Cambodia's building blocks

How climate change drives debt bondage in booming brick industry

As the Phnom Penh construction boom begins to permeate secondary cities, demand for locally produced clay bricks has seen full kilns selling out at unprecedented rates. But a transformation to Cambodia’s rural economy – led in part by remittances from construction workers on these sites and microfinance loans – has increased costs in the countryside, leaving the most vulnerable in a constant state of financial keep-up and feeding some into the growing brick sector and its toxic debt bondage

Janelle Retka and Leng Len
November 12, 2018
How climate change drives debt bondage in booming brick industry
Photo: Thomas Cristofoletti

As the Phnom Penh construction boom begins to permeate secondary cities, demand for locally produced clay bricks has seen full kilns selling out at unprecedented rates. But a transformation to Cambodia’s rural economy – led in part by remittances from construction workers on these sites and microfinance loans – has increased costs in the countryside, leaving the most vulnerable in a constant state of financial keep-up and feeding some into the growing brick sector and its toxic debt bondage

Sopheap stepped out of her family’s modern brick home in Kandal province and sat down at a table in their courtyard, which is closed off to their private factory beyond and the long dirt road leading back to National Road 6 by a red clay brick fence. On the other side of it, an excavator lifted wet clay toward a brick-moulding machine, which wailed behind her gentle voice.

“Before, we were selling the bricks for $200 and could barely cover the cost of materials,” said Sopheap, who declined to give her real name. That was before the price tag on a batch of 10,000 clay bricks nearly doubled at the start of the year, which helped her family in a way the 31-year-old said couldn’t be overstated. Last year, covering the cost of production had been a feat.

Clay can be hard to come by if you don’t already own land with the right level of salinisation to make smooth bricks. The wood required to fire the bricks in kilns – making them solid and ready for construction use – had become expensive, while rice husks that sometimes took their place in furnaces had also increased in value. In the lead-up to a four-year peak in international oil prices last month, the local cost of gasoline had also been on a constant uptick, influencing the cost of running brick-moulding machinery and clay excavators. Monsoon season had become increasingly unpredictable each year, slowing production because rainy days made the clay slick and prevented blocks from properly drying.

What’s more, many brick kiln owners give workers large advances, leaving the owners out of pocket and workers with debts that will take years – or decades – to pay back with their meagre wages. This and widely documented child labour through workers’ children compete for the role of the sector’s most widely criticised feature. Manual labourers strive to pay off loans that sometimes reach thousands of dollars brick by brick, often sinking deeper and deeper into debt to their boss along the way.

A worker removes bricks from inside a kiln and moves them onto a cart to stack outside for cooling. Due to the heat of the kiln after firing, workers report issues such as migraines, nosebleeds and more serious conditions

One worker at a brick factory told Southeast Asia Globe that she had initially borrowed only $25 from her employer, but daily expenditures, medical expenses and days lost to rain had added up to $1,000 over three years. She said she only made enough money each day to cover the cost of feeding her family. Another family had stacked up $700 in debt to their boss in a matter of three months, while a 19-year-old who said she had been working at brick factories since she was five years old had $2,000 in debt, part of which she had inherited.

Neither brick workers nor factory owners seem to enjoy this debt-bondage system heavily linked to the industry, which leaves workers bound to their site of employment and their bosses living in constant fear of them splitting without paying back the money owed. But factory owners speak candidly about this practice, which is strictly prohibited under Cambodia’s human trafficking law’s definition of exploitative labour.

“When they come to work for us, they demand money in advance. It’s high risk for us,” Sopheap said. “If they don’t have money, they won’t work, and we need to sustain production. But it happens a lot that they owe us a lot of money and then disappear without paying it.”

During the first four months of the year, demand for clay bricks was so high that the kilns were being cleared out by orders and each batch of 10,000 bricks was valued at just under $400 at its climax, putting factory finances in a sweet spot. This has gradually dropped since April, various brick kiln owners said, but sales were still high and the price remained relatively stable at $320 a set as of last month.

The surge in demand was a symptom of the country’s broadening development, which has fed both the sector and the debt bondage system that often runs parallel to it.

