out according to the following schedule. Figure 6: Project Schedule
(Source: Study team)
5. Feasibility of the Project Cassava Plantation and Ethanol production-Exporting to Vietnam project seems to be highly competitive and feasible based on the preliminary Feasibility study carried out from October 2011 to February 2012 although some aspects must be further studied and tested in 2012. Using the Mekong River Water Transport system is likely to reduce the transport cost significantly as we expected and also producing ethanol at the site area will further reduce the cost since reducing volume of xii
transportation.
6. Technical Advantages of Japanese Companies For a bio-ethanol project, the basic technology (quality control, transportation, storing, planting operation) of the petroleum industry of Japan can be utilized. Japanese companies have technical advantages and are expected to invest in this field. As a matter of fact, already several Japanese companies have invested in bio-ethanol projects in Latin America and Asia. Also, Japanese companies have advantages in environmental technology such as waste water treatment due to strict regulations in Japan. Such environmental problems as odor problems and waste water problems are often associated with bio-ethanol projects because of improper treatment of wastes. Plant makers and equipment makers of bio-ethanol plants are also looking at oversea opportunities due to the rapid growth of bio-ethanol market in the world.
7. Schedule for Project Implementation and Associated Risks Key issues and recommended necessary actions are as follow. (1) Private Side 1) Further Detail FS especially of Plantation, Industrial Zone, Bio-mass Power Plant and Logistic System (2012) 2) Productivity Test of Cassava at the site area (2012) 3) Negotiation for Land Concession and Finalization of SEZ Approval (2012) 4) Singeing of a MOU between SEZ Developer and Investors (2013) (2) Public Side 1) Approval of the Agro-SEZ Program (2012) 2) Approval of the Mekong River Transport system development (river ports and channel development) (2012) 3) Start of Mekong River Transport Development Study especially Re-opening of the Chanel in the Upper Mekong River (2012) 4) Upper Mekong River Basin Economic& Social Development plan and Infrastructure Development Master Plan Study
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8. Project Location Map Map 3 shows the project location. Map 3: Project Location Map
50km
(Source: Study team)
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Chapter 1 : Overview of the Host Country and Sector
1
2
1-1. Economic and Financial Status of Host Country 1-1-1. Basic Information Cambodia is a small country having total area of 181,035km2 with the population of 13.4million. The population concentrates in the southern part of Cambodia surrounding the capital city Phnom Penh. This centralized population distribution is typical case in developing country. While urban population is less than 20%, majority of rural population tends to have high poverty rate with limited economic activities. Map 1-1: Population distribution
(Source: The Atlas of Cambodia, National Poverty and Environment Maps, DANIA 2006)
Total Geographic area Number of provinces Number of districts Number of communes Number of villages Currency: USD=Riel
Table 1-1: Basic information 181,035 km2 Population 24 % of rural population 167 % of urban population 1,621 Annual population growth rate 14,073 Density of population 1.00 = 4,000 Average size of household (Source: NSDP Update 2009-2013)
13,388,910 81.5% 19.5% 1.54% 75 /km2 4.7
1-1-2. Economy and Finance Cambodia is experiencing rapid economic growth after half a century of civil war. Recent growth shows double digit GDP growth during 2005-07 and 6% after 2008. Major industry of Cambodia is primary industry such as agriculture, fishery and forestry contributes 35% of total GDP. Cambodia is agriculture country where farming land consists of 23% of total land next to forestry 54% and employs 60% of labor population. Recently, tourism and garment sector is rising industry in addition to agriculture sector. Despite of low income country, those sectors are attracting foreign investments. 3
In the past few years, due to the rise of wages and labor shortage in China, Thailand and Vietnam, increasing number of companies, especially from Japan, are shifting light industry base into SEZ. However, there are still some obstacles including costly electricity, availability of skilled workers and transparent administrative services for the further attraction of foreign investments.
