Much as the protagonist in the 17th century Spanish epic, the E.U. sees itself as a knight seeking to do good – and, in the process, finding enemies where there may be none. On a quest to limit the ecological impacts of E.U. commodities imports, this regulation is tilting at windmills, attacking illusionary foes.

The windmills right now in the E.U.’s case are countries that export commodities such as timber, palm oil, coffee, cocoa and rubber to Europe, which has long called for greater monitoring of the environmental impact of this kind of trade.  

At its core, the new legislation, which entered into force on 29 June, holds that firms importing goods into Europe need to prove they did not originate from land cleared since 31 December, 2020. Companies must also confirm imported commodities are produced in compliance with the “relevant laws” of their country of origin.

Trade partners such as Indonesia and Malaysia, which together produce about 83% of the world’s palm oil supply, share many of the ecological goals and declarations as stated by E.U. lawmakers.

But in May, the two sent a mission to Brussels arguing the Deforestation Regulation discriminated against their palm-oil-dependent economies and would harm their agricultural sectors. Both have long perceived the E.U. as taking unfair advantage of palm oil to stifle competition against its own oilseed crops, particularly rapeseed, and view the new regulation as yet another act of economic protectionism pressed under the cover of environmental concern.

In 2018, when Europe banned palm oil from biofuel use under the E.U. Renewable Energy Directive (RED), palm-oil-producing states lobbed accusations of ‘crop apartheid’. They soon appeared vindicated when the International Union for Conservation of Nature (IUCN) published a report acknowledging the land efficiency and productivity of palm oil as a crop – as compared to other seed-oils, including those preferred by Europe – meant there were “no easy solutions” to regulating its role in deforestation.

“Palm oil is decimating South East Asia’s rich diversity of species as it eats into swathes of tropical forest,” said Erik Meijaard, the report’s lead author and then-chair of IUCN’s Oil Palm Task Force. “But if it is replaced by much larger areas of rapeseed, soy or sunflower fields, different natural ecosystems and species may suffer. To put a stop to the destruction we must work towards deforestation-free palm oil, and make sure all attempts to limit palm oil use are informed by solid scientific understanding of the consequences.”

The new Deforestation Regulation are unconvincing on that last point, which should concern conservation-minded readers. To their credit, the E.U. Commission has set up a Joint Task Force with Malaysia and Indonesia to address issues related to palm oil smallholders and other challenges of the regulation’s implementation. 

But they’ll have to work quickly on that front. European importers now have 18 months or less to find a way to comply with this new legislation. The only sure way for them to meet this target is if the E.U. acknowledges certification programs for targeted commodities. For the palm oil industries, national programmes such as the Malaysia Sustainable Palm Oil (MSPO) scheme and its Indonesian counterpart (ISPO), must be counted in as credible enablers towards meeting the regulatory deadline.

Though these domestic sustainability schemes are not perfect programmes, they have greatly developed in recent years and have made tangible advancements in reigning in deforestation.

This would seem to be evidenced by the World Resources Institute (WRI) in its latest report on Global Forest Review. The report found that Indonesia and Malaysia marked near-record low levels of deforestation even as tropical forest loss elsewhere worsened in 2022, making specific mention of the MSPO and other domestic, industry-focused measures of recent years.

This kind of data will be instrumental in the E.U.-Malaysia-Indonesia task force’s work to resolve the palm oil problem, which stands in the way of trade deals between the three entities. If the E.U. refuses to acknowledge the ongoing efforts to make the industry more sustainable, it will effectively discourage its further advancement – instead incentivising producers to turn their backs on the European market as they seek less discriminating trade partners in Africa and Asia. 

Major exporting countries such as Brazil, the world’s biggest exporter of soy, have chosen to brush off the demands of the new E.U. regulation by quoting national laws as being compliant with global commitments. It is worth noting at this point that the expansion of soy plantations is the second-largest direct driver of deforestation and conversion, after the expansion of pasture for cattle farming and land speculation. 

Brazil’s confidence in maintaining its exports is bolstered by China and – as a further disregard of what the E.U. is demanding in terms of deforestation – these two countries have made a joint commitment to end illegal deforestation. This is very different from what the E.U. is demanding, which is that all imported commodities must be free of deforestation, whether legal or illegal.

Back in Southeast Asia, E.U. Member of Parliament Bernd Lange has appealed for understanding of the E.U.’s position in an opinion published in The Jakarta Post. The European Parliament in ASEAN tweeted in support, urging a constructive and result-oriented negotiation with Indonesia towards a trade agreement. 

Such negotiations are in everybody’s best interest, especially when compared to a more Quixotic approach. But the European Parliament should note that consensus on the regulation can only be reached when the E.U. stops making one-sided demands on its trade partners and engages with them as part of the solution to greener supply chains – not as the problem. 

Robert Hii is an independent industry monitor whose focus is on the sustainability of palm oil. He was born in Sarawak, Malaysian Borneo, and later moved to Canada. He now runs CSPO Watch, a platform that monitors the palm oil industry with a focus on sustainability.

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On the 51st floor of the CapitaSpring building in Singapore’s central business district a grass ceiling of crazy paving and edible crops turns the top of the commercial high-rise into a salad of fresh greenery. Below the starfruit, Brazilian spinach and Daikon radish, office blocks and vibrant shipping containers line the Lion City’s busy harbour.

Singapore’s latest urban agriculture venture, a project by food security movement Edible Garden City, became the world’s highest farm on its May launch, toppling Paris’s Expo Porte de Versaille from the podium. Since then, the U.K. has already announced plans to enter the edible rooftop race with a proposed Bristol project that would tower over both Singapore and France’s efforts.

“People gravitate towards interesting spaces,” said Sarah Rodriguez, head of marketing at Edible Garden City. “While many people visit to see the plants and to learn about urban farming, there are also… visitors who go for the ambience or the view.”

To tackle increasingly urgent food security and sustainability concerns, innovators in the Red Dot are taking agriculture to new heights. The city-state is capitalising on its status as a regional innovation leader to bring farming into the future. But amidst high-tech projects and cosmopolitan developments, traditional farms risk being left behind.

As CapitaSpring welcomed its first visitors, reports of export bans and disrupted food supply chains spread through Southeast Asia. Indonesia, the world’s top supplier of palm oil, launched a three-week ban on exports of the product on 28 April in an attempt to stabilise cooking oil prices. A month later, Malaysian Prime Minister Ismail Yaakob announced a curb on chicken exports from 1 June, causing concern in neighbouring Singapore, which imports a third of its poultry from Malaysia.

Food security is not a new issue for Singapore. Currently dependent on imports for more than 90% of its food, the government’s ‘30 by 30’ initiative aims to produce 30% of the country’s nutrition locally by 2030. But recent bans on exports and upended supply chains due to the Ukraine-Russia conflict have added an increased sense of urgency.

“Recent events have really shown how vulnerable Singapore can be if there are disruptions to supply chains,” said Paul Teng, adjunct senior fellow in the S. Rajaratnam School of International Studies at Nanyang Technological University Singapore. “Not just in terms of the actual food commodities themselves, but also in terms of peripherals [such as] rising fuel prices.”

In the meantime, the public sector is stepping in with new grants and opportunities for commercial farmers. These include the Agri-food Cluster Transformation (ACT) Fund, which provides support for farms looking at innovation and test-bedding and technology upscaling. The first Agri-Tech Career Conversion Programme was launched in early 2022, designed to train the nation’s workforce in skills including Smart Farming and Internet of Things technology.

Some of the city-state’s urban farms have already embraced innovation. Edible Garden City’s first Singapore project, CapitaSpring’s sister farm on top of the nearby Funan Mall hosts an aquaponics pond where nutrient-dense water from the resident fish is filtered and used to water the neighbouring plants.

But behind the hype, Teng is sceptical about the long-term benefits of urban, high-tech farms.

“Even though there’s a lot of talk about sustainability, the green plan, and so on, many of our farming practices, especially high-tech farming practices have yet to be proven sustainable,” he said. 

Many traditional farmers lack not just the resources but also the mindset and inclination to upscale using new, expensive technologies. Meanwhile, as Singapore remains far from its 30 by 30 goals, innovators in alternative proteins and lab-grown meats are hungrily working to capitalise on its terms, which, as Teng notes, refer to general nutrition, not just organic foodstuffs.

On the opposite side of the diminutive island, approximately 33 kilometres (20 miles) from CapitaSpring’s manicured soil beds, greenery sprawls across a 10-acre (4-hectare) estate. The land is divided into 12 plots, hosting Malaysian pomelo, Bangladeshi bananas and local Singaporean kangkong and grass-green and lemon-yellow signposts marking “ASEAN “compost” or “Wild Singapore.” Near the entrance, an open-air bistro named Poison Ivy serves dishes made with the farm’s produce.

“You can eat all plants,” said the farm’s co-founder and landowner, Ivy Singh-Lim. “Some you can only eat once.”

