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COMMUNITY ENGAGEMENT ALONG the BELT and ROAD: Findings from Cambodia and Pakistan

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COMMUNITY ENGAGEMENT ALONG the BELT and ROAD: Findings from Cambodia and Pakistan COMMUNITY ENGAGEMENT ALONG THE BELT AND ROAD: Findings from Cambodia and Pakistan SUMMARY REPORT The Asia Foundation is a nonprofit international development organization committed to improving lives across a dynamic and developing Asia. Informed by six decades of experience and deep local expertise, our work across the region addresses five overarching goals—strengthen governance, empower women, expand economic opportunity, increase environmental resilience, and promote international cooperation. For more information on our work visit www.asiafoundation.org. © The Asia Foundation, May 2020 This report was funded by the Australian Government through the Department of Foreign Affairs and Trade, and implemented by The Asia Foundation. The opinions expressed here are solely of the authors and do not necessarily reflect those of the Australian Government. Cover image: Sihanoukville City, Cambodia by slyellow / Shutterstock.com Community Engagement Along the Belt and Road: Findings from Cambodia and Pakistan Summary Report | May 2020 Introduction In the context of a rising Asia, South-South Cooperation (SSC) is now a critical modality for achieving the SDGs. As much of Asia has achieved middle-income status, OECD-DAC donors are reducing their Official Development Assistance (ODA) while channeling more of their assistance through aid-for- trade or foreign policy-oriented modalities. As western/northern donors step back, China is filling the gap and quickly becoming one of the most important development actors in the region. China’s Belt and Road Initiative (BRI), deemed by one analyst to be the most important diplomatic initiative of the 21st century,1 is not only reshaping the geopolitical realities of contemporary development cooperation, but is also having an immediate impact on communities, environments, and local governments across South and Southeast Asia. The BRI is an economic and infrastructure corridor designed and launched by China in 2013 to promote development, trade and connectivity, and to at least partially fill the infrastructure gap in Asia (estimated by ADB in 2017 to be $459 billion/year2). As of 2018, there were over 72 states participating in the BRI initiative,3 and most of the projects underway were massive infrastructure projects such as the $62 billion China-Pakistan Economic Corridor (CPEC), a $1.1 billion port project in Sri Lanka, and an industrial park in Cambodia, among others. Given the enormity of the scale of the BRI undertaking, there has been considerable analysis and research into its approaches and the impact of its infrastructure projects. However, most of this research is macro-level work that has been conducted by investment firms4, multi- lateral banks,5 or policy think-tanks for foreign policy purposes.6 There is a gap in research at the community level, with almost no research that we are aware of providing a first-hand assessment from those communities most impacted by BRI projects. This is a significant gap, not only from an end-user development perspective, but also because preliminary evidence indicates a prevailing pattern across BRI investments of a lack of stakeholder consultation.7 Experience tells us that the success of large infrastructure development projects requires stakeholder accountability and engagement, particularly with local communities8. This is a pressing issue for the Chinese government, enterprises, and policy specialists, all of whom wish to see Chinese investments achieve higher levels of sustainability and acceptability in partner countries. Chinese enterprises, while accustomed to implementing infrastructure projects, are not familiar with direct community engagement.9 Infrastructure project implementation in China involves close coordination between enterprises and local government bodies, but not local communities. As such, understanding the demands and needs of local communities and navigating the community engagement process in partner countries is unfamiliar territory for Chinese enterprises. Partner governments also contribute to poor community accountability, often negotiating loans and projects without local stakeholder consultation. 1 Parag Khanna, 2018. The Future is Asian. New York; Simon & Schuster. 2 https://www.adb.org/publications/closing-financing-gap-asian-infrastructure 3 https://www.oecd.org/finance/Chinas-Belt-and-Road-Initiative-in-the-global-trade-investment-and-finance- landscape.pdf 4 https://www2.deloitte.com/us/en/insights/economy/asia-pacific/china-belt-and-road-initiative.html 5 https://www.worldbank.org/en/topic/regional-integration/brief/belt-and-road-initiative 6 https://www.merics.org/en/merics_tracker 7 This conclusion is indicated in the research summarized by this report, as well as separate Asia Foundation- commissioned studies on BRI in Nepal and Cambodia. It is also indicated in numerous journalistic and policy reports, such as the Asia Society’s ‘Navigating the Belt and Road Initiative,’ 2018, or CSIS’ ‘The Belt and Road Initiative: Progress, Problems and Prospects.’ 