Item GDP growth rate GDP per capita (USD) Inflation rate Agriculture growth rate Industry growth rate Service growth rate Investment inflow (USD mil)
Table 1-2: Economic indicator 2008 2009 2010 2011 6.7 0.1 5.0 6.0 738 731 792 853 19.7 -0.6 6.0 4.5 5.7 5.4 4.0 3.2 4.0 -9.5 10.5 7.9 9.0 23 3.3 7.3 795 515 599 676 (Source: NSDP Update 2009-2013)
2012 6.5 915 3.5 3.4 8.4 7.4 745
2013 6.5 981 3.0 3.2 8.2 7.4 821
Financially, Cambodia is expected to continue with financial deficit therefore government’s public investment will be limited. Sector wise public investment shows government’s emphasis on industrial and social infrastructure after the deterioration from the civil war. Cambodia is considered to rely on international aid and foreign investment for the social and economic development. Table 1-3: Sector wise public investment Sector % Social Sector 34.73 Economic Sector 22.69 Agriculture and land management 8.57 Manufacturing, mining and trade 1.91 Infrastructure Sector 28.40 Transportation 4.24 Service Sector 14.17 Tourism 1.23 （Source: NSDP Update 2009-2013） 1-1-3. Infrastructure Development In Cambodia, 80% of domestic long distance transportation is by road transportation. Movement of goods in provincial level is via Phnom Penh and bordering region trade between Thailand and Vietnam. In terms of the road condition, national road is relatively well paved where concrete and AC pavement accounts for 30% and DBST accounts for 70%. On the other hand, provincial road is poorly developed and rehabilitated with 60% of laterite road and 40% unpaved road thus there are accessibility issue during the rainy season (MPWT, 2010). Country wise development assistance on road and bridge is shown in Map 1-2. Each country assists near Phnom Penh area, while in rural region, ADB assist around Tonle Sap and China supports upper Mekong River region.
4
Map 1-2: Road and bridge rehabilitation status
(Source: Study team) Port and river transportation infrastructure condition is shown in 1-2-2. River transportation sector. In terms of electricity infrastructure, current transmission line only exist sparsely and not connected. The capacity does not meet domestic demand and lack of electricity quality and stability is the major issue in the country. Cambodian government has the Transmission master plan 2008-21 and is implemented together with the importation from Thailand, Vietnam and Lao. Especially in the upper Mekong river region, plan includes substation development at Kampong Cham and transmission line extension from Lao to Stung Treng. Cambodian government has formulated energy source development plan until 2020. According to the plan, 8 hydro power and 3 coal fire plant are to be completed by 2020. Added with electricity importation, the maximum supply will be 3,400MW which exceeds estimated electricity demand. Country wise energy development is planned by China (hydro, coal), Malaysia (coal) and Vietnam (hydro).
5
Map 1-3: Electricty transmission master plan
(Source: EDC, 2008) Table 1-4: Electricity source development plan No Project Country/Donor 1 115kV from Thailand to Banteay Meanchey, Battambang and Siem Cambodia Reap by CPTL 2 230kV from Vietnam to Takeo and Phnom Penh by Loan WB/ADN/NDF 3 115kV from West Phnom Penh to Phnom Penh by Loan WB 4 230kV from Takeo to Kampot by Grant KfW 5 115kV from Laos to Stung Treng by Grant WB 6 115kV from Vitnam to Kampong Cham by private firm WB 7 230kV Kampot to Sihanoukville by Loan ADB/JBIC 8 230kV from Phnom Penh to Kampong Chhnang, Pursat and China Battambang by CYC 9 230kV from Pursat to Atey hydro power by CYC China 10 230kV from Phnom Penh to Kamong Cham by Leader Malaysia 11 230kV from Kratie to Stung Treng by Loan India 12 230kV from Phnom Penh to Sihanoukville along NH4 by CHMC China 13 230kV from East Phonm Penh to Neak Leung and Svay Rieng by China CHMC 14 230kV from Tatay hydropower to Ou Som Substation by CHMC China 15 115kV from WPP to EPP and GS4 (GIS) 16 230kV from Kratie to Kampong Cham Substation by CUPL Malaysia 17 230kV Reinforcement of transmission line of the exiting pole, Phnom Penh Kampong Cham (to transmit power from Se San) 18 230kV from Stung Chhay Arang hydropower to Ou Som China Substation by CSG 19 230kV from Kamong Cham, Kampong Thom and Siem Reap KTC Korean (Source: MIME) 6
Operation 2007 2009 2009 2010 2010 2010 2011 2012 2012 2012 2012 2013 2014 2015 2015 2016 2016 2017 2019
1-2. Overview of the Sector 1-2-1. Agro-Forestry Sector (1) Regional and industrial policy in Cambodia The Cambodian government has placed the Northeast Region as the prospective region for a further development, and intends to promote developing the four provinces in the region namely Kratie, Stung Treng, Mondorukiri and Ratanakiri. These provinces are part of the development triangle of Cambodia, Laos and Vietnam (CLV) defined in the master plan in 2004, and were emphasized by Prime Minister Hun Sen in December 2011. The priority industries that have been attracting attention in the provinces are agriculture and natural resource related development. In addition, the government has made a primary goal of exporting 2 million tons of rice by 2015 in order to move away from the current system which exports the raw materials with inexpensive prices through unofficial boarder trade and develop system of processing agricultural products in the country that can be exported directly to the international market. (2) Potentiality of Large Scale Agriculture Development Cambodia is endowed with large