The Cambodian Investment Board approved $4.42 billion in investment projects in 2006, with $2.32 billion coming from abroad as foreign direct investment, according to an official list of projects obtained on Jan 26.
The CIB approved investment projects worth $217 million in 2004, of which $141 million was FDI, and $1.1 billion in 2005, which saw $684 million in FDI.
Based on these figures, FDI to Cambodia has increased 240 percent in one year and 1,500 percent in two years.
South Korea leads the CIB list with its $1 billion contribution to the World City satellite town investment on Phnom Penh’s Pong Peav lake. Next is China with $717 million, including 28 projects down from 40 in 2005. Russian investment is next with the $278 million Koh Pos holiday resort island project in Sihanoukville. In fourth place is Thailand, whose investors plan a $10 million 250-bed hospital, $31 million sugarcane factory and $22 million Kampot electricity plant.
The investment figures include the value of land on which a number of massive real estate projects will be built. In addition to World City and Koh Pos, the list includes Diamond City Investment’s $369 million satellite city on Phnom Penh’s Koh Pich island.
Garment manufacturing continues to be the leading industrial draw in Cambodia, with 36 new clothing factories approved in 2006.
Of note among the foreign investments are light industry projects trickling into the country from Vietnam and China, while China’s Jengshin International plans an explosives factory, and Vietnamese investors plan for a paint factory, meat packing plant, and a cashew roasting facility.
Prime Minister Hun Sen warned on Wednesday at the 11th Government-Private Sector Forum that next year FDI statistics may appear to be lower than recent years. However, the real estate developments approved this year will provide economic benefits over many years, he added.
Far down on the list of investors to Cambodia is Japan, whose River Corp contributed a $2.1 million garment factory pledge. To address the low level of investment, Japan and Cambodia began negotiating a bilateral investment protection agreement on Friday.
Sok Chenda, lead Cambodian negotiator with Japan and Council for the Development of Cambodia secretary-general, told reporters on Jan 26 that the country needs to attract the Japanese companies that manufacture products in Thailand, Vietnam and Malaysia.
“We are a very free and very open economy,” Sok Chenda said.
“In the first step, we don’t think we can attract Japanese investors to produce television sets in Cambodia, but some spare parts would be good enough,” he said.
The Japanese government hopes that signed investment guarantees with Cambodia will attract businesses.
“I think the situation is getting better,” Japanese Foreign ministry staffer Hideaki Mizukoshi, the lead Japanese negotiator, told reporters on Jan 26.
He added that past political instability had deterred Japanese investors.
Economist Kang Chandararot, director of the Cambodia Institute for Development Study, said that lack of human resources may prevent Japanese heavy industry from setting up here, but there is strong potential for agro-industry.
SRP lawmaker Son Chhay said that many of the investment projects approved by the CIB will benefit land speculators rather than ordinary Cambodians.
“We need light industry that provides labor for the people,” he said. “We don’t need real estate investment.”