Bollywood Farms was founded in 2000 by Lim Ho Seng, former CEO of a Singaporean retail behemoth, and his wife, landowner and former business development leader Singh-Lim. The couple’s retirement project was launched to create a sustainable ecosystem of food produce.

For the landed couple, agriculture may be an easily affordable investment, but the reality for most agricultural workers is markedly different. The average farmer’s wage in Singapore is SGD 2,444 ($1,772), a little more than half the country’s average monthly income of SGD 4,680 ($3,394).

“Farmers need to be incentivised,” Teng said. 

When Singapore became an independent nation in 1965, farming was thriving. Vegetable production filled 50% of local demand. Pork was produced at a small surplus for export. Low labour costs boosted overall returns and the sector was a valuable contributor to the national economy.

But a report released shortly after independence revealed the strains beneath the success. Nearly all farms were small, family-based operations where the owners had less than four years of schooling and lacked the capital and resources to upscale or remain profitable. 

Concerns emerged over the pollution and environmental damage caused by pig farming. By the 1970s the government had turned its attention to modernising the workforce and agricultural sector through technology.

“The government made a very conscious policy effort to downplay the role of agriculture and restrict the… amount of land [and] human resources to diversify the economy in the 1980’s,” Teng said. While urbanisation boosted the national GDP, agricultural professionals faced challenges.

Around 1% of Singapore’s 720 square kilometres (278 square miles) is dedicated towards agriculture and traditional farms are only permitted to be built in approved designated areas. Farmers apply for land tender and a licence from the Singapore Food Agency, the statutory board responsible for managing urban agriculture. Subsequent approvals from various other government entities are also required, including the Urban Redevelopment Authority, the Land Transport Authority and the National Environment Agency.

“The government is not giving you land free of charge and smallholder farmers can’t really afford to borrow,” Teng noted.

Rodriguez noted fuel and food price inflation highlight the brokenness of Singapore’s food system where imported produce, often grown with chemical intervention, is more accessible than organic, locally grown food. “The solution is a self-sustaining local food system, decentralised, run and owned by the community,” she said.

Singh-Lim finds the current siloed structure and the lack of expertise in the public sector frustrating and a barrier to farmers supporting their businesses through supplementary income, such as restaurants.

“It took me one year to quarrel with the bastards in the agriculture department [to build my farm],” she recalled.

When Bollywood Farms was established, management fell under the purview of the Agri-Food and Veterinary Authority, a statutory board that was disbanded in 2019 and its duties split. A 2004 decision to incorporate a restaurant required a separate licence application under a new government board.

“When I applied for change of use, it threw a whole spanner in the works… they almost fainted,” she said wryly. “In the UK, they knew that small farming was not profitable, so that’s why they incorporated Bed & Breakfasts. They knew what was growing was leisure.”

High-tech urban farms are exempt from the land restrictions. Many of those operations, including Edible Garden City’s Funan and CapitaSpring entities, are directly linked with upmarket restaurants serving their produce and helping raise awareness of farm-to-table eating amongst discerning Singaporean diners.

“Working with talented culinary teams is important for farmers to reach out to even more people,” Rodriguez said. “The way to the hearts of Singaporeans is through our stomachs.”

Singh-Lim believes that farming should be accessible and visible, not just on Singaporeans’ plates but also in their everyday lives. High-rise rooftop farms should be reserved for specific solar and water-collection projects. Communal allotments and aquaculture ponds could be incorporated around each of the 1.09 million public housing units built by the Housing Development Board.

“We should convert every piece of land into a sustainable, useful, productive garden,” she said. “People say that we have no land. We have plenty of land. But think about this: 1% of land is for agriculture, 15% is for the military.”

The future of farming relies on a balance between the agri-tech and traditional methods. Innovation is there to bolster awareness of natural sustainable farming practices, according to Rodriguez.

“We need to strengthen the entire ecosystem of farming in Singapore, from training and development to partnerships and awareness,” she said.

Teng said many countries face a policy dilemma of whether to support small farms or more productive, high-tech operations: “Singapore is very focused on productivity and efficiency, but our country will be poorer off if we don’t have a countryside with small, conventional farms,” he said. 

For Singh-Lim, the logic and the solution are simple: Singapore’s farming methods may be divided but their ultimate goal is the same.

“Grow local. Eat local. Eat less. Waste less,” she said.

Photos by Amanda Oon for Southeast Asia Globe

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The list of eligible business sectors includes environmental management and protection, biodiversity conservation, the circular economy and green energy including technology contributing to climate change adaptation and mitigation.

“Overall, I find it quite encouraging that the environment is being mentioned as a priority area for incentives,” said Karolien Casaer-Diez, Cambodia representative for the Global Green Growth Institute. “It reflects a growing awareness that sustainability is becoming key for Cambodia to ensure its competitiveness in global markets.”

The final version of the bill is written broadly and will rely on additional clarity in a sub-decree expected in 2022.

The decree’s details are expected to shape the significance of the law’s environmental aspects, as well as specifying which green activities and organisations will be eligible for incentives.

“Sustainability strengthens competitiveness,” Casaer-Diez said. “Now, it all depends on how the government flushes out this law into more specific regulations and sub-decrees. Law is a broad framework, and while this law is a step in the right direction, how we implement these incentives will be just as important.”

While green businesses are eligible for incentives, certain environmental regulations were removed during the drafting process of the law. For example, earlier versions of law required investment projects to provide preliminary information on “waste management measures, environmental protection.”

Whether or not the sub-decree will reinstate, revise or leave out this regulation is uncertain.

The Council for the Development of Cambodia, a government agency tasked with coordinating and incentivising investments to Cambodia, met with private sector organisations such as the European and Japanese Chambers of Commerce in Cambodia throughout the law’s drafting process.

Susanne Bodach, chair of the Green Business Committee at EuroCham, believes prioritising environmental incentives for future investments will be critical to Cambodia’s economic recovery from the pandemic.

“Ten years ago, climate change was not prioritised in Cambodia because the country stood at a different stage of development. The priority then was simply to attract bigger and bigger investors and by doing so develop local industries and create more jobs,” Bodach said. 

“But now there is a momentum in Cambodia and the rest of the world when it comes to climate change. That’s what we see in this investment law and its incentives,” she said.

The environmental momentum in the Kingdom is building because international events, like the recent United Nations COP26 climate summit, brought attention to the environment shortly before Cambodia took on the 2022 chairmanship of ASEAN, Bodach said.

“There’s a strong interest from the private sector because when we see all these global challenges we face with climate change, we recognise how important it is to take environmental performance and incorporate it into our business operations,” Bodach said.

“If you have more policies and frameworks that incentivise going green, it’s obviously easier for businesses,” she said. “In Cambodia, we are still at the stage where some framework is not yet fully developed, leaving a gap. We will work with CDC on developing and giving our comments towards filling that gap in the sub-decree.”

The tax law states after a proposal is registered and approved by the development council, the “qualified investment project” can choose between two basic tax incentive options, depending on its individual circumstances.

Option one grants a project with a tax exemption period of three to nine years. After the period ends, the project can select between three options to pay income taxes. The options range between different percentage rates and time spans.

Option two reduces the capital expenditure of a project and exempts it from certain taxes.

While the law mentions several additional incentives, the details “shall be determined in the Law on Financial Management and/or the Sub-Decree.”

“We always say Cambodia is a largely untapped market,” said Noë Schellinck, advocacy manager for EuroCham. “The openness of the Cambodian people is reflected in the openness of the investment environment. There is not too much red tape for investors and it’s still quite feasible to invest in Cambodia without going through lengthy processes, which definitely makes Cambodia an attractive environment for investors.”

This new law will also hopefully communicate Cambodia’s willingness to “accommodate clean investments that level the playing field between green players and polluters,” Casaer-Diez said. 

“Environmental investments come with an extra cost up front because you have to rethink how you do things and innovate new technologies. That cost is paid back over time, but that up front investment gives polluters an advantage,” Casaer-Diez said. 

“Having incentives in place for green companies and taxes for polluters is the first thing you want to see when it comes to making sure green companies are not at a commercial disadvantage,” Casaer-Diez said.

Transparency International Cambodia plans to publish a research study on the Kingdom’s tax incentives in 2022.

A draft of the study states that while foreign direct investment has steadily risen in Cambodia over the last decade, it is “unclear how much influence tax incentives have in attracting the FDI and it is likely that foreign businesses would invest in Cambodia regardless of the incentives.”

“There are no studies that prove incentives directly lead to more foreign investment, or how big of a role they play in foreign investments. Cheaper labour expenses could be the real factor,” said Im Norin, director of programmes at Transparency International Cambodia. “We need to be very intentional about incentives because if you don’t give incentives, we may generate more income.”

Young Heng, director of the department of investment project evaluation and incentives of the Council for the Development of Cambodia, was unavailable for comment.

“The priority has always been job creation,” Norin said. “The government just wants to create jobs in order to stimulate the economy and push for economic growth at all costs.”

