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Multiagency Cambodia Business Advisory – Section III (Trafficking in Persons, Wildlife, and Narcotics)

III. Trafficking in Persons, Wildlife, and Narcotics

a. Human Trafficking and Child Exploitation

U.S. businesses are advised to consider the threat of human trafficking and child exploitation, particularly when investing in the tourism industry. While the Cambodian government has taken some steps to combat human trafficking, such as continuing to prosecute and convict traffickers, official actions are not sufficient to meet the Trafficking Victims Protection Act’s minimum standards to eliminate human trafficking. Corruption, a lack of a judicial monitoring system, low capability, and misuse of limited law enforcement resources hamper enforcement and leads to a failure to protect vulnerable populations.

Children in Cambodia are subjected to the worst forms of child labor, including in commercial sexual exploitation, sometimes because of human trafficking, and in forced labor in brickmaking. In addition, judges were reported1 to have accepted bribes in return for dismissal of charges, acquittal, and reduced sentencing for individuals committing such crimes, especially for those with alleged ties to the government; this made children more vulnerable to child labor.

Research indicates that some children work on rubber plantations in northeastern Cambodia to help pay off loan debt taken on by their parents, putting them at risk of debt bondage. Research also indicates that children in domestic work face similar debt bondage conditions, including approximately 30 percent of child domestic workers under the age of 18.

The Cambodian League for the Promotion and Defense of Human Rights (LICADHO) has reported that more than 2.6 million persons in the country had microloans, which in Cambodia has contributed to an increase in child labor and bonded labor. Cambodia has $10 billion of issued microloans and the highest microloan debt per borrower in the world. Nine major lenders hold 90 percent of Cambodia’s $10 billion in registered microloan debt including two former microfinance institutions that have since become banks.

Rampant development in Sihanoukville, the site of dozens of new casinos built in the last five years, raises concerns of child exploitation and trafficking. In recent years, the rapidly growing and largely unregulated presence of casinos and entertainment establishments in Preah Sihanouk province led to an increase of local sex trafficking and forced labor among Cambodian women and girls. Cambodia’s 2020 ban on online gambling and the subsequent shuttering of many casinos and other entertainment establishments have reduced such trafficking, though the problem persists and will likely grow as the Cambodian economy recovers from COVID-19. The government lacks the capacity to deal with child labor and is overwhelmed by the scale of the issue, particularly in Preah Sihanouk, leading to an increase in the number of child laborers at construction sites and entertainment venues, including casinos, hotels, and karaoke bars.

b. Conservation Crimes

Corruption and a lack of law enforcement capacity fuel conservation crimes such as wildlife trafficking and illegal logging in Cambodia. U.S. businesses are advised to exercise vigilance when operating in the logging, animal-related products, and linked industries. In December 2019, the United States designated Cambodian tycoon Try PHEAP for being a current or former government official responsible for or complicit in, or directly or indirectly engaged in, corruption, as well as 11 entities that are owned or controlled by him. Try PHEAP used his vast network inside Cambodia to build a large-scale illegal logging consortium that relies on the collusion of officials to facilitate protection from the Cambodian government, including military protection, for the movement of his illegal products. PHEAP used the Cambodian military to enable his illegal logging activities. Illegal logging remains a risk to businesses operating in Cambodia. For example, Hong Kong customs seized more than 211 tons of endangered wood from Cambodia in May 2021.

Cambodia is a major source, transit, and destination point for trafficked wildlife and wildlife and timber products, including ivory and rosewood, and is identified as a Country of Concern under the 2020 Eliminate, Neutralize, and Disrupt Wildlife Trafficking (END) Act Report. Siamese Rosewood, a Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) Appendix II listed species, is illegally logged from protected areas in Cambodia to satisfy booming demand in the PRC. Legal loopholes and lax enforcement enable foreigners to buy ivory and other illegal wildlife and timber products in Cambodia.

In recent years, Cambodia emerged as a regional tourism hotspot for visitors and others seeking to purchase ivory and other illicit wildlife products, with tourism increasing after China’s ivory ban was enacted in late 2017 and then PRC law enforcement increased actions against wildlife traffickers in the years that followed. There is a prevalence of traders who sell illegal wildlife products to visitors in Phnom Penh and Sihanoukville. Because the pandemic disrupted cross-border activity (including trade and tourism) in Cambodia and around the world, stockpiling of illicit products (including ivory) is occurring. Consequently, while seizures of illicit wildlife products and timber are down compared to recent years, this is not an indication of a drop in consumer demand.

In 2020, Cambodia was added to the Countries of Concern List in the State Department’s Report to Congress on Major Wildlife Trafficking Countries, which means the U.S. government has serious concerns of either high-level or systemic government involvement in wildlife trafficking. As demonstrated by Cambodia’s 2016 national risk assessment, the government recognizes that illegal logging and wildlife trafficking are money laundering threats in the country. However, legal loopholes and a lack of capacity to effectively tackle transnational organized crime are obstacles to disrupting the transit and sale of ivory and other illicit wildlife products in Cambodia.

Special economic zones set up to promote trade between the PRC and its Southeast Asian neighbors are facilitating a black-market trade in wildlife products, according to NGO reporting. Among these locations are special economic zones set up by local firms and Chinese businesses.

c. Drug Trafficking

U.S. investors and businesses should be forewarned that Cambodia is a production and transit point for synthetic drugs, including methamphetamine produced in Burma’s northern states with precursor chemicals sourced largely from PRC manufacturers. An increase in the availability of these drugs has resulted in corresponding sharp increases in numbers of illicit drug users in Cambodia. Counterfeit and illegal tobacco products are also widely trafficked in Cambodia.

Categories: Advisories Guidance Multiagency Advisories

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