Economic Land Concessions (ELCs)

Background
Since the 1990s, land concessions have been granted in Cambodia for various purposes. The 2001 Land Law formalized the legal framework for granting concessions for economic purposes. An economic land concession, or ELC, is a long-term lease that allows the beneficiary to clear land in order to develop industrial agriculture.

To date ELCs have been granted for various activities, including large-scale plantations, raising animals and building factories to process agricultural products.

The Ministry of Agriculture, Forestry and Fisheries (MAFF) website has a list of ELCs granted to date. These include concessions for establishing plantations to grow crops such as rubber, sugar, cassava, palm, cashews, and acacia.

The ministry responsible for granting ELCs is the MAFF, and no other authority can legally grant an ELC. Provincial level authorities previously had the power to grant concessions for less than 1000 hectares, but this authority was cancelled in 2008.¹ According to the law, details of all ELCs should be listed in the ELC Logbook.² This logbook is updated and maintained by MAFF and can be found at: http://maff.gov.kh/elc/.

Why does Cambodia have ELCs?
According to the World Bank, over 80% of Cambodia’s population live in rural areas and more than 70% depend primarily on agriculture for their livelihoods. Although the agricultural sector has grown over recent years, agricultural production and rural economic growth have suffered from low productivity, high vulnerability to weather, and a lack of adequate infrastructure.³

According to Cambodia’s National Strategic Development Plan, because agriculture is the main source of employment and the core of the rural economy it is essential to develop the sector in order to build and sustain economic growth and to accelerate poverty reduction.⁴ The government of Cambodia is currently encouraging diversification in crops and increasing productivity. ELCs are seen as a key tool for achieving these objectives.

It is envisioned that through industrializing Cambodian agriculture, productivity will increase, quality of produce will be raised, and Cambodia will no longer depend on agriculture as a means of survival. Rather, it will be a base for trade and a generator of employment. It is also hoped that the associated improvements in infrastructure, such as roads, energy supply, irrigation, and telecommunications, will also make the country more attractive to investors.

The overall objectives of granting ELCs are: to develop industrial-agricultural activities requiring a high rate of initial capital investment; to reach agreements with investors for developing land in an appropriate and long-term manner; to increase employment in rural areas and stimulate diversification of livelihood opportunities; to encourage investment in economic land concession projects and to generate state revenues through economic land use fees, taxation and related services charges.⁵

Main legal framework related to ELCs
The main legal framework for granting and utilizing ELCs is set out in the 2001 land law and sub-decree No.146 on Economic Land Concessions. In addition, there are key provisions in the environment and forestry laws that also apply.

Under the 2001 land law, state land is divided into state public and state private. State public land is any land of natural origin (such as rivers, lakes, forests, etc.), land that provides a general public use (such as schools, hospitals, roads, etc.), and archaeological and cultural heritage sites.⁶ State private land is any state land that does not provide a public service or come under any of the other categories of state public land. According to the 2001 Land Law and sub-decree No.146, ELCs can only be legally granted on state private land.⁷

In addition, the law states that ELCs cannot exceed 10,000 hectares, and that the same person or legal entity cannot hold several concessions that total more than 10,000 hectares. This also applies to several legal entities controlled by the same person.⁸ ELCs can be granted for a maximum of 99 years (although 70 years is most typical⁹ ) and concessionaires must begin operations within one year of the concession being granted.¹⁰ If a concessionaire does not comply with the legal requirements the concession can be cancelled.¹¹

All ELCs require a contract between the concessionaire and MAFF setting out the purpose of the concession, how long it will last, what area it covers and what the concession will be used for. All concessionaires must follow the terms of this contract.¹² A concessionaire cannot sell the land or transfer the ELC to another company or person. The only way that the ELC can be transferred to another person is if the authorities create a new ELC contract for the new company.¹³

The sub-decree on ELCs sets out the process of obtaining an ELC in more detail. The sub-decree states that the land in question must first be registered and classified as state private land in accordance with the legal process for land registration, and have a land use plan adopted by the Provincial State Land Management Committee. The ELC must be consistent with this land use plan. Before any ELC can be approved, environmental and social impact assessments must be conducted, and these must be completed and approved according to the regulations set out in the environment law and associated regulations. It is also required that before an ELC is granted there are “solutions for resettlement issues” that are in accordance with existing legal framework and procedures, although the sub-decree expressly states that there must not be involuntary resettlement by lawful land holders and access to private land must be respected. Importantly, before an ELC is granted, there must first be public consultations with local authorities and residents of the area.¹⁴