Relying too heavily on tax incentives for economic growth could negatively affect Cambodia’s economy and contribute to a “race to the bottom” in Southeast Asia. This is the notion of countries competing for foreign investments by lowering or waiving taxes, eventually leading to a downward spiral of tax cuts, Norin said.

The forthcoming Transparency International report lists recommendations to improve these future foreign investments. Suggestions include improving government transparency on investment monitoring, streamlining investment approval processes and increasing regional coordination among ASEAN countries regarding the safe use of tax incentives.

“This new legal framework looks good, but the law in practice is a different story,” Norin said. “It is still very broad and we will need to develop other policies to support its proper implementation. If we keep it broad and vague, it will be difficult to hold anyone accountable.”

All text and photos by Anton L. Delgado for Southeast Asia Globe

This article is a part of an ongoing partnership with Transparency International Cambodia meant to accentuate issues along with practical solutions concerning good governance and anti-corruption in Cambodia. Learn more about the partnership here.

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Veyret recently made the move, mid-pandemic, to a Singapore hugely changed. But his passion for the Red Dot remains. As he settled into his new role as CEO of Decathlon Singapore, he spoke to Southeast Asia Globe editor Amanda Oon about Asian markets, the next era of “phygital” and building a sustainable, socially conscious business.

What was it about Singapore and its business landscape that attracted you to move here?
I knew I definitely wanted to come here and work because of the environment. It is a very densely populated city, but also very green, so there are a lot of spaces and places to play sport, to walk around as a family. It’s a very good fusion between the urban world and natural space.

Singapore is also a great place to innovate and to embrace new technologies. [It’s] a relatively new country as well. So you have this young innovation [in a] giant company, almost like a start-up. Now [at Decathlon Singapore] we have reached a size where we definitely need to go to the next step: the transition to an agile and innovative company. And then to make sure that we have the right people and to empower them with the responsibility to lead their projects.

Where is your favourite place in Singapore?
With the family we spend time in MacRitchie reservoir [which] is absolutely amazing. For the social part, Dempsey Hill is also very nice.

Your first experience with Asian markets was in China. What differences and similarities have you found between the Chinese and Singaporean markets?
I was on the Chinese project 23 years ago, and 23 years ago China had just opened up to foreign investment. I remember we were only 200 French people at the time. I think now there are more than 20,000. So it was really the beginning. And it was a pioneering journey.

Here in Singapore, it’s [also] a very new journey. But the country is very mature to retail, very mature to innovation, to sport. The participation is great. I’ve spent 6-and-a-half years in the UK and I remember working with Sports England. The active population was 23%. It is more than 60% here in Singapore.

What is great here compared to China as well is you can play a sport all year round, because the weather conditions are very favourable. So it makes it a very interesting playground to develop our activities.

The consumption in China has evolved a lot. And in terms of innovation, I think China is really taking the lead on the switch from physical to digital. It is even beyond Singapore. But Singapore is following, and we’re preparing for that.

So is digitalisation a key part of Decathlon Singapore’s post-pandemic strategy?
I think that the talent is not to talk about physical and digital anymore. But to talk about “phygital.” We don’t talk about “omni commerce” anymore, we talk about “uni commerce” because there is only one commerce, one need, one retail and one customer at the end of the day consuming different channels.

Over the past 10 years we’ve seen a rise in the ecommerce part of our business. The shares are increasing little by little, and maybe the pandemic has accelerated this trend. During the lockdown, you saw ecommerce really surging. But as soon as we are back to normal operations, then you see a massive amount of people coming back to the stores. We have to be conscious that shopping is a leisure in our societies. So people go out to enjoy browsing in stores. And that’s why we call our stores “experience stores,” because you come to a place where you can really live an experience. You can render some services that you cannot render online. I think that the store will remain the main driver for the business.

At some stage, you have to also look for what the digital giants are doing. I don’t think that Amazon opened Amazon Go just for fun. It’s because the digital model also has its limit. They are trying to enter into this physical world to create what we call “business tomorrow,” which is to be a hybrid between physical and digital.

We don’t want to go 100% digital and that’s very important. Physically and digitally, there are no two channels or two worlds. So there is only one world now and the talent – especially with retail companies – is how do I merge these two?

How is Decathlon merging the physical and digital, and using new technologies to complement the in-person experience?
It’s very important to see that digital will complement the business, not only for the customers but also for our teammates. First is to try to eliminate the non-added value tasks that are very repetitive. We have a robot doing some inventories on its own. That’s an initiative that was initiated in Singapore and now duplicated in other countries.

In small stores where we cannot display all our tents, we use VR (virtual reality). So you have the impression that you are in the showroom with all the tents you can imagine.

We have the foot scanner, as well, in our stores here in Orchard Road, where you can actually take the shape of your feet and what is your size and it’s also for kids to predict when they will have to change the shoes. Orchard Road’s is Decathlon’s most used foot scanner in the world. It shows Singaporeans’ appetite for new technologies.

Another key mission of Decathlon is sustainable, socially conscious business. How are you implementing this at Decathlon Singapore?
We’ve paid a lot of attention to being involved in the local community by supporting local initiatives and by developing our local people. Ninety percent of our recruitments are in the local community and Decathlon is a fantastic school of development. All the top management started as a trainee or as a part-time worker. We give opportunities to local members of the community, even if you don’t have a degree, to still grow in the company and to develop.

We have a programme called Decathlon Activities where we bring people to play sport in our stores or in physical places next to our stores. We brought 15,000 people together last year despite the pandemic. But our aim is to bring 100, 200, 300,000 people together and that’s where the help of the technology can be very useful. During the pandemic, for example, people couldn’t come to the stores physically. So we created live streams or and had [virtual] classes where everyone  could practice at the same time with one coach.

I don’t think we’re going to be able to sell 10 times more product in the future. But I think that we can create from each product 10 times more value. So I really want to put a zero-waste target to the team. [We ask ourselves] if today, I sell a bike, how can I repair it? Can I put it on the secondary market? And at the end of the cycle, when we cannot resell it anymore, how can we take the spare part and use it on some other bike?

I have two kids and I can tell you, a bike doesn’t last long, because six months or one year later it’s too small. And so basically, what you have to do is to buy another one. And that’s a programme that can be also very meaningful; a 10-year programme that supports your kids in cycling, and each time you need to, you can lease a bike which fits, and when your kid outgrows it, we take the other one back and put it again in the system.

We are a sporting company and the world is our playground. So we have to protect our playground. I cycle a lot with my son in the forest. I’m a diver. And I’ve seen the changes in the ocean. We have to protect our oceans to make sure that our kids and our grandkids will still be able to see the beauty of corals. More than just a personal belief, I think this is a mission that Decathlon has for the future.

What are your main aims and goals for the future?
There is a fantastic background here to tap into the start-up world. And we will create an incubator next year, to make sure that we can tap into the start-up scene in Singapore [and] help some start-ups develop their projects. We help them to develop and, in return, they bring us technology and the know-how and, of course, their energy and their creativity.

After 23 years, it’s also very exciting to work with different cultures with different people in Singapore, a multicultural hub.

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I was here to visit Mi, a traditional Hmong artisan, in her mountain home. She was wrapping up a cameo in a Netflix pilot on traditional craftsmanship in Vietnam. It was only the latest in a slew of related media visits. As with the many tourists who visit Mi’s home in Ha Giang, there was a strained focus on the “traditional” element of her craft. 

One cameraman followed Mi’s husband down to their fields, where he began to thread the harvest through a dilapidated rice huller. The spectacle raised a chorus of laughter and surprised cheers from the group of female farm workers. Shaded beneath an oversized Coca Cola umbrella, they had been busily toiling away at the very same task before the arrival of the camera crew. 

The focus on her husband felt like a metaphor for Mi and her group of female workers, whose attempts to move past gender stereotypes and gain more status in their communities are often quelled by mawkish traditions. But in a push for self-determination, Mi and the rest of her employees are tapping into tradition and actively moving away from backbreaking agricultural work. 

In recent years, traditional crafts from Vietnam’s minority cultures have seen a resurgence in demand at home and abroad – in part a reaction to a growing concern over the fast-fashion industry, where human rights abuses and environmental degradation are rife. Female-owned businesses like Mi’s, or more high end fashion like Hanoi’s Kilomet109, are just two attempting to empower female minority workers to earn their own income and stay in their hometowns, rather than travelling over the nearby border to China for work.

“I used to live through difficult times. Other women went to China to look for jobs, but leaving is so difficult,” said Mi. “They would get beaten by their husbands when they come home, and then they would stop them going back to China.”

A few years ago, using the traditional hemp weaving and indigo dyeing techniques taught to her by her step-mother, Mi began producing long strips of delicately crafted hemp, about a foot wide, and covering storey after storey of tall buildings in length. It’s detailed, covering a vast array of patterns. Selling these woven fabrics to passers-by allowed her to spend more time with her family and community, generating much-needed employment opportunities for the other women in her village.