8 See for example: The, 2019. Published by AECOM 9 “A Civil Perspective on China’s Aid to Cambodia,” 2015. Published by Shanghai Institutes for International Studies, China Agriculture University, East China Normal University, and Asia Foundation China. 1 Community Engagement Along the Belt and Road: Findings from Cambodia and Pakistan Summary Report | May 2020 This study aims to close this sustainability and accountability gap. It provides insights into community and local stakeholder knowledge, impacts, and expectations surrounding BRI projects, which may be useful to policy makers, companies, and officials in China and partner countries as they design and plan and implement future BRI projects. Research design and outline of report This is a pilot study, initiated in response to interest from a range of Chinese stakeholders (government, academic, think-tank, CSO) to better engage communities and improve sustainability of BRI (or other) projects. The Foundation’s intent was to produce an empirical snapshot of community experiences and see if this snapshot revealed useful information to warrant further research. We chose two countries, Cambodia and Pakistan (one in Southeast Asia and one in South Asia), where Chinese investments are significant and ongoing. Given the pilot nature of the project, we chose a context-driven approach to project selection, choice of stakeholders, and research methods. This summary report starts with a description of Chinese BRI engagement in Cambodia and Pakistan, followed by an explanation of the research methodology used in each country, the findings from the research in each country10, and recommendations for further research and action. We conclude with a brief overview of The Asia Foundation and our research consultants for this undertaking, Kimchoeun Pak (Cambodia) and Shirin Gul and Jamal Janjua (Pakistan). BRI in Cambodia China has been the number one source of FDI into Cambodia since 2011, averaging investment capital of about USD 1 billion a year through 2017, which then jumped up to USD 3.5 billion in 2018.11 Primary sectors for investment are garments, construction, electricity, rice milling, agribusiness, mining and energy, coal and tourism. According to Cambodian ODA data, the Chinese provided over USD five hundred million in bilateral assistance in 2019, making it not only the largest source of FDI, but also the largest bilateral donor.12 This amount was allocated largely for Roads & Transport ($214M), with the remainder divided almost equally ($115M each) between Agriculture and Power & Energy. The Comprehensive Strategic Partnership between China and Cambodia, signed in 2013, was bolstered in 2018 by a new $250 million concessional loan to build a ring road in Phnom Penh. According to a 2018 report by London School of Economic (LSE) and CIMB ASEAN Research Institute,13 the total value of BRI investment in Cambodia was USD 104 billion, which was the third highest BRI investment in the region after Indonesia and Vietnam. Further, the Koh Kong Railway project, started in 2013, is ranked number 2 among the top 10 largest BRI projects in ASEAN. Some of this data is disputed, as there is disagreement among analysts about what constitutes a BRI project – that said, most scholars agree that China does not designate projects as BRI or not BRI – rather, BRI is a framework for all Chinese investment.14 The Sihanoukville Special Economic Zone (SSEZ) – one of China’s flagship BRI investments in Cambodia - alone has created 20,000 jobs for Cambodians to date, and as it enters phase three of development, projects another 100,000 to be created.15 10 This summary is drawn from more detailed country reports. 11 https://www.phnompenhpost.com/business/china-still-no1-source-fdi 12 Source: http://odacambodia.com/DCR_Report 13 LSE and CIMB. 2018. China's Belt and Road Initiative (BRI) and Southeast Asia, CIMB ASEAN Research Institute. 14 Sebastian Strangio, 23 Nov 2019, interview. 15 https://thediplomat.com/2019/04/the-belt-and-road-in-cambodia-successes-and-challenges/ 2 Community Engagement Along the Belt and Road: Findings from Cambodia and Pakistan Summary Report | May 2020 BRI in Pakistan The China Pakistan Economic Corridor (CPEC) is another one of BRI’s flagship projects, through which it has invested $40 billion in Pakistan over five years (2015-2020) on multiple infrastructure projects which include roads, airports, seaports, power plants, and pipelines, amongst others. In the longer run, the investment is expected to
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