Cambodia's construction sector will see a slowdown in 2012

London 7/24/2012 

(TransWorldNews)

 

BMI View: We remain convinced that Cambodia's construction sector will see a slowdown in 2012, despite robust growth in project approvals over January and February. Not only do issues such as flood concerns and poor global economic outlook remain pertinent, but we have also seen a marked increase in the number of large-scale projects being delayed by business environment risks. This suggests there is a problem moving project approvals along to the construction phase. As a result, we forecast Cambodia's construction sector to experience a slowdown in 2012 with real growth of 6.6%, down from an estimated 13.7% in 2011. The key developments in Cambodia's infrastructure sector are:

In March 2012, Australian logistics group Toll Group announced that it withdrew from its 30- year concession to operate Cambodia's railway network. Toll Royal Railway, a joint venture (JV) between Cambodia's Royal Group and Toll Group, suspended all railway operations for a year and laid off half of its 120 personnel on a recall basis at the end of March 2012. The JV had secured the concession in mid-2009 and was part of a plan to revive the country's decrepit railway network, following years of neglect.

In April 2012, Thailand power producer Ratchaburi Electricity Generating Holding has formed a joint venture (JV) with Cambodian tycoon Ly Yong Phat for the construction of a US$3bn coal-fired power plant in the province of Koh Kong. This JV agreement comes after Ratchaburi completed a feasibility study for the 1800-megawatt (MW) power plant in February 2012. Besides developing the coal-fired power plant, the JV, named KK Power, is also planning to invest up to US$30mn in transmission lines between the power plant and the Tatay hydropower plant in Koh Kong. KK Power is holding negotiations with Thai officials regarding the tariffs for the coal power plant. Upon completion, the Koh Kong project will be the largest power plant in Cambodia.

In April 2012, Heng Development announced that it is planning to spend around US$200mn on a water treatment project in Cambodia, in a joint venture (JV) with China CAMC Engineering and BIG International. Heng Development is to own a 30% in the JV, while China CAMC Engineering and BIG International would hold a 50% and 20% stake, respectively. CAMC and BIG have been carrying out research in coastal areas, Battambang, Kampong Cham and Kandal province.

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