Controversial Chinese projects in Cambodia bow to public pressure

PUBLISHED : Saturday, 03 September, 2011, 12:00am
UPDATED : Saturday, 03 September, 2011, 12:00am


Two Chinese state-owned companies held back from their investment projects in Cambodia under public pressure, a sign China is paying more heed to international opinion.

China Southern Power Grid (CSG) has pulled out of controversial dam projects in the country after local villagers protested that the dams would ruin their fisheries.

And a luxury real estate project by the other Chinese state-owned firm, Inner Mongolia Erdos Hongjun Investment, has only resumed after Cambodian Prime Minister Hun Sen agreed to set aside land to relocate residents evicted to make way for the project.

'There has been a growing sensitivity [by Chinese state-owned firms] to the way China is perceived across the world,' said Professor Shaun Breslin, associate fellow of the Asia Programme at British NGO Chatham House. 'There is an understanding that to be in it for the long term and to make access [to overseas projects] sustainable, sometimes short term gains might have to be foregone.'

CSG, a state-owned company established in 2002 to transmit and distribute electrical power in China's southern provinces, has quit all its potential power projects in Cambodia, said the company's spokesman Rambo Niu Feng.

The power utility had conducted feasibility studies for at least six proposed dams in Cambodia with a total power output of more than 3,300 megawatts, according to 3S Rivers Protection Network (3SPN), a Cambodian civil society organisation that works to support hydropower-dam-affected communities living along the Sesan, Srepok and Sekong rivers in northeastern Cambodia.

China has become the biggest builder of dams and roads in Cambodia and, according to 3SPN Co-ordinator Meach Mean, the projected output of the CSG schemes is far above Cambodia's power consumption of 500MW.

The company's involvement in several dams in Cambodia, Myanmar and Laos threaten local populations and ecosystems, said International Rivers, an international NGO. In a letter to CSG chief executive Zhao Jianguo on 22 June 2009, International Rivers expressed its concerns with some of the Chinese firm's projects in Southeast Asia, including the Sambor and Stung Cheay Areng hydropower projects in Cambodia.

The Sambor project would have 'unacceptable impact on fisheries', while the Stung Cheay Areng project would flood nine villages, the letter from International Rivers said.

CSG's Niu defended the company. 'CSG is a responsible company,' he said. 'We understand the concerns of local residents, just as we understand the concerns of consumers for adequate power supply and the concern of the government for economic progress.'

But CSG's feasibility studies for a dam along the Srepok River in the northern Cambodian province of Ratanakiri aroused opposition from residents of Thmey Village, located 500 metres from the dam site. 'If the river is blocked by the dam, it will be difficult for us to catch fish,' said a member of the village.

A young man in Thmey Village, Cham Sam Ol, added angrily: 'Even if we get compensation, we will have to use the money to feed our families and pay for their electricity.

'It is better to use our own money than other people's money.'

Niu said: 'On every project, CSG always strictly follows the laws in the host country, carefully carrying out feasibility studies, including the influence on local residents and environment. If proven unsustainable, the government will not approve the project. Therefore we believe that whether the project is approved will be subject to the balance of all parties' interests.'

The other Chinese state-owned firm, Inner Mongolia Erdos Hongjun Investment, is involved in the US$98 million Boeung Kak Lake property project in Phnom Penh, which has aroused opposition from local residents and the World Bank.

Erdos Hongjun and a Cambodian firm, Shukaku, have formed a 50-50 joint venture to develop the luxury property project, which is expected to be completed next year, according to government documents from Ordos, a city in Inner Mongolia, where Erdos is headquartered.

In February, the Cambodian Housing Rights Task Force, a coalition of 12 NGOs, sent a letter to Erdos Hongjun chief executive Wang Linxiang, saying 4,000 families in the Boeung Kak Lake area were being 'forcibly evicted' and having their land 'illegally appropriated'.

Development plans were only announced to Boeung Kak residents after the municipal government of Phnom Penh signed a 99-year lease agreement with Shukaku in January 2007 without consulting the residents, the letter said.

'There have been adverse social and environmental impacts since Shukaku commenced filling the lake in August 2008,' the Housing Rights Task Force letter said. 'These impacts include the intimidation of residents by company officials, the deliberate flooding of homes with sewage-contaminated water, destruction of private property and the denial of fair compensation.

'More than half the residents have been evicted and many have been driven into impoverishment as a result. Since September 2010, Shukaku has pointed its sand-pumping machine directly at the homes of residents of one Boeung Kak village, deluging villagers' homes with mud and forcing families to evacuate the area,' the letter alleged.

On August 9, World Bank Cambodia director Annette Dixon warned that until an agreement was reached with the residents of Boeung Kak Lake, the bank - which has lent Cambodia up to US$70 million annually over the past few years, 'did not expect to provide any new lending to Cambodia'.

World Bank president Robert Zoellick said: 'We are deeply troubled and frustrated about the people who are being forced from their homes. We have repeatedly called on the Cambodian government to end the evictions.'

Days after the World Bank halted its loans, Cambodian Prime Minister Hun Sen said he had signed an order for 12.4 hectares of land to be reserved for the evicted families, Reuters reported.

An executive of Erdos Hongjun, Liu Xueming, said: 'The problem has been resolved by Hun Sen. Our company has no further comment.'

Erdos Hongjun is involved in nearly US$2 billion of other projects in Cambodia, according to Ordos government documents.

Erdos Hongjun is part of another joint venture, with Cambodian International Investment Development Group, to build two 135MW electric power plants in Sihanoukville, Cambodia, with a total investment of 2.46 billion yuan (HK3 billion).

Shukaku's director is Lao Meng Khin, a senator of the ruling Cambodian People's Party, whose wife Yeay Phu is a close friend of Bun Rany, the wife of Hun Sen, according to a report by Global Witness, a London-based NGO that 'campaigns against natural-resource-related conflict and corruption and associated environmental and human rights abuses'.

Lao's companies have been granted concessions by Cambodia to explore for iron ore with Chinese firms, and he is a shareholder of a Sino-Cambodian joint venture, Wuzhishan LS Group, which has been granted concessions of at least 10,000 hectares by the Cambodian government, the report said. Lao has financed construction of Cambodian army bases, it added.


Number of Cambodians expected to be moved off their land in the next few years, according to Housing Rights Task Force, a Cambodian group