“That is one of the reasons that I try to grow my business,” Mi explained. Her textile business currently employs 14 local women and supplies to Hanoi-based businesses like Touched. “To help the women in my village find work.”

Mi as a part of Vietnam’s Hmong minority group. Described throughout history as ‘people who [dwell] among the clouds and mist,’ the Hmong have called these mountainous highlands home since the end of the 18th century. 

They are just one of Vietnam’s 54 ethnic minority groups, comprising about 8 million of the nation’s 95 million total citizens. Minority artisans from rural Hmong villages up in these remote mountainous landscapes are producing complex hemp and indigo-dyed handicrafts, spinning and weaving their fibrous materials with techniques developed over several thousand years. 

Recently, however, these items have been gathering attention from further down the rocky roads, and are being sold in Hanoi, the capital city, in high-end boutiques, and even further, as far as Bristol in the west of England.

As with any craft tradition, hemp handicrafts were once closely linked to indiginous lifestyles. Whenever a family would settle somewhere new, the women of the house would hand-carry seeds of hemp to the new location, preparing the ground for a new crop on day one.  

I currently have about 14 people working for me, though most of them are my family. But I want to try and grow to 16. There are people in the village who need help, some have difficult living situations, and I want to support them

But these days, minority farmers in villages like Mi’s focus primarily on growing more intensive cash-crops like corn and rice, leaving hemp cultivation to a few larger factories. Fields once used for growing hemp and indigo plants have transformed into cornfields and pasture-land for grazing livestock. As a result, the Hmong’s hemp cultivating traditions and handicraft arts have gradually begun to fade. 

But a few years ago Mi began to notice the potential for this fading tradition, and asked her mother-in-law to teach her the skills required to weave her own. From there, she began to head down from the mountain, setting up her stacks of deep blue indigo dyed fabrics and hawking her handmade goods at craft fairs around the capital Hanoi.

Since then, Mi has gradually garnered the support of organisations like the British Council’s Crafting Future programme, which aims to encourage sustainable livelihoods and improve the well-being of women and girls in rural communities. 

“I currently have about 14 people working for me, though most of them are my family. But I want to try and grow to 16.” said Mi. “There are people in the village who need help, some have difficult living situations, and I want to support them.”

When asked whether she is worried about market demands for fast-fashion jeopardising traditional Hmong culture, Mi answered with a blunt, unequivocal, no. For Mi, the textile business isn’t necessarily about preserving tradition, it’s about creating a sustainable livelihood for her family.

Rather than traditional hemp outfits, Mi’s husband and sons wear factory-made t-shirts and shorts. As she prepares for her day of interacting with tourists, she quickly grabs her traditional garb.

“I love the pattern on that dress,” one tourist tells her as we sit in the back of her wooden home, sipping tea. Mi laughs. “Thank you,” she responds, “it’s from a factory in China”. 

Chee, one of Mi’s employees, is beating on a large, sopping wet bundle of hemp-turned fabric outside of her home, casting a thin stream of blue indigo dye streaming slowly down the road. 

“I live just behind Mi’s house with my husband,” Chee explains. “I’ve been working with Mi since 2009, though I only work part-time. Still, for the days I work I get 150K VND ($6.50 USD).”

Chee said that if it weren’t for Mi’s textile business, she’d be working in a factory in China herself. She’d done that work in the past, but struggled to understand the sewing machines.

“The work is hard,” Chee says. “They make you work really long hours, and there’s always a language barrier because I can’t speak Chinese. You also have to work away from your family and you can’t look after your children.”

Precarious financial circumstances have driven women in many ethnic minority households to travel abroad seeking work. In 2016 alone, an estimated 200,000 people left Vietnam by irregular means to look for seasonal employment, mostly in China and other bordering countries. 

Though Chee admits that the money was better in China, that wasn’t her only consideration. To get there, women face dangerous backroads, risking human trafficking rackets that could see them sold into coerced marriages or brothel work, places where cruel conditions are standard.

“I could earn around 11 million a month [in a factory in China], but I wasn’t happy,” she said. “Working here gives me the chance to be around my children.”

As Vietnam’s economy booms, with high-rises shooting up like bean sprouts in urban areas, wealth continues to grow primarily for the majority Kinh ethnic group. Meanwhile, many minority communities remain dependent on subsistence level farming just to get by.

The agricultural sector is slow-growing in Vietnam, especially when compared to the rest of the nation’s skyrocketing industries. With the Kinh majority investing heavily in lucrative emerging markets and minority groups largely stuck in agricultural production, a widening income gap has emerged. Though they make up less than 15% of Vietnam’s total population, ethnic minorities constitute 47% of the nation’s poor, with 66.3% living well below the poverty line. 

Thao Vu, founder of Kilomet109, a high-end fashion brand made up of local artisans, found that giving new perspectives on traditional textiles empowered the artisan women that she works with to view their work with a new, creative eye. 

“When I started working with them they would look at their tradition as something to be sold in a souvenir shop, or fair trade market, or working with NGOs, and that’s it. Nothing more than that,” Thao told the Globe. “So, when I started working with them, I explained that I wanted to create something contemporary.”

Mixing up tradition as Thao does isn’t always easy. She found that many minority artisans were often sceptical about her plans, and when she began playing with different shades of indigo dye, creating a stone bluish grey which the community hadn’t seen before, she received pushback. 

It wasn’t until after Thao took the material home and turned it into a skirt that the artisans began to appreciate how their work, passed down from generation to generation, could be adapted to modern tastes. 

“They looked at it and said, is this our fabric? Is this from my mum? It has changed on so many levels!”

Thao works with multiple ethnic minority groups around the country, and just like Mi, helps them transition away from farming into more financially productive sectors. 

“They’ve been able to fix their houses, even buying second homes, buying more cows and more water buffalo,” Thao said. 

However, according to Thao, it’s not just the financial gains that are benefiting these minority groups, but the ability to keep their traditional crafts alive and relevant in a changing modern world. She explains that, when she first met them some 10 years ago, many of these cultures were on the verge of losing their communal handicraft traditions. 

As international interest grows, with a slow but steady move away from farming and back towards traditional crafts, it seems that a resurgence of minority textile traditions could be on the way. 

Like Thao’s artisans, Mi has been busy growing fields of hemp. For every corn yield, she’ll follow it up with a hemp crop. These plants improve the environment, increase biodiversity and enhance soil health by shedding weeds and reducing the need for herbicides. What’s more, they’re helping to keep minority handicraft traditions alive. 

Mi and Thao may have divergent motivations for their businesses – one a pragmatic focus on alleviating poverty, the other a quest to preserve indigenous culture. But their efforts ultimately achieve the same results: a better future for ethnic minorities in rural areas, environmentally sustainable fashion that allows women to stay with their families and a way of keeping traditional textiles alive.

It seems that now, Mi is doing what her ancestors did. Taking that hemp seed to a new location, preparing the ground, and watching a business shoot up.

“If I can create jobs here,” said Mi. “It will give everyone the chance at a better life.” 

The post Vietnam’s Hmong women finding empowerment through hemp appeared first on Southeast Asia Globe.

Luckily for any squeamish onlookers, the man-sized bug is just a statue, a loving rendition of a humble insect that plays a special role in the economy of Kampong Thom province in central Cambodia. The chirping insects make up an important harvest here, where they’re often seasonally caught wild or grown as a bumper crop by local farmers. Across Cambodia, these crickets are fried in oil and seasoned with sliced chilis and green onion to make for a tasty snack. 

Though maybe unusual to European or North American consumers, there’s nothing novel about eating crickets in Cambodia, or really anywhere else in Southeast Asia. Crickets and other insects have long been eaten through the region as a provincial delicacy. But what is new is seeing insect-based food products appearing on supermarket shelves or under the sterile fluorescent lighting of a neighbourhood convenience store.

“We want to change the way Cambodians eat crickets,” said Chou Lundy, a founder of insect-based food startup Cricket House in Phnom Penh. “Right now, they only eat them deep-fried – very traditional.”

Along with her co-founder, Kun Kimlong, Lundy is betting that tastes can change here. Cricket House works with farmers to produce whole, dried crickets as well as cricket flour, a fine, protein-rich powder made from ground insects that can be used in cooking and baking.

As is, these offerings are really ingredients. But Kimlong says it’s a small step from cricket flour to cricket-based, ready-to-eat goods that can be sold and eaten on the spot. 

“We’re thinking cricket snacks, protein bars, other things cricket as well,” he said.

Far from the rice fields of village life or the brimming, chili-spiced pans of a market vendor, the commercialised world of processed foods is the new frontier for insects in Southeast Asia. Dreams of a buggier urban diet have already seeded a global field of startups who swear by insects as the environmentally friendly superfood of tomorrow, a source of ready protein and other nutrients without the costly inputs, environmental impact and guilty feelings given over to cows, chickens and other livestock.