In addition to the laws specifically related to ELCs, a concessionaire must comply with the environment law and associated environmental regulations. This includes managing waste products and other pollution, and safeguarding the health and safety of workers and those living around the concession. In addition, a concessionaire must respect provisions of the forestry law protecting traditional user rights of communities living in forest areas. A concession should not block access to forests for people who have traditionally collected forest products there.¹⁵ The forestry law also prohibits the cutting of trees that local communities tap for collecting resin according to traditional custom.¹⁶

Concerns
Due to a widely acknowledged lack of transparency in the way ELCs are granted, it is very difficult to assess exactly how many ELCs have been approved, which concessions are active, and how much state revenue has been raised in the process. As noted above, the MAFF is responsible for maintaining a public logbook of ELCs granted, and at present this list contains details of more than 80 concessions. However, a number of concessions known to exist are not listed on the website, and there may also be concessions listed that have since been cancelled due to inactivity. The MAFF website states that as of April 2010, 956,690 hectares of land have been granted as ELCs. However, many new concessions have been granted since this date and the figure is likely to be considerably higher. Open Development is mapping ELCs in Cambodia according to official documents that are available, maps of which can be found here.

Over recent years there have been many concerns raised by communities, local and international organizations, UN agencies and development partners about the widespread granting of ELCs and the impacts that they are having on communities and the environment. Both local and international media frequently report on cases of land being taken from villagers who have long settled there, and as such should be entitled to legal protections as legal possessors under the land law. Indigenous communities have also been affected, losing access to spirit forests and areas they have traditionally used for agriculture, and losing resin trees that they have harvested for many years.

A number of reports have been published highlighting and examining the impacts of ELCs on communities, including a major report in 2007 by the Special Representative of the Secretary-General for Human Rights in Cambodia. This report found that essential preconditions for granting ELCs were not being met, concessions frequently exceeded the 10,000 hectare limit, and that concessions were being granted in forested areas.¹⁷ In 2011, these same issues are still a concern.

Although concessions often generate work for local people, the pay varies considerably from place to place, and work is often insecure. Another major concern is that consolidating large tracts of land in the hands of less and less people is contributing to the increasingly inequitable division of Cambodia’s land. According to the German development organization GTZ, in the last several years landlessness has risen to 20%, and 40% of households have farmland that is less than 0.5 hectare – the minimum required to meet basic nutritional needs.¹⁸

A trend has emerged of companies circumventing the legal size limits on ELCs by setting up separate companies and applying for ELCs that lie adjacent to each other. In actuality these concessions are developed as a single project. In addition, many ELCs are being granted within forests. As discussed earlier, forests are state public property and it is therefore illegal to grant an ELC in forested areas. This restriction can be bypassed if the land is first reclassified as state private land. It is legal for forest to be reclassified as state private land, but according to the land law, state public land can only be reclassified if it first loses its public interest.¹⁹ However, it can be seen that areas of protected forest are being reclassified as “sustainable use zones” with great frequency in order to allow it to be granted as an ELC before it is cleared and turned into plantation.

Prospects for the future
Although the Cambodian government has dismissed many of the concerns raised by observers regarding the negative impacts of ELCs, it is taking some measures to discourage companies that have received concessions but failed to develop them. According to the MAFF website, the ministry has requested the cancellation of 41 ELCs totalling over 379,000 hectares. While ELCs could potentially increase access to higher paid jobs in rural areas and contribute to the development of infrastructure that benefits the area as a whole, improved monitoring is required regarding how ELCs are being developed. Likewise, without increased transparency in the approval process, and without adequate access to information, it is not clear how much revenue is being generated by ELCs and where it is going.

Not only in Cambodia, but across the world, there is debate as to whether developing and intensifying agro-industry is the best way to sustainably develop agriculture in developing countries. Nevertheless, it is clear that the predicted benefits will not fully materialize or, reach the poorest if implementation of the ELC program is not improved. This includes increased focus on enforcing legal requirements on the process of approval and implementation, cancellation of idle concessions, enhanced monitoring of active ELCs, and appropriate punishments for violations of the law on ELCs and infringements on the rights of Cambodian citizens.

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