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Legal Focus
JULY 2013
Cambodian Economic Land Concessions
Here Lawyer Monthly benefits from an exclusive article written by Gavin Batcheler, Senior Counsel at VDB Loi, looking at the investment possibilities of the Cambodian Economic Land Concessions. Over the past three years, land concessions in Cambodia have been a lightning rod for social protest and negative media attention. This situation has been seen as so severe, that in 2011 the World Bank suspended aid to Cambodia and in 2012 the Prime Minister issued a moratorium on new Land Concessions in the country.
In light of these events, many investors
may get the impression that Cambodia’s once promising concession opportunities are no longer available, or even worth the risk. In fact, valid land concessions continue to be granted at a steady rate in Cambodia. For investors willing to tread carefully, land concessions in Cambodia remain a viable and lucrative investment option.
Legal Framework for Land Concessions In Cambodia, a significant portion of land belongs to the State by law. The Land Law of 2001 invalidates any land title that predates 1979, and as a result, vast swaths of territory have escheated back to the State. In addition, the State reserves exclusive ownership rights to a wide variety of high value areas like islands, forests, ports, harbors and airports. These State Lands are divided into Public and Private Land categories. Only Private State land can be conceded, but in practice there are ways of converting State Public Lands for concession purposes as well.
the Concession Process By law, Economic Land Concessions are “a mechanism to grant private state land through a specific economic land concession contract to a concessionaire to use for agricultural and industrial-agricultural exploitation.” While it is often assumed that Economic Land Concessions must have an agricultural purpose, in practice this is not always the case. Concessions are granted through 99 year leases, limited to 10,000 hectares per Concessionaire and all related entities. In practice, this period is generally limited to 70 years.
As foreigners cannot own land outright under Cambodian Law, this is often the simplest way to access State Lands.
By law, Economic Land Concessions are awarded in two ways: by competitive bid and unsolicited proposal. Competitive bids should be awarded through a transparent bidding process with all proposals receiving a score based on the distributed criteria. The procedure for Unsolicited Proposals is rather more fluid and has higher baseline acceptability requirements, requiring new technology, social benefits or access to processing or export markets. In practice, only unsolicited proposals are considered.
For all Concessions, it is required that the proposed concessionaire conduct an environmental and social impact assessment.
It is also required that the
proposed project complies with the Environmental Protection and Natural Resource Management Law, which sharply limits access to forest resources and other forms of natural resource exploitation.
Navigating through the procedural requirements for the bidding can be challenging. Constructive