As their boosters are quick to say, insects could have the potential to change almost everything in the world of mass-produced food, offering a super-efficient option at a time when the planet is already teeming with more than 7 billion hungry human mouths. Researchers say one acre of black soldier fly larvae, a maggot commonly grown today to make feed for livestock, can produce more protein in a year than 3,000 acres of cattle or 130 acres of soybeans, all while eating almost any organic matter given to them. For those who work with edible insects, the question of whether they’ll be the next big thing isn’t a matter of if, but when.

Against that backdrop, investment bankers from richer countries have taken a new interest in what the UN Food and Agriculture Organisation says is already a dietary staple for about 2 billion people around the world. 

In 2019, British finance house Barclays estimated the global insect market could be worth $8 billion by 2030 with an annual growth rate averaging at 24%. Late last year, the US agribusiness giant Archer Daniels Midland Co. announced its partnership with a French startup to build the world’s largest insect protein plant in the US to grow black soldier fly larvae for animal feed and other products.

But despite recurring media buzz, the mass acceptance of an insect diet has yet to catch on in the more formal marketplace of supermarkets and restaurants. And though young entrepreneurs at Southeast Asian startups like Cricket House have hopes of capitalising on local interest in insect foods as a kind of first-mover advantage in global markets, they’ll face stiff competition from emerging industry leaders – not to mention trade restrictions in major economies like those of the EU, a major potential market now developing regulations for bug-based products. 

For the time being, that means keeping out most importers from their own growing industry.

“This [trade restrictions] is a gigantic barrier for startups in the developing world,” said Massimo Reverberi, founder of Bugsolutely, a Thai producer of cricket-based pasta.

Reverberi, originally from Italy, has been living and working in Thailand for more than 15 years, in which time he’s established a foothold in the edible insect market. Before the onset of Covid-19, he travelled from Bangkok between Asia and Europe in part to flog his brand and attend conferences with other players from the bug world. 

Though he’s quick to disavow the technical term for eating bugs, entomophagy, as being overly weird, Reverberi is committed to the practice. Still, despite his enthusiasm, he notes several barriers ahead for the industry as a whole, both in Southeast Asia and beyond.

The first is just a matter of price point. For insects, the biggest market of interest may be in black soldier fly larvae, which are already used as a feeder crop for chicken and fish but aren’t often processed into food for humans. Then there are cockroaches, which are the preferred bug crop in China, where they’re grown by the billion in industrialised settings. Finally, the bug startups in the US and EU favour mealworms, while nutrient-dense crickets are generally the bug of choice in Southeast Asia.

Though raising those last insects is cheap compared to beef cattle or chicken, it’s not yet being done on a scale to bring cricket flour, the most marketable good, down to a price point that a snack producer would jump at. Barclays reports the price per kilo of cricket flour is falling considerably in most national markets, pointing to a 33% decline in Thailand from 2017-19. But even then, with an average price in Thailand of more than $20 per kilo, cricket flour still loses out for now to cheaper, plant-based protein powders.

“People will tell you it’s a nice idea for the future, but come back when it’s cheaper,” Reverberi said. 

There are two worlds: One is traditional insect eating and one is processed, packaged food with insects as an ingredient. The two things don’t have much in common

The second issue the Bugsolutely founder has run into is getting major producers and distributors on board with what can still be regarded as an unusual or even gimmicky product. Without the credibility of being carried in a mainstream supermarket, cricket-based goods can find skepticism among shoppers and retailers alike.

For now, the actual producers of insects tend to be startups, which often means lots of potential without funding to match. While some key brands are investing exploratory funds for insect producers – such as in 2019 when the major seafood company Thai Union invested an undisclosed sum from its $30 million corporate fund into the Israeli fruit fly larvae firm Flying SpArk – the industry-wide investments just aren’t coming yet.  

Finally, there’s the matter of knowing your customer. Though whole insects are already a common food for people around the globe, Reverberi doesn’t necessarily see much overlap with the emerging bug product market. 

“There are two worlds: One is traditional insect eating and one is processed, packaged food with insects as an ingredient,” he explained. “The two things don’t have much in common. In Thailand, some Thai people eat insects as a tradition in the countryside, but these are whole fried insects. They’d never buy an energy bar with cricket flour, they’d never even consider it as they eat insects only for the taste, really. In the West, it’s marketed mostly as a super food, as an environmentally sustainable food.”

The fact remains that in Southeast Asia, rural consumers who want to eat whole insects don’t need to head to the supermarket to stock up. 

Cambodia is no exception to this. The ground there for a full-scale insect industry was primed by a combination of traditional cricket farming and, more recently, development efforts from nongovernmental organisations such as Angka Changrit Kampuchea, or the Cambodian Cricket Farming Organisation, and the local office of nongovernmental organisation Danish Christian Association (DCA). Both promote efficient cricket cultivation and processing by smallholder farmers as a means of fighting poverty and rural food insecurity.

Today, the handful of Cambodian startups that reference this work from DCA include Cricket House and Ecologgie, both of which launched in 2019 and work with networks of independent farmers to source the insects for processing in Phnom Penh. On the finished product side, the capital is also home to EatCriche, a cricket-based snack line co-founded by Indranil Roy, a former technical advisor for Cricket House, that retails in Phnom Penh and online. Away from crickets, the local insect market also features Bug Bacon, a project run by longtime insect entrepreneur Josh Galt that bypasses crickets in favour of black soldier fly larvae.

Besides spreading best practices to farmers, Lundy and Kimlong from Cricket House have also been piloting an automated cricket habitat with sensor-controlled heat and humidity features. The founders hope to eventually scale up to a warehouse setting for mass cricket production as part of their long-term strategy of exporting to bigger markets such as the US.

Such a facility would be the first of its kind in Cambodia, where players across the agricultural sector are rushing to mechanise in a bid to keep up with their neighbours. Meanwhile, over the border in Vietnam, insect producer Cricket One is banking on using even more technology to stay ahead.

The company reportedly processes 100 million crickets per month in its heavily automated warehouses north of Ho Chi Minh City, where the basis of its own line of cricket products – including an insect-based burger patty – are grown, dried and ground into heaps of powder. Last year, that level of production caught the attention of Singaporean investment firm Corecam Capital Partners. With three other investors, the firm plugged a seven-figure infusion of capital into Cricket One to fund the company’s expansion.

Some people don’t know what to do with the cricket powder at first. But then we show them how to make different kinds of food and it can really go into anything

Founded in 2017, Cricket One is off to a strong start. But co-founder Bicky Nguyen said the fresh state of the industry in Southeast Asia means the playing field is more or less open. 

“We would see ourselves as one of the major suppliers in the market rather than the market leader since it’s still a very young and relatively small market to really set positions,” she said in a message.

For now, the company is focusing on developing new cricket-based products with an eye to meat substitute products – a $20 billion and growing category mostly filled today by soy and other plant foods.

Cricket One’s biggest markets today are in the US and Japan, and though hurdles remain to get access to the EU, Nguyen was optimistic about her company’s chances.

Back in Phnom Penh, Lundy and Kimlong say they’re busier than ever tending their own company, building out their supply chain, and developing their own range of products. Even in a country where crickets are a familiar food, the new goods take some getting used to in the marketplace.

“Some people don’t know what to do with the cricket powder at first,” Kimlong said, describing the domestic market. “But then we show them how to make different kinds of food and it can really go into anything.”

The post Heralded as the future of food, but are bugs all buzz and no bite? appeared first on Southeast Asia Globe.

Yet the recently published “Worked to Debt” report from Cambodian rights organisation LICADHO prompted a backlash, not only from the Cambodia Microfinance Association (CMA), but also from local media aiming to discredit LICADHO and their research methods.

This recent and ongoing civil society attention to microfinance in Cambodia has brought its social risks further into the spotlight. In light of the current debate, we have drawn from a sample of the existing research to show that issues such as over-indebtedness and distress land sales are well documented in recent studies as well as in available government and industry data.

By acknowledging such social risks and improving transparency, Cambodian leaders can take real steps towards better governance of the Kingdom’s microfinance sector.

Microfinance in Cambodia has grown from donor and civil society initiatives to a major financial sector

Cambodia’s microfinance sector was established in the 1990s with international donor support to facilitate post-conflict rebuilding. One of the earliest microfinance institutions, ACLEDA, was set up in 1993 with UNDP support and then became a fully-fledged bank in 2000.

From small beginnings, by 2016, Cambodia had over 60 microfinance institutions or MFIs. According to 2019 industry figures, micro-credit providers loaned money to around 2.6 million people across Cambodia, with an aggregate value of about $10 billion and an average loan size of $3,804. Cambodia is now tenth in the world for micro-credit lending, and the profits of Cambodia’s top seven MFIs are among the highest in the developing world.

Initially, microfinance was seen as an effective way to alleviate poverty and connect rural communities to markets. Early models, such as Bangladesh’s Grameen Bank (est. 1983), used group-based saving and lending and did not need collateral to secure their loans. At that time, funding for microfinance came mainly from governments and donors. 

