Capital investment pledged for Cambodia has slowed dramatically this year, totaling $240 million in the first nine months of 1999, down from $796 million during the same period of 1998, government statistics show.
The third quarter especially was quiet, with only 15 proposed projects worth $60 million approved, according to figures from the Council for the Development of Cambodia. That compared with 45 projects worth $369.3 million during the same period of 1998.
It’s not known what percentage of approved projects are implemented in Cambodia.
The latest statistics show that investors from Asia and the Pacific region, especially from Asean countries, drastically declined. “Cambodia is in the same position as neighboring countries like Laos and Vietnam. Investment in these countries is going down,” said Kao Kim Hourn, executive director for the Cambodian Institute for Cooperation and Peace. “This is something related to the Asian financial crisis. The economy in the crisis countries is slowly recovering but it still impacts on Cambodia’s transitional economy.”
Economic analysts and CDC officials attributed other factors—poor infrastructure, high cost of transportation, frequent crimes and unclear land tenure—to slow investment plans.
“The government needs to set clear policy and strategies on how to attract private investors,” said Kao Kim Hourn.
The statistics show that the Cambodian Investment Board of the CDC approved 67 projects worth $240 million from January through September this year, compared with 120 projects worth $796 million during the same period of 1998.
The figures showed sharp drops in wood processing, tourism and agriculture projects.
Proposed investment in wood processing manufacturing is down from $179 million during all of 1998 to only $14 million so far this year. Hotel investment projects have declined from $106 million in 1998 to $25 million in the first nine months of this year. Proposed investments in agriculture plantations have dropped from $41 million in 1998 to roughly $5 million through September.
The decline in proposed investment in garment manufacturing—Cambodia’s leading industry—was relatively mild despite export quotas imposed by the US government early this year.
About half of this year’s approved projects so far are in the garment manufacturing sector. Proposed garment manufacturing projects accounted for $89 million.
During the same period of 1998, 68 projects worth $105 million were approved in garment manufacturing.
The biggest investor this year so far is Manhattan Textile and Garment Corp, a US-Taiwan joint venture, which pledged $21 million. The project is followed by Royal Heritage Hotels Co, a Cambodian company, pledging $20 million for its hotel and restaurant projects. A number of other projects are in the $10 million to $15 million range.
In recent years, Asian countries had accounted for a large portion of foreign investment, according to the statistics.
In all of 1998, Asean countries outside Cambodia pledged $187 million in capital investment while this year so far the total is only $32 million.
Other countries in Asia and the Pacific this year have committed $93 million, compared with $350 million for all of last year.
European countries as a whole have maintained a stable, although small investment. Proposed investments from the US, although a fraction of the total, have increased from $4.5 million during 1998 to $16.7 million during the first nine months of this year.