scale agriculturally suitable land along the flood plain and riverine areas namely Great Tonle Sap and Mekong River Basin. Current land use in Cambodia is along the lowland from the Northwest Thai border to the Southeast of Vietnamese border. While lowland experiences an increase in population density and agriculture production, low population and forest coverage characterize the north/northeast and southwest of the country. According to the satellite image based analysis reported by MAFF, total of 6.4 million ha existing forest, shrubs and unused land are potentially convertible to the agricultural land. The country is one of the few countries in Asia still having significant scale of unutilized agricultural land having a great potential to be developed as a major agriculture production base in Asia. Map 1-4: Land Use Map
*Legend: pink – rice field, purple – abandoned field, green – evergreen forests (Source: The Atlas of Cambodia, National Poverty and Environment Maps, SCW 2006) 7
Currently agriculture production is essential to the domestic economy of Cambodia. The main agricultural crops are rice, maize, cassava, soybeans, tobacco and rubber. Out of which, rice is by far the predominant crop in terms of volume, while a variety of other crops has seen rapid increase in recent years. Figure 1-1 shows the trend of agricultural production over the years. Table 1-5 shows the regional characteristics of agriculture production. Figure 1-1: Crop Products Production (Left) Crop Cultivation Area (Right)
(Source: MAFF, 2011)
Rice Cassava Maize Sugar cane Soybeans Rubber Cashew nuts Coffee Acacia, Palm
Table 1-5: Product wise Agriculture Production Area Tonlesap and southern Mekong River basin Southern part, neighboring Vietnam and in the center of the country Southeast and northwest part bordering Thailand such as Battambang and Pailin Southwest and central south area Northwest, center north such as Kampong Cham, Kampong Thom, and northeast Southern Mekong River Basin North east and central part especially in Rattanak Kiri bordering Vietnam Thailand border South east coastal area and North eastern area (Source: Study Team)
(3) Key Constraints: Lack of logistic and institutional infrastructures Cambodia has achieved impressive growth in agriculture production over the past decade. Cambodian farming systems however, has not seen satisfactory improvement. Agriculture practices are largely subsistence oriented and are dependent on rain fed conditions. The average size of agricultural land for more than 2 million Cambodian farm households is about one ha or less than one hectare. Limited commercial agro-forestry products are collected and transported to/via traders and exporters in the form of raw materials. The volume of border trade is not known but is considered substantial with respect to informal export to Thailand and Vietnam. Lack of value added processing together with limited logistic access is one of the key constraints of agro-forestry development in Cambodia. For the effective utilization of unused lands, Cambodian government has launched the Economic Land Concession (ELC) scheme in 2005 to lease the government’s land to private investors for agro-industrial development project. A number of foreign investor especially Chinese and Korean investors have been active in ELCs development and nearly 100 ELCs have already been granted to 8
domestic and foreign investors. However, there have been very few successful cases of large-scale agriculture projects with ELCs because the land was utilized not for the development purpose per se but only for the brokerage purpose without concrete project plans or finance. Land issue is another concern impeding agro-forestry investments and development in Cambodia. (4) Potential Agricultural Development Scenario in Upper Mekong Region Despite of current unfavorable performances, Cambodian land potentiality is a great interest to the investors seeking for large scale lands for agricultural projects, which are presently not available in other Asian countries. In this vein, the west side of Upper Mekong River, namely Kratie and Stung Treng Provinces have a great potential estimated to have 0.5-1 million ha of available land. The area is remained untapped due to the limited access from the National road and other transportation infrastructure. Considering geographic advantage of the region where Mekong River running across the region, inland waterway should be utilized as transportation means. Once the river logistic infrastructure is properly developed, huge amounts of bulky agricultural products can be collected from the catchment area of the river transportation and be exported to the global market. Map 1-5: Potential Agriculture Development in Upper Mekong Region Catchment area of Mekong River trasportation (Rice, Cassava, Woodchips etc)
West side of Upper Mekong River
Mekong River
(Source: Study team) Based on the availability of the land and the past development trend of the Mekong River basin area, strong agricultural development scenario can be estimated in Kratie and Stung Treng provinces. Presently Kampong Cham province, located south from the two provinces has already developed 49% of its land for cultivation and export agricultural products to Vietnam by road taking advantages of its proximity to the border. In comparison, the cultivated lands have just started to expand in Kratie and Stung Treng provinces with only 2% and 5% of the total lands under cultivation by 2009, respectively.