Today, MFIs have been absorbed into the global financial order and receive investments from international banks and financiers. In Cambodia, and internationally, commercialisation drives MFIs to expand their lending and to work for profit rather than earlier goals of poverty alleviation. MFIs use quotas and bonuses to expand their lending, and often need  collateral, such as land, to secure a loan. 

The Cambodian Microfinance Association (CMA) outlines a similar transition in Cambodia from 2000 onwards, when the first government regulation (Prakas) on microfinance was announced and the sector was “driven up a notch” by foreign investment. Indeed, in its Financial Sector Development Strategy 2006-2015, the government stated that the “significant success [of microfinance] is largely the result of an overall market-based approach to development and light government intervention”.

Recent research shows that MFIs’ commercial pivot and regulatory gaps put Cambodian farmers at risk of impoverishment from debt and land loss

The Cambodia Microfinance Association acknowledges that this sector’s rapid growth through the 2000s “started to substantially diverge from a path considered as sustainable”, and that this could “ultimately bring increased over-indebtedness problems”. For example, Sango’s 2016 household survey in Mondulkiri found that as many as 73% of households were indebted with sizable loans of $1,000-2,500. Keeping up their repayments was a major stress for the middle and poor households, especially when their crops were impacted by drought, disease and unseasonal rainfall. 

The popular image of microcredit is that it helps alleviate poverty by financing self-employment, but actually more than two thirds of Cambodian households borrow to pay for basic needs, social commitments (such as weddings and funerals) and other purchases. Nathan’s research in Kampot Province found that households regularly borrowed to pay for education, healthcare, and home improvements. To repay these loans, families depended on remittances from younger family members working precarious jobs in Kampong Som Province, Phnom Penh, and even Thailand. These indebted households faced considerable risk of economic hardship if they lost access to such income. 

Industry data reveals a concerning trend towards over-indebtedness in Cambodia. In 2017, an unpublished industry study, using a nationally-representative sample, found that between 28 and 50% of microfinance borrowers were either over-indebted or at risk of over-indebtedness. The Cambodian Microfinance Association has also acknowledged that, because of growing competition in the microfinance sector, many MFIs are using more “relaxed lending criteria”.

Cambodian MFIs typically make riskier loans than their counterparts in other countries, lending to families without the capacity to repay loans. Industry data from 2019 confirms that the fastest growth in lending now comes from MFIs providing new and larger loans to people who have not yet repaid their prior loans. 

Now that land is often used as collateral, farmers who cannot sustain repayments face the risk of losing their land. Sango’s work in a Mondulkiri found that after three years, around 12 of the 24 indebted households she interviewed in 2013 had left the village after defaulting on loans and losing their land. Some had moved as far afield as Malaysia and Thailand in search of work.

Data from the National Institute of Statistics suggest that distress land sales have been ongoing throughout the country since at least 2009, when tracking on land sales began. In that year, following the global recession, an estimated 180,000 people across Cambodia sold land to repay a debt. That number declined in the following years, but even in 2016, a reported 67,000 people sold land to repay a loan. In 85% of cases, these loans were sourced from a MFI. Nathan’s research with US collaborator Maryann Bylander finds that such distress land sales can be left out of MFI annual reports because they involve informal transactions between family members or neighbours. 

Existing regulations aren’t effective at managing such risks

Ultimately, the commercialisation of MFIs creates incentives for them to lend more and lend often. Cambodia has laws to govern its MFIs (NBC 2019), such as minimum capital requirements and loan disclosure standards, but these are geared more towards ensuring the viability and transparency of the sector than managing social risk.

Instead, the industry has pursued self-regulation to manage aggressive credit sales and debt collection practices. In January 2013, the Cambodia Microfinance Association helped to launch a Smart Campaign certification programme as part of a global move supported by the commercial industry to ‘self-regulate’ microfinance. The local Smart programme has now certified nearly all of the largest MFIs in Cambodia. CMA later introduced its Lender Guidelines Initiative in 2017 to define best practices for the national industry. However, both the Smart client protection principles and CMA’s lender guidelines are voluntary codes of conduct with little oversight to ensure compliance. 

Rural Cambodians need more oversight of MFIs to reduce their vulnerability to debt

It is crucial that emerging evidence of local lending practices and social risks are acknowledged, both by government and microfinance institutions instead of taking a defensive stance. Bodies supportive of microfinance, such as The World Bank, have also flagged the importance of strengthening local financial literacy, and for MFIs’ local operations to be far more transparent.

Greater cooperation between local authorities and the industry to ensure compliance with the industry’s code of conduct and lending guidelines would also help. Ultimately, a strong civil society role in which organisations such as LICADHO may continue their own research is important to strengthen MFIs’ accountability and better govern their practices in Cambodia’s rural areas.

Sango Mahanty, Crawford School of Public Policy, Australian National University

W. Nathan Green, Department of Geography, National University of Singapore

The post The evidence around Cambodia’s microfinance debate appeared first on Southeast Asia Globe.

However, events in recent months have also shone a light on the dangers of this success, with the fragility of the Cambodian economy as a result of lack of diversification becoming starkly apparent. 

The garment sector has been rocked by a string of disasters – from the partial withdrawal of the EU’s Everything but Arms trade privileges due to what the bloc labelled a deterioration in democracy and human rights, to the more recent global economic downturn caused by Covid-19 that has resulted in factory closures and job losses en masse. 

Cambodia’s economic stalwart is in danger of being severely compromised – this could be an opportunity for upcycling to fill some of the void. 

A term first coined in the 1990s, upcycling is in essence to make something new out of something old, unwanted or discarded. It closes the loop between production, distribution, collection and re-manufacturing, thus creating a circular economy in an industry infamous for its wastefulness. 

The United Nations Environment Program (UNEP) estimates that 10% of global emissions are from the fashion industry, 20% of global waste water is from fabric dying and treatment, with the industry also consuming over 93 billion cubic metres of water annually. 

As a way of building sustainability into the sector, independent upcycling designers are emerging like Charlotte Bialas and Christopher Raeburn, as well as fashion retailing powerhouse Asos moving into the market with its own ‘reworked vintage’ section.

With the fragility of the Cambodian garment sector exposed for all to see, industry insiders, as well as government officials, are increasingly mulling the benefits of implementing a circular economy in the Kingdom. 

In 2018, senior Cambodian government delegates attended talks about the benefits of circular economy at the Second World Circular Economy Forum in Japan. 

At the meet, Nick Beresford, country director at UNDP Cambodia, remarked: “If a circular economy model is applied in Cambodia, instead of being disposed, waste would be treated as ‘new products or energy’ to be reused and recycled, to add new economic values for the economy.”

Katia Nicolas, CEO and founder of Phnom Penh based ethical ‘slow fashion’ label Good Krama, says a circular business model is possible, but it is currently hampered by a lack of access and transparency in the garment industry. 

“For just over four years, Good Krama has been making ethical clothing from garment industry excess, rejects and deadstock. Throughout those years, the major problem for us is our inability to work with factories directly to source fabric for upcycling,” she told the Globe. 

“This is because brands do not own the factories to which fabrics are imported and have little visibility or interest in the type or amount of fabric that gets left over.

“Picture warehouses full of excess fabric, with no system in place with which to deal with it as brands only care about their product. It’s a barrier for companies like us as we want to be transparent about our products and their environmental impacts, something which our customers care about.”

A Cambodian garment sector insider working for a global brand, who did not want to be identified, agreed that there should be better systems in place for waste, but said that currently there is a lack of incentive. 

“Industrial waste management from some 1,000 factories here [Cambodia] is a major problem and until recently, only one company was licensed to collect this waste and it was taken to landfill. 

“One big problem is that it’s simply cheaper in many cases to dump waste, rather than upcycle. The fees for industrial disposal are so low that there is little incentive to segregate waste, find dealers interested in collecting and then finding facilities that can process it.” 

The problem, he said, is that the symbiotic collection and processing infrastructure doesn’t exist, with these issues telling of a sector that has long focused on high volume and low production value, fuelled by growing demand for ‘fast-fashion’ in the West.

The industry insider added that “there are a number of ethical clothing brands in Cambodia that make use of deadbolts”, however “they buy in too small a quantity to be significant”.

Reverse Resources, who operate a global platform connecting textile waste producers with buyers, are an example of an organisation trying to unlock business opportunities of a circular economy within the textile industry. 

“[Opportunities in textile recycling] are improving and brands are becoming more engaged, but it is still a slow process, due to the fact that the awareness is still low on what is waste and what are the possibilities with it,” said marketing manager Marieke Koemans-Kokkelink.

“It’s a complex process due to legislation which is different per country. The current technology is growing but not scaled yet, the alignment of all stakeholders to transition takes time, effort [and] investment. However, the circular economy approach is in our eyes still the ultimate route to follow.” 

