Completed Projects Highest in Six Years
Capital investment pledged for Cambodia dropped dramatically in 1999, totaling 98 projects worth $480 million, the lowest amount since the government began tracking the figures in 1994.
Data from the Council for the Development of Cambodia show that 1999 figures represented a steep decline from 1998, when 145 projects worth $855 million were pledged.
But government figures indicate that the implementation rate of the pledged investment in 1999 was the highest of the past six years. While the ratio of project implementation in previous years reached only between 11 percent and 45 percent, last year’s rate exceeded 85 percent, according to CDC.
“We recognize the impact of the regional financial crisis and the internal problems on capital investment,” said Chea Vuthy, director for CDC Information Bureau. “But still 1999 is the best year for Cambodia in terms of implementation.”
He said the gap between pledged capital investment and implemented investment narrowed dramatically because the government in mid-1998 started requiring investors to deposit 1.5 to 2 percent of their investment amount upon approval. That meant only serious investors pledged to come to Cambodia.
Chea Vuthy said the sharp decline in pledged investment for 1999 also is partly a result of the new requirement.
According to the 1999 investment statistics, all sectors except tourism saw a sharp drop from the previous year. Industry, for example, which includes garment manufacturing, wood processing and mining, experienced a 63 percent drop from $654 million in 1998 to $239 million in 1999. But the number of garment factories approved remained roughly the same.
Pledged investment in services, however, increased five times from $39 million in 1998 to $209 million in 1999. The increase could be attributed to Cambodian investor Duty Free Shop Co Ltd pledging to invest $146.8 million to develop a duty-free zone in Koh Kong province.
The sharp decline in investment from 1998 to 1999 correlates with a sharp drop in Asian investors, especially from China and Taiwan.
Economic experts attributed that decline to the lingering impact of the Asian financial crisis.
“In general, it take two years from pledging projects to implementing them,” said Sok Hach, a macroeconomist with the Cambodia Development Resource Institute. “In 1999 and 2000 we have the real impacts of the Asian crisis.”
But he predicted that Cambodia as well as other Asian countries will enjoy economic growth and recovery from the regional crisis this year.
Kao Kim Hourn, executive director for the Cambodian Institute for Cooperation and Peace, said that the government needs more aggressive strategies to draw more investors. Strategies include strengthening a “One Stop Service” by the CDC to help investors, improvement of security and development of investment-related regulations.