Building on ‘blood bricks’

These small red bricks are unavoidable in Cambodia. As much as 80% of the country’s developments are built on bricks, stacked one by one by construction workers who slather plaster between them to create the walls of homes, offices and even skyscrapers, said Chiv Sivpheng, secretariat of the Cambodia Constructors Association.

Many of these bricks are directly linked to debt bondage, according to Blood Bricks, a report on the state of the industry in Cambodia released last month by the University of London. Recent real estate developments, including the mixed-use The Elysee on Phnom Penh’s Koh Pich (featuring a replica of Paris’ iconic Arc de Triomphe) and the One Park apartment complex built on the filled-in Boeung Kak lake, have been built using these “blood bricks”, the research found. The report also linked some projects using these materials made through debt bondage to development investors from Singapore, the UK and the US.

For years, Phnom Penh’s development alone fuelled the brick industry, with the number of brick factories growing from 50 sites a decade ago to around 300 today, said Chheang Suyheang, the president of two brick kiln associations in the country representing more than 100 factories in the province of Kandal. Until this year, he said, the supply and demand seemed to more or less balance out.

A worker loads a brick kiln with a bag full of garment off-cuts. These are purchased by kiln owners as they are transported from Phnom Penh’s garment factories to the dump located on the outskirts of the city

But the increase in demand came rapidly. In the second half of 2017 alone, the Ministry of Land Management approved 737 new projects worth a total of $3.66 billion, according to leading real-estate firm CBRE Cambodia. The value of nationwide investments approved in that period by the Ministry of Land Management had skyrocketed by 64% compared to the previous year, and tripled in value of recorded investment in the previous three months.

The coastal town of Sihanoukville has claimed much of the excitement, with predominantly Chinese investors erecting a slew of condos and casinos. Research released last year by CBRE anticipated that the supply of coastal condominiums will soar to 5,700 units by 2020, compared to the single high-rise condo building there as of 2017. This activity bolstered the local sale of construction materials, including bricks, by around 40% this year, said Lim Taing Kruy, who has run a construction supply company in Sihanoukville for over a decade.

After a slight lull in new projects ahead of the Cambodian general election in July, real estate development saw a resurgence, said James Hodge, associate director of CBRE. In addition to Sihanoukville, the edges of Phnom Penh and secondary urban locations became host to a variety of new construction plans.

“We have a lot of projects to develop,” said Sivpheng of the construction association. The country’s biggest airport is in the making in Kandal province. Gated communities called boreis are being erected along the edges of Phnom Penh, in Siem Reap and Battambang, and in smaller, emerging cities. “Of course they use our bricks… The brick demand has increased because… these construction [sites have] increased, so we need more bricks for building.”

Workers at the construction site of the Parisian-style Elysee development project currently on Koh Pich (Diamond Island), Phnom Penh

But Suyheang, head of the brick kiln associations, said some factories can’t keep up. While automatic machinery at some sites allows factories to produce mass  quantities at high speeds that mirror demand, most factories – including his – are still using manual machinery.

“We can get only 20,000 bricks per day, because we use six people. But for them, it’s the same amount of people, six people, but they get 100,000 bricks per day,” he said of his modernised competitors.

Of the 300 factories across the country, some 50 are able to churn out bricks at the faster rate, having invested in modern brick machinery and kilns – often safer for the workers manning them – that can fire bricks in hours rather than days, said By Pitou, the deputy general director of the Ministry of Industry and Handicraft’s industry department.

The others are competing against each other – and the weather – to catch up.

A climate of change

Now, it’s the highest amount of rain it’s ever been,” said Va Sam Ol, a 57-year-old former journalist working as a brick maker for the past decade – in $2,000 of debt to his boss today. “Before, you wouldn’t expect rain when it was so hot and so dry. But now, it may be hot and dry, but in a few hours, it will rain cats and dogs. You just can’t tell anymore.” These unpredictable rains mean that bricks can’t dry properly in the sun to be fired and that the loose clay becomes too runny to work with for the remainder of the day and possibly the following day, he said. Over the years, it’s been increasingly problematic.

This is likely a symptom of climate change, according to Blood Bricks. Changes in rain patterns over the year have led to “unseasonal rain, leading to flooding” and interrupted the flow of work or damaged the quality of drying bricks.  

