Deserted factory; empty operation center and residual responsibility of Thai sugar investor in Koh Kong

original content by The Mekong Butterfly

You could access the original via this link https://themekongbutterfly.com/2020/03/25/deserted-factory-empty-operation-center-and-residual-responsibility-of-thai-sugar-investor-in-koh-kong/

The academic operation center; biofertilizer bags as well as piles of chemical bottles labeled and explained in Thai language had been crossed the border and scattered over a vast area.  Almost 20,000 hectares of land located in Sre Ambel district, Koh Kong Province in Cambodia was originally full of sugarcane as a concession area for sugarcane cultivation and sugar factory of Koh Kong Plantation Company Limited (KPT) and Koh Kong Sugar Industry Company Limited (KSI). They are subsidiary companies of Khon Kaen Sugar Industry Public Company Limited (KSL), the third-largest Thai sugar investors, who have settled down and invested in this area since 2006 until now with over 2 billion baht of investment value in total.

Surprisingly, the condition of the operation center, as well as other buildings such as offices; site offices or plunge baths, seems as if they have been abandoned for a long time. There was also massive destruction showing no signs of restoration for future use as though there were no activities in such area for years.

In the middle of January, the Mekong Butterfly team had an opportunity to visit the said area in order to follow up the progress of the project and to explore the livelihoods of the affected communities with our own eyes. We interviewed by asking them questions regarding their lives and together sorted out the problems which have happened for over a decade. It currently seems that the problems related to arable lands; livelihoods as well as the company’s responsibility are still pending without an end.

The showing picture may inconsistent with the movement of writings along with profit and loss figures presented on the investor’s website and annual report. After reviewing the 2017-2019 annual reports of KSL, it was found that the subsidiaries: KPT and KSI together have approximately 809 million baht of income in 3 years and their activities in the area are still being executed. There is no notification of closing down the business at all, the websites of both companies are still normally accessible.

The findings have created chaos since they conflicted with the information in the annual report submitted to the Stock Exchange of Thailand and appeared on public media which can be reviewed by the general public.

Villagers from Chhouk; Chikor and Trapaing Kandal villages which are located near the concession area together with the representative from a human rights organization, Equitable Cambodia, gave us the answer by clarifying that the companies have not planted sugarcane or produced sugar for more than 2 years. All machines stood still with no sugarcane in the plantation, it has been in this condition for a long while.

One of our colleagues expected to see an enormous amount of sugarcane in a gigantic area like a panoramic view of a sugarcane plantation, but in fact, it was an empty space with some visible remains of burnt sugarcane.

There is not only the controversy between what appeared in the documents and the facts regarding the profit and loss as well as its operation in the area but also the company’s accountability issue that is to say it was accused of being involved in human rights and community rights violations in the area.

Before the entry of sugarcane plantation, this land was full of the community’s agricultural products. Most of which were vegetables such as watermelon; corn; cassava; mango; rice, including livestock. Such areas were already pioneered for each family, it was moreover a common area of the community where villagers used to continuously and peacefully live together. Whether during the Cambodian democratic period or the era where the Khmer Rouge was over 3 years in power, from 1975 to 1979, more than half of Cambodians were killed causing severe damage to human rights and economy. Private property was abolished and then owned by the state, but the villagers here could still produce on their lands. They were not migrated or sent to work in other communes, they only had to produce for the state.

After the Khmer Rouge era and the political victory of the liberal party over the communist party, Cambodia had a political transition to a more formal democratic state. There were elections held by the UN agency, the United Nations Transitional Authority in Cambodia (UNTAC). The entry of several global organizations required Cambodia to open itself to the world community embracing liberal economic policy. It enacted several progressive laws, the Cambodian Land Law 2001 was one of them determining that any person who had enjoyed peaceful, uncontested possession of land – excluding state public land – for at least 5 years has the right to request a definitive title of ownership.