The Economic Research Institute for Asean and East Asia (Eria) analysed circular opportunities in industries across Asia in 2017. The research found that the adoption of circular economy principles could lead to economic growth of around $324 billion, with the potential to create 1.5 million jobs in Asia over the next 25 years. 

What’s important is that [upcycling] provides not only more jobs, but people learn new skills and make new connections. It opens doors for people who wouldn’t get those opportunities just working for factories

Samphas Him of Nomi

Indeed, successful circular economy initiatives in the garment industry have been seen in Asia before and where better to begin than the world’s largest textile producer, China. In response to the damaging effects of the textile industry, China’s State Council passed the 2008 Circular Economy Promotion Law which required the textile industry, among others, to develop a circular value chain. 

This benefitted both private and third sector parties wishing to capitalise on the newly incentivised textile recycling sector. A report by The Netherlands Embassy of China in 2019 said: “The largest company in China that is working in [the textile recycling] field is Flying Ants, and from 2015 to 2018, the number of clothes that the company collected rose from 1000 tons to 40,000 tons, a significant rise.”

Flying Ants were reported as saying the rise in clothing recycled occurred due to “growing awareness among Chinese consumers and the door-to-door pick-up service”.

The report also said that upcycling companies such as UseDem and The Squirrelz had benefited from increasing textile recycling awareness, the latter saying in an interview that “import-export agents from the United States and South American countries responded very well to their wholesale project”.

Samphas Him, a production and merchandising manager from non-profit economic development agency Nomi, who among other initiatives employ survivors of human trafficking in Cambodia to produce upcycled goods, says a circular economy offers more than economic benefits.

“There are many private companies and NGOs that are involved in upcycling, it is definitely a growing industry. What’s important is that it provides not only more jobs, but people learn new skills and make new connections. It opens doors for people who wouldn’t get those opportunities just working for factories. 

“As news spreads, we find people are choosing to buy upcycled garments from ethical sellers because they know the money goes to something positive. In our case, they want to buy our products because they are supporting the fight against human trafficking while boosting employment in the Kingdom.”

The current view in the garment sector appears to be that to solve current import reliance, and to strengthen the ongoing political relations, cotton mills will move from China to Cambodia, which could in turn cause further environmental damage in the Kingdom. 

But with the severe depletion of Cambodia’s garment industry following the events of recent months, the Kingdom now sits at a crossroads. The question remains whether its focus on short term, high volume, low-value production and fast fashion dependence is going to remain feasible in the post-Covid and EBA future. 

Upcycling and the handful of small companies and NGOs operating upcycling initiatives in the Kingdom cannot currently serve as the antidote to the mammoth waste issue in Cambodia’s garment industry. However, they offer an insight into alternatives, shining a light on the potential of waste recycling and evolving consumer attitudes towards ethically made, environmentally conscious products.

In a changing world, it remains to be seen how long the fashion industry can continue to hang out dirty laundry; with this question taking on particular urgency in Cambodia. 

The post Upcycling: Growing sustainability and diversity in Cambodia’s garment sector appeared first on Southeast Asia Globe.

For Lourdes Dilariarte of Pilar, Sorsogon Province of Bicol region, typhoon Kammuri was yet another disaster bent on testing her resilience.

“This is the first time I ever experienced a storm like this,” says the 70-year-old. “The wind lasted for so long, and it rained the entire night.” Pointing to her thighs, she adds, “the flood was up to here.” Her village is still littered with the debris that portrays the extent of destruction.

In early December 2019, Typhoon Kammuri, locally known as ‘Tisoy’, made landfall in Sorsogon in the Philippines. Along its path, 65,000 houses were destroyed, hundreds of thousands of families were left in need of help and without power for days.

In the past, affected families had no other choice but to wait for assistance to arrive. This time however, the people of Pilar were ready. Residents like Lourdes had already received support from a UN agency well before the storm hit.

Forecast-based financing

Two weeks before Tisoy, knowing the region was entering its peak flood season, WFP Philippines dispatched cash to 1,000 vulnerable households. The action was triggered by a pilot system known as “forecast-based financing”. It does what its name suggests, helping people prepare for shocks around the corner.

The communities were happy.

Left: With no steady income and an ailing father to care for, Cecilia Doroliat Camposano (first left) and her family face great financial difficulties. She planned to use the money from WFP to fix her house damaged by typhoon and buy medicines for her father.

“The number one thing is food. And then preparing the house for the strong wind, tying things down with ropes. That’s what most of us do here,” says Rody Rodriguez, another resident who received cash support from the WFP.

Tisoy was the 20th storm hit the Philippines in 2019.

By acting early, WFP, together with the provincial and municipal governments, is helping vulnerable households prepare better and recover quicker in the face of hazards.

The province of Sorsogon was selected based on reliable weather forecasts and seasonal data, which predicted that the first week of December would be filled with extreme weather events. A strong typhoon could easily wreak havoc on the lives and livelihoods of local communities who are already living hand to mouth.

Pay-outs of PHP2,300 (US$45) – 10 days’ worth of the minimum daily wage in the target area – were provided to at-risk households. The sum aligns with the national government’s guidelines for cash in emergencies. The households were selected out of a most vulnerable household list developed by the Department of Social Welfare and Development.

The number one thing is food. And then preparing the house for the strong wind, tying things down with ropes. That’s what most of us do here,”

WFP had also set up a complaint-and-feedback mechanism to ensure the scheme was accountable to the affected population.

Counting the benefits

When asked how they spent the money, many locals say that they used it to buy food, before anything else.

“If we had not gotten the cash, we would spend our own meagre income to buy food or would have to rely on the assistance from local government units,” says Lourdes.

Having already received assistance in advance, the communities’ need for assistance after the disaster was much reduced; a fact that is well noted by local officials.

“Based on our experience, no one gives assistance before a calamity. Usually that happens after a calamity or event,” says Arnol Lista, Local Disaster Risk Reduction and Management Officer. “The amount may not be a lot, but for people in our municipality, it means they could use it to buy food and other necessities; get their houses ready before the storm; and move on with their lives much quicker after the storm.”

Currently, 10 provinces in the Philippines have established plans to institutionalise the FbF approach in their respective areas. WFP is also supporting the institutionalisation of the FbF approach at the national level by supporting the Government of Philippines with capacity strengthening.

These activities are funded generously by the government of Germany.

“A key element of FbF is that the allocation of resources is agreed in advance as a form of partnership between the government, WFP and other humanitarian partners,” explains Douglas Broderick, Country Director a.i. of WFP Philippines. “By combining FbF with climate-smart disaster risk reduction and response efforts, WFP can contribute to the long-term community resilience-building efforts of the country.”

Besides the Philippines, WFP’s forecast-based financing is also being implemented in Bangladesh and Nepal in Asia and the Pacific—the most disaster-prone region in the world.

All photo credits: ©WFP Philippines/Arete

The post Before the Storm Hits appeared first on Southeast Asia Globe.

“Compared with other big cities such as Hanoi and [Ho Chi Minh City], Hai Phong is still the most traditional. There is no Starbucks, no McDonald’s, nor skyscrapers (yet),” reads the introduction of the book, Hai Phong Through the Eyes of a Foreigner.

Commissioned by industrial firm Deep C for their 20th anniversary, the book was intended to provide a snapshot of Vietnam’s third-largest city 120km east of Hanoi, little-known to foreigners except for its proximity to tourist hotspots Ha Long Bay and Cat Ba Island. Now, just two years later, a busy Starbucks is nestled in the city’s core, and the skeletons of future skyscrapers are dotted with construction crews – though still no sign of a McDonald’s franchise. 

A long-term, export-driven vision has handed Hai Phong the title of Vietnam’s fastest-growing city in terms of GDP since 2015, with a population that has expanded by almost 50% in the past decade. Hai Phong’s growth has also been part of the the north’s transformation into an FDI hotspot in recent years. 

Deep C was established in 1997 to capitalise upon this trend, with their approach contributing heavily to the massive uptick in FDI and development in recent years. The result is a rapid transformation of the city that seems poised to continue. 

“If you drive through the city, you just feel the buzz of things being built,” said Hans Kerstens, Deep C’s head of sales and marketing, citing the under-construction five-star Hilton hotel as an example – an establishment that would have stuck out like a sore thumb just five years ago in the industrial port city.

Deep C’s main operation in the city is an industrial zone on land developed as a multitude of sites for factories hosting major international brands such as Chevron, Bridgestone and Puma. They also have service companies providing water and electricity. 

Following the creation of the ASEAN Economic Community in 2015 with the vision to create “a highly competitive region … fully integrated into the global economy”, industrial zones across Southeast Asia have gained increasing traction as a means to attract foreign investment.

Vietnam has been among the leading beneficiaries of this drive, and as of December 2018 over 326 industrial zones dot the country’s ports and countryside, with the north experiencing particular growth in the past decade due to its proximity to China.

According to Vietnam Briefing, by the end of 2018, industrial and economic zones attracted around 8,000 foreign projects with a total capital of over US$145 billion. With the displacement of Chinese factories to the area as a result of the ongoing “trade war” with the US, this number is projected to rise in the coming years.