9
Table 1-6: Land use of Kratie, Stung Treng and Kampong Cham provinces Kampong Cham Kratie Stung Treng Cultivated (ha) Forest (ha) Others (ha) Total Area (ha)
449,056 49% 51,951 5% 136,737 12% 877,126 78% 337,685 30% 196,614 17% 923,478 1,125,691 (Source: NDCC Data Book, 2009)
28,466 708,654 464,485 1,201,605
2% 63% 41%
Figure 1-2: Agriculture development status of Kratie, Stung Treng and Kampong Cham These maps visually illustrate the extents of agricultural development in the three provinces. In the maps, green colors generally indicate forest land whereas white color indicates cultivated area and the settlements.
Land use map of Kampong Cham
Land use map of Stung Treng Land use map of Kratie (Source: NDCC Data Book,2009) From the present situation of land use in the three provinces, it is estimated that nearly 1 million ha of unused land can be converted into agricultural lands on both sides of Mekong River, possibly producing nearly 10 million ton of agro-forestry products such as 1) Cassava, 2) rice, 3) sugarcane, 4) Corn or soybean and 5) Tree products such as Rubber, high value lumber and woodchips. Four figures below show the recent trend of nation-wide agricultural production of main crops in Cambodia. In the past 5 years, the production of these major crops increased 1.5 to 6 times.
10
Figure 1-3: Production of Main Crops in Cambodia
4,500
4,247
Cassava
4,000
(1000t)
3,676
3,497
3,500 3,000 2,500
2,182 2,215
2,000 1,500 1,000 500
148
142
122
331
362
536
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
(Source: MAFF, 2010) The region also has high potential of woodchip (Eucaluyptus and Acacia) production in Cambodia. As the table below clearly shows, the neighboring countries of Cambodia have already developed woodchip industry and exploited export opportunities under the strong growth of the global paper demand. Given the Cambodia’s untapped land resource, at least 1 million CUM of woodchips is expected to be produced in Cambodia in near future. Table 1-7: Production and Export/import of Woodchip （2006: ’000 CUM） Thai Vietnam Indonesia Cambodia Malaysia Japan China Production 2,100 1,300 600 500 4,400 8,400 Export 300 2,600 300 4 4 1 400 Import 0 2 0 0.3 19,000 3,000 （Source: FAOSTAT）
Korea 1,000 0 1,400
Based on the assumption of the potential land development, the volumes of agriculture production and possible export commodity are estimated as below with the assumption of 4-6% annual growth in cultivated areas of the target crops. By 2015, when the land development reaches 0.7 million ha and estimated products and export goods will be 2.8 million ton and 2.0 million ton respectively. By 2030, land development will hit 1.5 million ha and produced products and export goods will reach 8.8 million ton and 6.2 million ton respectively. Compared to the present production base, the region has the potential of expanding its production to more than 6 times as the current situation.
11
Table 1-8: Future potential of Agricultural development in upper Mekong River basin area Year 2010 2015 2020 2025 2030 Cultivated Area (ha) 530,000 690,000 890,000 1,160,000 1,510,000 Rice 320,000 390,000 460,000 560,000 670,000 Cassava/corn 90,000 110,000 150,000 190,000 250,000 Woodchip 0 100,000 200,000 300,000 400,000 Others 120,000 90,000 80,000 110,000 190,000 Production (ton) 1,430,000 2,840,000 4,480,000 6,440,000 8,840,000 Rice 650,000 910,000 1,270,000 1,780,000 2,500,000 Cassava/corn 540,000 760,000 1,060,000 1,480,000 2,070,000 Woodchip 0 0 350,000 700,000 1,050,000 Others (soy, rubber) 240,000 330,000 540,000 790,000 1,120,000 Export Cargo (ton) 1,000,000 1,400,000 2,250,000 3,330,000 4,720,000 Truck >95% 90% 70% 50% 30% Share of transportation modes for export River