Nick Beresford, country director of the United Nations Development Programme (UNDP), said that while Cambodia has gaps in its country-specific records of climate patterns due to the years of genocide and civil war, there is regional evidence of a 0.1 to 0.2 degree increase in temperature decade-on-decade – “and Cambodia is no exception.”

“There is clear evidence of the climate change effect, and we can see… El Niño-type effects… more frequently than we have done over the period of a number of decades. They’re more severe,” he said, citing the devastating weather cycle that swept Cambodia from late 2015 into May of the following year, causing drought and water shortages. “Basically the climate change effect is not the right amount of water, not at the right time and not in the right place.”

Changes in weather due to global warming will produce more rain, leading to more flooded houses like these in Kampong Cham

This has impacted the productivity of brick factories, Blood Bricks argues, but it also has served to lengthen the term of debt bondage of workers since factory owners normally compensate workers on a brick-by-brick basis. For some, a lost day of work due to rain means having to borrow money for food from the owner, increasing the length of their modern-day slavery with each downpour. “The unpredictability and intensity of rainfall bound up in climate change is therefore a factor in the inability to escape debt bondage, and is experienced by debt-bonded workers in both rural and urban Cambodia,” the report says.

This same climate change that keeps bonded workers indebted is likely helping to drive the country’s most vulnerable rural populations, often farmers, into the debt and debt-bondage system, the research claims.

“What we found in Cambodia in recent years is that changes in rain patterns in particular have made it really difficult for farmers to continue to farm in the traditional manner,” said Laurie Parsons, one of the report’s authors. “Essentially, people complain that the rain patterns which used to be relatively predictable are now much less predictable. They come in shorter and more intense bursts. This means that essentially, you have to be willing to put up with a far greater level of risk in farming and it means that people are taking on a lot more debt in order to farm.”

The El Niño weather cycle from late 2015 alone was estimated to have increased household debt by an average of $1,200, as resulting failed crops and fallen livestock forced rural families to buy new seed, said a report released shortly after the drought ended by the UN’s Food and Agriculture Organization, the UN’s World Food Program and Unicef.

When families default on microfinance institute (MFI) loans or informal loans, some take larger MFI loans with a secondary MFI to pay off their debt, something the Cambodian Microfinance Association (CMA) and the National Bank of Cambodia (NBC) are in the midst of restricting, said CMA’s general secretary, Yun Sovanna. Since last year, he said, the rate has diminished from 20% to just over 5%.

An employee stacks fired bricks outside the kiln to dry. Dried bricks are transported to trucks by kiln workers, ready for transport to the construction projects. This transportation work is also paid piece rate

Others turn to brick factories, where they can take an advance to pay off their debt in exchange for their work, brick by brick, Nithya Natarajan, another co-author of Blood Bricks, told Southeast Asia Globe. Not only in Cambodia but globally, the brick industry is known to prey on the financial desperation of workers with debt-bonded labour, she said.

“This is a wider pattern in terms of labour relations. The scholarship coming out of South Asia has recognised that this is largely because the work itself – the unsafe conditions, the requirement to stoke a kiln fire for seven days – is so unsavoury in terms of the other options available to poorer households… It is always a last-resort type of labour and [is] for the most vulnerable households, and often has to involve some sort of compulsion or coercion through debt bondage.”

If debt and overspending are the cause, Cambodians’ vulnerability has been exposed. NBC data shows that about a third of loans are used for household expenses – not entrepreneurial or farming investment.

In the countryside, this is the result of an economic transformation over the past decade in which remittances from migrant workers at garment factories and the construction sites where clay bricks are being laid have led to an increasingly “material world”, said Yang Saing Koma, founder and president of local agriculture organisation Cedac. At the same time, he said, crop vulnerability and the increase in big-scale farming developments have led around 50% of farmers to grow their own rice or other crops only for subsistence and instead work for other farms as labourers – making them more vulnerable to the demand for labour. This also means that rather than growing their own crops to survive and profit, many rural families are increasingly spending money on goods at markets.

Meanwhile, the number of loans provided by MFIs has grown by more than 30% year-on-year in the past five to seven years, said Sovanna of CMA. The average loan size has also increased by around 40% annually, he said, “from $1,600 in 2016 to $2,500 in 2017.” In spite of an 18% cap on interest rates enforced by the NBC last year, Sovanna said, the most vulnerable borrowers – also seen as the highest risk for defaulting – pay an average of 21% interest when fees for the services are included. He says this is necessary due to the cost of reaching these rural populations and that it “is not illegal.”

