Australian agribusiness investment firm Indochina Gateway Capital and Sumifru, a subsidiary of Japanese trading company Sumitomo Corp, are reportedly planning to invest more than US$35m in a banana plantation, drying factory and port in Cambodia.
Por Ratana, planning office director at Cambodia’s Ministry of Agriculture, Forestry and Fisheries, told the Phnom Penh Post that the two companies would jointly invest in a banana plantation in the Thma Baing district of Koh Kong Province.
Some US$35m has reportedly been earmarked for establishing the plantation alone, according to the Phnom Penh Post, which said no figure was available for the planned investment in the drying factory and port.
If the project goes ahead, Por Ratana said the companies would import banana seeds from Africa and export fresh and processed bananas as well as banana trees.
Indochina Gateway Capital, which focuses on agribusiness investments in Cambodia, Laos and Vietnam, has reportedly been raising funds for a very large-scale agricultural investment in Cambodia. The Australian-based company has been advised by corporate and financial advisory service BKK Partners, which has an office in Phnom Penh. Former Australian Treasurer Peter Costello is listed as partner and managing director in BKK Partners.
Sumifru, meanwhile, is already a leading player in Asia’s banana trade. The company reportedly has 14,000ha of banana plantations in the Philippines, where it employs 30,000 people through its subsidiary Sumifru (Philippines) Corp.
Finding large tracts of land to expand banana production in the Philippines has become more challenging for major corporates operating there in recent years, however, while disease pressures have been mounting. These factors, coupled with the ever-increasing consumption of bananas in China and other parts of Asia, is apparently spurring major players in the industry to explore opportunities for plantations in other untapped production sources, such as Cambodia.
A more politically stable Cambodia is in need of economic investment to improve living standards. The government is looking for agribusiness industries that are sustainable, according to key officials in Asia’s banana trade, who note that bananas presents a good alternative crop to sugarcane or logging. “With the lumber industry, you have to keep pulling out trees, while sugar cane uses a lot of land and there are significant water costs,” said one industry source. “Bananas offer a very sustainable business because you can replant and do it in an environmentally-friendly way. This industry also employs a lot of people and brings a lot of infrastructural investment in terms of roads and shipping.'
Despite the apparent opportunities, there a number of procedures to complete before the proposed plantation in Koh Kong province can go ahead, not to mention potential hurdles.
Por Ratana said the investors must determine whether the soil in the province is suitable for growing bananas. “The companies have hired a Malaysian company to study the quality of the land for banana cultivation,” he told the Phmom Penh Post, adding that the research could take a year.
An official from another major player in Asia’s banana trade, which is a competitor to Sumifru, told Asiafruit that his company had already explored plantation opportunities in the area and found the soils were unsuited to its needs.
Koh Kong provincial governor Sun Dara also told the Phnom Penh Post that while Sumifru and Indochina Gateway Capital had been studying the land and other impacts of a 5,000ha economic land concession in the region, they had not yet received official approval to invest.
The project, situated in the southern Cardamom Mountains, also faces opposition from environmental activitists, who say it will close off an internationally significant elephant corridor as well as threatening a complex wetland and river ecosystem.
According to a report in the TheAustralian newspaper last April, the plans for the high-tech, drip-irrigated 5,000ha banana plantation also come with a 20,000ha reforestation project to give migrating elephants a new pathway. But the proposals have failed to win over environmental opponents.
“The reforestation that they’re talking about doing alongside the banana plantation is also where the company says the elephant corridor will be moved to,” Suwanna Gauntlett of the Wildlife Alliance told The Australian. “So my first answer is no because that is a populated area and elephants will not migrate and move through a populated area.”