But when the Cambodian Government enacted the Sub-decree on Economic Land Concessions in 2005, it changed the state’s duty in protecting its citizens and insuring the rights; liberty and ownership of the villagers as well as their communities, instead making them face with land eviction. The state claimed its legal privilege and grasped villagers’ lands offering them to foreign capital groups. The law itself does not only specify such privilege of obtaining the land to the investors, it also stipulates that to allow any person or juristic person to get an Economic Land Concession (ELC) the land must be empty and has never been in use. The aforesaid communities are however agricultural communities who have been staying here for at least 70 years, they earned their living using natural resources in such fertile area which was allocated under the Participatory Land Use Planning (PLUP) policy. These villagers, therefore, have legally lived on their lands for more than 5 years without any contest, their possessions were open; peaceful and obvious to the public. The concession area was thus not an empty land without owner, according to the Cambodian Land Law, the villagers then have the rights to possess and are qualified to request for land title deeds as well as the market value of their lands in case of expropriation. In spite of the law and although the villagers have obtained a land-use permit, also known as “chicken feather title”, from the state, what actually happens in practice was contrary. The villagers’ lands were recognized by the government and the capitalists as degraded forest areas; wastelands; non-economic benefits and remote areas, the sugar business then came in bringing prosperity and creating jobs for the people here. The villagers were transformed from farmers who earn their living by producing with their own resources to labors in monoculture as production factors of the capitalist, that is to say, they became labors working on their own lands under KPT and KSI. Both companies were joint ventures between Thai; Taiwanese (on behalf of Ve Wong Corporation) and local tycoon with the initial investment proportion of 50%; 30% and 20%, respectively. Ly Yong Phat had later sold his shares to KSL, such concession was for a period of more than 90 years.

This is like trading of the country’s land sovereignty and its people, especially those who have been living in this area for many generations.

“After our lands were seized, we really suffered. Many of us hardly had income. I and several of my neighbors had no choice but to be workers in sugarcane plantation daily receiving only 70-80 baht for the whole family. Some could not earn enough and had to get informal loans, they were finally in debt. Is this the prosperity that will pull us out of poverty?”, a middle-aged woman from Chhouk village energetically told us in a hut in the middle of her vegetable garden which used to be sugarcane plantation area.

She and her friend also recalled that before the foreign investors came in to place their victory flag with sugarcane and sugar mills, some of the villagers could earn more than a thousand dollars per year or 83 dollars a month of income from agriculture within and outside the community which was higher than the wage paid by the company.

It was not easy to prepare the land for sugarcane plantation and to establish a sugar mill without any help from government officials; local capitalist as well as Ly Yong Phat who is the King of Koh Kong; Senator from Cambodian People’s Party and Prime Minister Hun Sen’s economic advisor.

The sugar concession area used to actually be a place for duty-free shop and Koh Kong International Resort Club owned by Ly Yong Phat, each company had exactly 10,000 hectares of land. That is the reason why switching from commodity and resort businesses to sugar business was simple in terms of documents. He merely needed to pave the way for the company by moving the villagers out of the area and taking over the community lands for himself in the name of the state.

Teng Kao, one of the village leaders and representatives of more than 400 families affected by the concession, said that after their lands (more than 5,000 hectares in total) were seized 12 years ago, they have tried to ask for responsibility from the companies and the government. This project was suspicious; non-transparent and did not care about the villagers since the beginning, regardless of the fact that they have been residents and owners of such arable lands for decades. Both the companies and the government officials have never informed us in advance and never had any consultations or public hearings in the area, there was clearly no participation process at all. There were also physical assaults; destroying villagers’ crops and killing their livestock. In addition, while planting sugarcanes and producing sugar, these sugar business activities massively affected the environment, especially water sources.

“We were unable to perfectly grow other crops in several areas since many streams were covered by sugarcanes mixing with chemicals and spilled into other remaining marshes or canals. Fishes or even ducks; chickens or cows did not dare to drink such water as it was smelly, fishes almost disappeared in some places and we also did not dare to eat”, added Teng Kao.

With no means of making a living as their lands were seized by the state and the capitalists, more than 200 villagers then gathered and voiced their requests for the return of their arable lands as well as the compensation for the existing damages. Their movement happened not only within their villages, but on many levels: national and international. The method used was tracking the supply chain or the route of sugar products to see which groups of stakeholder are involved in the whole process.

When knowing the sugar route in the supply and consumption chains, the villagers therefore applied a variety of fighting methods which are filing lawsuits; marching to raise their problems to the central government; filing a complaint with the National Human Rights of Thailand (NHRCT) as a country of origin of the famous sugar capital for human and community rights violation investigation as well as raising the issue to the E.U.; the U.K. and the U.S. as destinations of the sugar produced in Koh Kong. Also, there was an investigation conducted by the UN Special Rapporteur for Human Rights in Cambodia and the E.U. representative.

Their strategies seemed to be more or less effective, although the Cambodian court dismissed the case claiming that it was not under the jurisdiction of the court. There is a light at the end of the tunnel for some of their efforts outside the country such as the result of the NHRCT’s investigation saying that the human rights violations have really happened and the recommendation to the Thai Cabinet in taking the company into account for the compensation and restoration of the environmental damages. The Thai Cabinet also had to establish a mechanism to supervise Thai investment in foreign countries while the UN Special Rapporteur was confirming of human rights abuses occurred in the area. There was, in addition, a legal action in London court and a complaint towards Bonsucro, a sugarcane industry initiative for responsible and sustainable growth, saying that Tate & Lyle Sugar which is one of Bonsucro’s founders and members got involved in buying blood sugar from Koh Kong where sugar derived from local people’s tears and human rights violations. Furthermore, the villagers and some relevant CSOs filed a complaint to the U.S. National Contact Point (NCP) which is a unit receiving complaints under the Organization for Economic Co-operation and Development (OECD) after American Sugar Refining owned the U.K. sugar company.

