The government approved $854 million in capital investment projects in 1998, a 12.5 percent increase from 1997, official statistics show.
And for the second year running, more than half of the 143 approved projects were in the garment industry.
Domestic investment made up $248.2 million of the total value of approved projects in 1998, figures from the Council for the Development of Cambodia show.
Malaysia was the leading foreign investor with proposed projects worth $146.5 million.
The value of projects approved from Taiwan and China increased dramatically. In 1998, the CDC approved $144 million worth of projects from Taiwan, up from $44 million in 1997. The value of approved Chinese investment bounced up from $36 million in 1997 to $112.5 million last year.
Most investment projects were in wood processing, tourism and garments.
“The uncertainties of the election did not affect investment. There was no slowdown or dramatic drop,” said CDC Secretary General Sok Chenda.
But the regional economic crisis did show some impact as hard-hit South Korea’s investment projects plummeted. In 1997, South Korea was the leading investor nation with $189 million worth of approved projects. In 1998, approved projects from South Korea totaled just $4.5 million.
But not all projects are implemented. Since 1994, only about 50 percent of $5.3 billion in approved investment has actually begun, Sok Chenda said. Other analysts and an Asian diplomat said the number is probably closer to 35 percent.
But the CDC chief said he expects about 65 percent of 1998’s projects to be implemented.
In 1999, Cambodia’s investment landscape is likely to change reflecting a recently negotiated US quota on garments.
“The big boom [in garment factories] will not be the same this year,” Sok Chenda predicted, adding the new quotas will push factories to produce higher quality products.
A possible slowdown in the garment industry and the regional crisis could hit Cambodia hard, an Asian economic analyst said.
“If things are stable, most companies and bankers are talking about [improvement here] about the last quarter of this year,” he said. “But it will be slow.”
The World Bank recently reported Cambodia’s economy fell to zero percent growth in 1998.
because of drought, political instability and the regional crisis. The number is down from 1 percent in 1997 and 6 percent the previous five years.
In order to improve investment, the CDC plans to target the long-neglected agriculture sector. Only 5 percent of all private investment since 1994 is in agriculture, even though the majority of the population—and most of the country’s poor—live in rural areas.
In order to attract investment, the government is considering dropping rent costs for plantation owners until after their first crop, Sok Chenda said.