The amount of investment approved by the Council for the Development of Cambodia increased slightly last year, fueled by a surge in domestic investment.
The domestic gains, however, were offset by a 33 percent drop in approved projects with all or some foreign investment.
“Normally, investment from Cambodia should increase because certain people are richer now,” Sok Hach, director of the Economic Institute of Cambodia, said Monday. “It’s a more familiar political situation for Cambodians than foreigners,” he added.
The CDC approved 47 projects worth about $73 million last year. In 2002, 34 projects were approved, valued at about $71 million. Those numbers may be inflated, however, as economists and business observers note that only a fraction of CDC-approved investment is typically realized.
Foreign investment boomed in the late 1990s as the garment industry took off. From 1996 to 2000, Cambodia averaged about $217 million worth of foreign investment each year.
Coinciding with a worldwide recession, however, the amount of foreign investment declined rapidly in the past few years. In September, the UN and the International Chamber of Commerce, with the government’s blessing, published an independent investment guide aimed at increasing foreign investment.
As the country waits to reap the benefits from the investment guide and its expected World Trade Organization membership—which still needs to be ratified by the National Assembly, when and if it convenes—domestic investors have picked up the slack.
In 2002, CDC statistics show, domestic investment accounted for 32 percent of all registered capital and nearly 35 percent of all fixed assets for approved projects. Last year, approved domestic projects comprised 56 percent of registered capital and nearly 72 percent of fixed assets.
Sok Chenda, secretary-general of the CDC, said Monday he was not prepared to comment on the 2003 statistics.
Another CDC official, speaking on condition of anonymity, said the government has shifted its strategy from attracting garment factories to wooing tourism and agri-business investments.
“The tendency from looking at other countries is that the garment sector is temporary,” the official said. “We don’t want a decline, but we are looking for another way.”
The garment industry increased yet again in 2003, with 10 more factories and about 24,000 more workers than it had in 2002, Ministry of Commerce statistics show. Though the number of factories has hovered around 190 for the past four years, the number of workers employed at the factories has increased as larger factories have expanded their operations.
Foreign investment “may not have come to Cambodia much last year, but Cambodians have been mobilizing their own resources,” the CDC official said. “I look down this list [of approved investment] and see many Cambodian projects. Rich people have learned how to run their money.”
Seven hotels are among the 19 approved domestic investment projects. Other large domestic projects include an alcohol distillery, pharmaceuticals manufacturing and a shopping mall.
Foreign diplomats and business owners said Monday that last January’s riots, which targeted the Thai Embassy and Thai-owned businesses, do not seem to have left a lasting impression on potential investors. They added that weak economies in developed countries have discouraged potential investors more than the current political deadlock, though it clearly has an effect.
“For foreign businesses already here, there is a great deal of tolerance for the current political situation,” said Bretton Sciaroni, a US lawyer and head of the International Business Club.
“We’ve seen protracted stalemates after every election. It’s more of a problem for new investors who don’t understand the political history and just want to wait and see before spending their money,” he said.