This story was certainly well-known around the world, the E.U. then threatened many times to cut off Cambodian trade privileges because of the severe human rights violations in terms of land and political problems, particularly the case of the menace to the opposition party and the threat to press freedom during the last election in 2018. On 12 February 2019, the European Commission ultimately notified its final warning about withdrawal of Cambodia’s tariff preferences under “Everything But Arms (EBA)” trade scheme which is beneficial to several goods except arms such as textiles; shoes and sugar imported to the E.U. from the Least Developed Countries. These products are tax-free and 100% profit guaranteed and such measures attract Thai sugar investors to set up their trading estate in neighboring countries.

Exactly a year later on 12 February 2020, the E.U. finally decided to partially withdraw Cambodia’s trade privileges. It is true that Cambodia can still export its goods to the E.U. countries, but with normal tax rate that the country has never paid for more than 2 decades, it affects 1 in 5 Cambodia’s annual exported products that is to say approximately 1 billion euros or 34 billion baht. It is estimated that an increase of tax from 0% to 12%, especially for textiles; shoes and sugar, could be roughly calculated as around 120 million euros or 4 billion baht that Cambodia needs to pay. This amount surely affects Cambodia’s overall economy which tied closely with foreign investments and other general investments within the country making profits from exported goods.

However, Hun Sen seems to have ignored the said punishment of his big trade partner who has offered such privilege for more than 20 years because during the past few years Cambodia has a new trade partner which is one of the world largest markets to support Cambodian exported products, namely China, the big brother of the Mekong Region.

Considering KSL’s business ethics and a verbal statement giving to the NHRCT, it is found that the company is determined to be natural and eco-friendly as well as to be significantly responsible for local communities in order to firmly and sustainably run its business. But on the other hand, the company refused to commit the violent acts and frauds of the government officials.

Although such human rights violations were caused by Cambodian government officials, the company should apply fair and accurate methods in doing its business or express its disagreement with what happened that was beneficial to its business. If the company truly took its own business ethics and policies into consideration, it really should not get involved and should instead withdraw from the area or improve its investment standards.

Going back to the NHRCT’s aforementioned recommendations, the company has to compensate for damages; return the lands to villagers and restore the degraded environment caused by the company’s business activities. It, however, seems that there is currently no concrete action from the company in compliance with such recommendations. Even though there was a cabinet resolution later issued from the country of origin, it was not legally enforced or punishable to Thai capitalists who violated human rights overseas.

The Thai Cabinet later approved to set up a mechanism for supervising Thai investments abroad by applying the UN Guiding Principles on Business and Human Rights which consists of 3 main pillars, namely protect; respect and remedy and finally developed a sacred writing: the National Action Plan on Business and Human Rights (NAP) which is officially promulgated in December 2019. This plan has 5 year implementation period from 2019 to 2023 with 4 main urgent issues: 1) labor 2) Land; natural resources; environment and community 3) human rights defenders and 4) cross border investment and multinational enterprises, including Thai abroad investments. The NAP has been implemented for a year already, it nonetheless may not be applicable this year. There is no concrete progress in setting up an explicit mechanism or agency with authority to supervise or even suggest Thai outbound investors to respect human rights while conducting their businesses. Particularly for the case of Koh Kong, the government sector seems to remain silent without any orders or forces towards the investors for more or less compensations.

After a decade-long battle, the villagers now have more bargaining power to get some of their lands back and start a new life. Many of them are able to possess production factors in their own areas and begin to do integrated farming without insecticides or herbicides, this is the way of production that they already had and practiced such knowledge. Some of the villagers, in addition, learned more about organic farming from Thai farmer network. In spite of getting some lands back, they surely have to continue fighting in the midst of an uncertain future. Although Thai investor already removed their settlements from the area, their responsibility to the local people has not yet appeared.

The academic operation center; deserted factory and piles of chemical substances are therefore not only leftover wastes but a symbol of responsibility, in washing all dirt of investment and business activities out of the area, that has never happened. In Sre Ambel, the villagers in all 3 villages still have to live their lives with the past cruel memories, they also need to find the way to live with full of hope; to bring back justice and to make the company’s responsibility a reality. The strength of the community alone may of course not be enough, corporate governance and accountability in regard to rights violations are also needed. Residual “waste” in Koh Kong must be removed in the future.