Cambodia approved $1.2 billion in investments from China in the first six months of the year, a 104 percent increase in the amount of Chinese money set to flood into the economy compared to the same period last year, the Cambodian Investment Board said.
The amount of investment pledged makes China the country’s largest foreign investor by far, with Chinese firms accounting for 40 percent of all investment projects authorized by the Cambodian government between January and June.
According to the latest Cambodian Investment Board report, the $1.09 billion of approved Chinese investments between January and June was concentrated in infrastructure projects, while $125.6 million was directed toward industrial and manufacturing projects.
Cambodia’s second-biggest foreign investor after China was Vietnam, which accounted for a modest $156.38 million, or just 5.2 percent, of all approved investment projects in the country. During the same period in 2010, Vietnamese firms accounted for 10.4 percent of the total foreign investment in Cambodia.
Approved investments from South Korea, the third-biggest foreign investor, accounted for 3.94 percent of all projects, or $119.1 million. US companies had $47 million in investment, or 1.6 percent of all approved projects.
Domestic investment also saw a strong increase, with $1.45 billion in approved projects in the first six months of the year, up from just $593 million during the same period in 2010.
While the investment board’s figures do not accurately represent the amount of foreign capital that is eventually spent here—some investment projects are delayed and many never actually materialize—the report does reflect investor interest in Cambodia. Figures on the total amount of foreign investment can vary wildly from year to year, particularly when approval is given for large-scale infrastructure projects, such as dams, bridges and highways.
“If we take out one-off major investment projects, we can evaluate that the amount investment has increased in Cambodia is not so big,” the investment board said in the report, adding that earlier this year the government approved a $2.17 billion plan for Phnom Penh’s Boeng Kak lake, which is a joint venture between Cambodia’s Shukaku Inc and China’s Erdos Hong Jun Investment Co.
Economists said that while the figures show China’s growing leverage in Cambodia, it still remains to be seen how much of the approved investment materialize will.
“I can’t speculate about the future, but in the past, we have seen several projects, especially land based projects from China, not materialize,” said Chan Sophal, president of the Cambodian Economic Association.
Vietnam, on the other hand, “has been very effective in implementing their investment projects,” Mr Sophal said, pointing toward a recent push into the rubber sector by Vietnamese companies.
According to the report, approved investment in the agricultural sector fell by 43 percent to $161.3 million during the first six months of the year compared to the same period in 2010.
Still, there is optimism among investors that Cambodia’s agriculture sector is a source for future economic growth.
“From where I sit, people are still speaking about agriculture and it is still absolutely on the top of the priority areas for investment,” said Joshua Morris, managing director of Emerging Markets Investments, an equity fund based in Cambodia and Laos. “Everyone seems fairly excited.”