Proper governance of the BRI projects would help minimize risks and significantly contribute to the sustainable development of Cambodia, writes Keo Piseth.
Cambodia is one of the key beneficiaries of the Belt and Road Initiative for International Cooperation (BRI). Participating in the BRI has proved to be beneficial for Cambodia in terms of increasing Chinese foreign direct investment and tourists and the continuous growth of the industrial, service, agriculture, and construction sectors. Also infrastructure development has been bolstered with the building of roads, hydropower dams, bridges, hospitals and schools that the country is urgently in need of.
While the BRI has positively contributed to Cambodia’s economic development and poverty alleviation, there is no doubt that negative aspects related to the initiative are also emerging. Problems related to development are not unique to Cambodia, but also in Southeast Asia and in countries along the BRI corridors. The magnitude of the impacts vary depending on the regulations and law enforcement in each country.
With non-binding conditions from the BRI in such areas as environmental and ecological protection, biological conservation, social protection and cultural preservation – where legal instruments are not adequate and enforcements are weak – the impacts are inevitable. Environmental degradation, water and soil pollution, unmanaged solid and sewage waste, and biodiversity losses, and social conflicts are evident.
In addition, inadequate physical infrastructures, human resources, and governance system in place to receive a large influx of Chinese workers for the BRI project makes it challenging for the state to effectively respond.
An additional, but most frequently resonated, concern is the potential debt trap posed by the BRI. With regard to this concern, the Cambodia government seems to be cautious and is paying close attention to its debt ratio. Accordingly the Cambodian Ministry of Economy and Finance, which regularly publishes public debt data, confirms that the Cambodia debt ratio remains in a healthy range. The MoEF (2019) stresses that, “based on the international best practice Cambodia’s public debt remains ‘sustainable’ and ‘low risk’ of debt distress”.
With the opportunities being presented, embracing the BRI is important for Cambodia. Nevertheless, there are areas that require close attention in order for Cambodia to take full advantage of the opportunities and to build synergy that would help the Kingdom achieve its 2030 and 2050 vision, Sustainable Development Goals 2030, and Rectangular Strategy IV. The following are some of the key areas for immediate attention.
First, there is an urgent need to strengthen Cambodia’s public institutional capacity, and to provide enabling mechanisms for these institutions to function properly to enforce laws and legal instruments to safeguard the environment, ecology, people, and local cultures where BRI projects are to be implemented.
With keen interest from Cambodia’s Chinese counterparts to promote environmental and social protection, there is a chance that such important mechanisms such as strategic environmental and social impact assessments, with mitigating measures, could be incorporated from the planning to the implementation and post-implementation stages of BRI projects.
Second, attention should also be paid to the cost-benefit analysis and economic return of the proposed projects. This is to avoid any potential debt traps that could arise from the BRI projects. Along with these, transparency and accountability mechanisms for the BRI projects, especially those involving mega infrastructure, should be established. This is to prevent the problems of elite capture and corruption in these kinds of gigantic heavy-loaned infrastructure projects that supposedly serve the long-term interests of local people.
Next, it is essential to have better management of foreign workers under the BRI projects. This would help China and Cambodia to recruit suitable workers having the right skills for contribution towards the success of the projects and for the development of Cambodia. It also helps screen out those who may pose potential threats to social and public order.
Additionally, proper taxation, protection of local employment and businesses, and enforcement of the employment ratio of foreign and domestic workers should be effectively implemented in order for the Cambodian government to generate sufficient funding to maintain public infrastructures and services being burdened by a large increase of the number of users.
Last but not least, investment from BRI should also focus on culture-based and grassroots-driven rural development. To realise its 2030 and 2050 vision, Cambodia has to maximise potential use of its rural resources, both natural and human, for economic development. To do so, comprehensive studies led by villagers should be conducted in order to understand resource availability and potentials for development for either the agriculture, service, or industry sectors.
Economic growth centers, which are the clusters of villages, should be established to support adjacent villages. With employment and income earning opportunities available, villagers would find the charm of their villages and be keen to stay on and work close to their families. This would help reduce emigration, and stabilize local populations, which are the foundations of community and village development. It ultimately contributes to national economic growth, poverty alleviation, and sustainable and inclusive development.
For the BRI projects to be effective and sustainable, integrated and cross-cutting approaches including human resource development, public-private partnership, technology transfer, cultural preservation, market creation, scientific and innovative research, and local-based (tailor-made) development intervention should be applied.
Proper governance of the BRI projects would help minimize risks, and significantly contribute to the sustainable development of Cambodia. Both China and Cambodia need to work closer to link BRI projects with sustainable development goals.
Dr Keo Piseth is director of Center for Sustainable Development Studies (CSDS), Asian Vision Institute (AVI).