Investment in Cambodia drops by half

By Chun Sophal

The Mekong Times

Investment in Cambodia plummeted by nearly 50 percent in the first quarter of this year over the same period last year, a report from the Council for the Development of Cambodia (CDC) claims.In a pre-release brief received by The Mekong Times on Thursday, CDC stated that private investment totaled US$253 million in the three months of early 2008; far lower than the US$503 million in the same period in 2007. Domestic investment fell from US$221 million to US$90 million, the report claimed.Suon Sophal, a CDC official, said that the number of investment projects had also declined, though the picture was less bleak. There were 21 new projects recorded by the CDC this year, compared to 26 last year. Of this year’s 21 projects, four relate to tourism, two are agricultural, one related to telecommunications and 14 industrial projects.Singapore is the investment leader so far this year with US$48 million, Suon Sophal revealed, followed by China with US$32 million and Korea with US$30 million. Last year China was ranked first with total investment of US$66 million, leading Kazakhstan with US$62 million and Korea with US$38 million.Son Chhay, a Sam Rainsy Party parliamentarian, claimed falling investment was a warning to the government to re-examine its politics, especially those on corruption and the rule of law. “I think that we have to strengthen our administrative reform soon because investors cannot allow money to go to waste in a complicated and unclear situation,” he said. “We have to build their confidence rather than extorting money from them.”Still, Cambodia is “a country which finds it easy to attract investors,” Son Chhay said, urging “reliable reforms.”Chan Sophal, President of Cambodian Economic Association and Senior Research Manager of Cambodian Development Resource Institute, was also upbeat despite the CDC figures. “I’m optimistic Cambodian investment will increase in the second semester after the elections, as Cambodia has many resources, good economic growth and political stability,” he said, adding that investment was still high when compared to the last 3-4 years.Cambodia first saw seen substantial foreign investment in 1993, with momentum increasing until five years later, when street fighting between Cambodian People’s Party supporters and supporters of Prince Norodom Ranariddh’s Funcinpec broke out in central Phnom Penh. Foreign investment plummeted, only restarting in earnest in 2000.In 2007, investment in Cambodia totaled US$2.6 billion.