This increase in cash flow through the countryside from remittances and loans has also inflated the cost of the fertilisers, machinery and labour that farmers rely on, unevenly impacting poor farmers, said Parsons.

“Essentially, the rural economy has boomed in a way that has left a lot of people out.”

Phnom Penh has seen an unprecedented boom in construction in recent years

Towards a modern future

Preap Koy, the owner of a brick factory in Kandal province’s Muk Kampoul district, said he would prefer to pay employees higher wages and avoid entering debt arrangements altogether, but sees no easy solution to the current situation.

“We really want to [do this], but now the sales aren’t high enough and the cost of raw materials has increased. How could I make a profit?” he wondered – even with the stable cost for 10,000-brick sets and high demand.

Natarajan argued that instead of offering loans, factories could increase the mechanisation of kilns to improve safety and offer occupational health measures to attract new employees. “Given how expensive it is to bond this many families at the start, these are investments that should be available to kiln owners,” she said.

Parsons echoed her sentiment: “Often, brick kiln owners are bonding people with up to $1,000 to $2,000. So to set up a brick kiln involves not only building up the kiln, but this huge investment in bonds. If that money was spent simply on increasing the piece rate of the bricks being made, everybody benefits. That’s a win-win solution.”

I think in the next five years, the small, small handicrafts will be closed

This moment of increased demand is the perfect opportunity to resolve the debt-bondage situation, Parsons said. The current setup “is not good for brick kiln owners, it’s not good for brick workers and it should be possible to resolve this without even increasing the price of bricks – especially given that they have increased, they’ve doubled, I think, over the last 12 months. And that’s something that can be taken advantage of.”

Minister of Labour Ith Sam Heng could not be reached for comment, while ministry spokesman Heng Sour did not respond to multiple requests for comment. After the release of Blood Bricks, however, Sam Heng announced ministry plans to “inspect the locations mentioned in the report” and “take the necessary legal action to put a stop to” child labour, the Phnom Penh Post reported.

Meanwhile, Pitou of the government’s industry department said the demand for bricks is expected to remain steady or grow in the next five years. But he worries about the survival of the smaller brick factories – roughly 250 of 300 – that have not yet invested in modern machinery that Natarajan advocated.

“There are many kinds of materials that can replace the brick from clay. For example, this wall: You can call it like ‘smart board’. It’s not so heavy and is very fast construction,” said Pitou. Precast concrete has also entered the market this year, he said, and is likely to become popular, especially among high-rise buildings. Slabs of concrete can be transported from factories directly to construction sites and, with strong enough cranes, installed as floors and walls. Larger concrete blocks are now being produced in-country, he said, and a handful of companies that haven’t registered yet with the ministry are already in production.

“Until today, the clay [bricks are] still more popular than cement… The cement brick is a new product for the Cambodian people. They don’t believe in this product yet. But I think maybe in the next five years, this will change,” he said. “So I worry about the brick kilns. Maybe next time, [developers] will not use the bricks, because the bricks [are laid] one by one, one by one. Each one is so very slow.”

While smaller construction sites such as boreis are likely to continue using clay bricks, he predicted that brick factories that are not able to modernise and keep up with demand will lose out on the construction boom, with both owners and their employees losing this avenue for paying expenses and managing debt: “I think in the next five years, the small, small handicrafts will be closed.”

Whether for the well-being of workers or companies’ incentive to keep the kilns firing, industry insiders agree that the factories must evolve. And though losing a dangerous job that keeps employees drowning in debt may not seem like such a loss, the question of how they will be able to pay off their remaining debt and future expenses is still a pressing one. Despite the uncertainty, the prospect of a brick industry fuelled not by debt-driven slavery but modern machinery and better working conditions is one that the sector cannot afford to ignore.

“It’s not a [matter] of ‘we can’t make bricks anymore’,” said Parsons. “It just needs to be modernised.”

Sand, Cement & Brick: This is the final article in our three-part series on the true costs of Cambodia’s building blocks. Follow these links to read parts one and two.

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