Hai Phong has always been capitalised upon for its favourable port-side location on Vietnam’s northeast coast, and was an epicentre for violent conflict during French colonial occupation and subsequent decades of war.

As the city recovered from the heavy bombing it suffered during the Vietnam War, agriculture, manufacturing and fishing all grew as important industries in the 1980s. In recent decades, the area has also flourished on tourism, with it located a stone’s throw from UNESCO World Heritage Site Ha Long Bay. 

But today, as Hai Phong rapidly emerges as a trading gateway and a modern industrial city, Deep C’s intent – to make it as easy as possible for foreign companies to invest in Vietnam – is spurring growth, sling-shotting the once-traditional community into a new age.

Among the clearest indications of the city’s shifting demographics is the QSI International School of Hai Phong – which opened in 2005 as one of a chain across 31 countries globally – that has tripled its student body over just three years. 

Jonathan Mudd, the school’s director, has been witness to this unprecedented change. QSI spent the past year constructing a new building – part of a “three to five year plan” according to Mudd – only to have it reach capacity as soon as it was finished. To accommodate further growth, the school started construction of its next building within two months, as opposed to the original plan of three years later.

It’s a far cry from the apartment building they were running the school out of previously, which has been renovated and turned into housing for some of the teachers. 

Most students are foreign, with the majority of Deep C’s expat employees enrolling their children in the school. A strong Western influence can be seen in the community that has popped up around the school, catering to the tastes of expats with wide, hushed streets and larger homes.

Mudd vividly remembers Bruno Jaspaert, general director of the Deep C company cluster, visiting QSI when he was considering moving to Hai Phong for his current job.

“Bruno walked in the door, it would probably be January, February, just to visit Hai Phong. He hadn’t even been accepted to his job. And he walked in the school and we said, ‘Oh yeah, we have 55 kids. And he said, ‘Okay, I’m going to accept my job. So when I see you again, you’re going to have double. 

“When he walked in the door again, in August of the following year, we had double, exactly, of when he walked in the door [the first time].” 

Bruno said, ‘I’m going to accept my job. So when I see you again, you’re going to have double [the students].’ When he walked in the door again, in August of the following year, we had exactly double

Jonathan Mudd, QSI International School of Hai Phong director

Jaspaert has only been with Deep C for about 18 months, and moved to Hai Phong armed with an intent to re-envision the way the company was doing business. 

At the time of Jaspaert’s arrival, Deep C had one designated land zone, 113 employees and a vague idea of starting up an electricity company to support their clients. Today, they have 289 employees and two further zones are under construction in neighbouring Quang Ninh province.

Suddenly, the 23-year-old company is going through a rebirth, one meant to change their company’s position in the country’s economic landscape. 

“Within Southeast Asia, it’s a good place to be. It’s very simple,” the Belgian said. 

The figures largely speak for themselves: the company’s 2020 budget is triple what it was in 2019, and according to Jaspaert, as of 6 January 2020, they have already signed up enough new tenants to their industrial zone to make the budget for the year. 

“If our sales department doesn’t do anything anymore for the whole year, we’re already good for the year,” joked Jaspaert. Shocking to think about, he agreed, and also “pretty frantic”. 

Fellow Belgian Koen Soenens is one of these new employees. After joining in late 2019 as Deep C’s international business development manager he has been bolstered by the amenable attitude of local government, who do not want to solely rely on nearby Ha Long Bay’s tourism dollars for income. 

“I’m really positively surprised about the the overall attitude of the local government, how they look at things,” he said. 

Soenens sees the same “exceptional momentum” in Hai Phong as Jaspaert, which is why he moved his family from Singapore to explore the area’s potential. 

He took Southeast Asia Globe on a daylong tour of the firm’s factories and infrastructure sites that form the sprawling 3,400ha facility sitting adjacent to the newly-operational Japanese-funded Lach Huyen Deep Sea Port. Its sheer size makes it impossible to tour without a car, and after a while, the endless greys and blues blend together. 

Driving back into Hai Phong, the city’s transformation becomes more evident as the car passes rows of glamorous, faux-European apartment complexes, blindingly white and adorned with black balconies that look straight out of a kitsch Parisian movie set. 

The massive Vincom Plaza mall, opened in 2015, sits across the way, with the entire area a brand-new development by the conglomerate owned by Vietnamese billionaire Pham Nhat Vuong – which has also firmly established its presence in the city in recent years.

For Deep C, standing out can be a challenge in Vietnam’s highly competitive growing FDI environment, especially as more people notice the north’s potential.

“We have to be better than the standard Vietnamese operator, who only is interested in one thing: develop some land, sell it, and that’s it,” said Jaspaert.

This has seen Deep C’s financial growth paired with a shift in mentality towards sustainability-minded planning, according to Kerstens. 

I’m trying to help my people to rethink our vision and mission as a company. Of course we are selling land, but it’s more than that. I think we should be, and we will become, probably the first eco-friendly sustainable industrial zone [in Vietnam]

Koen Soenens, Deep C international business development manager

“Because it’s good for the environment, it’s good for the image of the part, and it’s good for the image of the customers, and it guarantees that the customers have energy,” he said.

Kerstens says that he is passionate about keeping the company sustainable, and sees a link between the environmental side and Deep C’s profitability long-term. Of course, it helps that many foreign investors increasingly have green concerns at their core to meet the public’s shifting attitudes towards the environment. 

When Kerstens started, he said, not one company would ask about the source of energy when considering investing with Deep C – today, many do. Corporations are becoming increasingly concerned with their footprint and how that presents to the public, more often forgoing cheap labour and questionable supply chain options for sustainability indexes and media-friendly goal-setting.

This green concern is also a departure from the norm in a country with ambitions to grow faster than China this year, and whose growing demand for energy is predominantly being led by the coal sector. Between 2000 to 2015, coal’s share in Vietnam’s total primary energy supply grew from 14% to 35%. 

The government has incorporated a renewable energy development strategy into its overall energy plan, but has plans to increase the number of coal plants. While the affordability of coal is attractive to developers, it has received scathing criticism from organisations like the World Bank for putting the environment and lives – due to worsening air quality – at risk. 

“I believe it should be Deep C’s goal to show … that we can bring economic growth in combination with an eye for the future, with respect for the environment, with sustainability ingrained in everything we do,” said Jaspaert. 

A bank of solar panels soaks up in the sun in a field near Deep C’s water management station; the plan is to generate enough energy to supply all of the industrial park within the next seven to nine years, and they offer discounts in exchange for occupying their customers’ roof space. 

Rows of trees are planted to create much-needed green space. And between zones one and three, on a 200m stretch, Deep C has constructed Vietnam’s first recycled plastic road, made out of plastics that have been dried, shredded, and integrated into the concrete. 

“We’re a foreign company, the majority of our tenants are foreigners. So we want to bring benefits to Vietnam,” said Kerstens. “Meaning we create jobs, we create taxes, but we don’t want to put a burden on Vietnam by, for instance, generating waste deposits.” 

They’re relatively small gestures for a company defined by industrial growth and development – with the unavoidable negative environmental impact that entails – but Deep C hopes the outlook will take hold in other parts of the country, as well. 

The aim isn’t to become the largest industrial zone in the country, clarified Soenens – that would perhaps attract unsavoury tenants. The vision, rather, is a slow transition to a full “eco-park”.

“It’s just more than just cleaning land and paying our taxes … I’m trying to help my people to rethink our vision and mission as a company. Of course we are selling land, but it’s more than that. I think we should be, and we will become, probably the first eco-friendly sustainable industrial zone [in Vietnam].”

And under new regulations introduced by the Vietnamese government in May of 2018, called “Decree 82”, “eco-industrial zones” will enjoy preferential treatment when it comes to loans, exchange of information related to the technology market and other benefits.

Hai Phong, as a city, is at the precipice of further rapid growth, and seems to be constantly planning for the future. 

The proposed addition of a second terminal to Cat Bi International Airport, on the outskirts of the QSI community, would make it the largest in northern Vietnam ahead of the capital Hanoi if realised. And with burgeoning infrastructure supported by the local government – such as the recently finished Ha Long-Hai Phong Expressway – you no longer have to pass through Hai Phong’s city centre to access highways that run to Hanoi and China. 

But Jaspaert notes that the north is growing so fast that there will no doubt be a plateau or slight fall the near future if infrastructure can’t keep up. 

“If you look at it, today, logistics in Vietnam are extremely important. And the reason why is because they’re extremely bad,” explained Jaspaert. “The impact of logistics is very bad.” 

But despite the challenges on the horizon, what ultimately makes Jaspaert confident of the industrial zone’s potential is its position in the country. When he pitches to companies, the bulk of his message is just three words: location, location, location.

“I don’t know any other spot that I would like to be more than Hai Phong today.”  

The post Rise of the north appeared first on Southeast Asia Globe.