Fears of political instability have typically slowed and delayed business in Cambodia in the run-up to national elections, but business leaders say that they are not taking a wait-and-see approach to this year’s vote.
Pointing to a number of recent and upcoming business developments, Cambodian and foreign investors said that in the current stable political environment, it’s work as usual.
Last week, GS Engineering and Construction broke ground on the $1 billion International Finance Complex, which will contain eight skyscrapers, including Phnom Penh’s tallest building. In May, the country’s 20th bank, Maruhan Japan Bank, opened. Several companies have made announcements on new resorts in the Sihanoukville area, such as a project by Russian company Koh Puos Investment Group, which broke ground on a $473 million island resort.
Projects such as these would never have happened in the previous pre-election periods, said Bretton Sciaroni, chairman of the International Business Club and an attorney who advises foreign investors in Cambodia.
“Six months before [previous] elections you could see the business community putting plans on hold, but this time for the big major players everybody has confidence,” Sciaroni said.
Sciaroni said that changes in the Constitution, which now require only a simple majority for a party to secure power, and the growing strength of the ruling CPP make the election predictable and signals that a government will be formed quickly.
“Cambodia has a way of surprising you sometimes. But as of today, one month before election, I don’t see why there should be any major problems with the election” he said.
Kith Meng, chairman and CEO of the Royal Group, said Wednesday that his company has not seen a slowdown ahead of the poll.
“The business community is enjoying their work and developing their businesses,” he said. “I have spoken to a lot of my colleagues; they are very comfortable with it,” he added.
Sok Kong, president of the Cambodian conglomerate Sokimex, which in February began work on a $1 billion resort on Bokor Mountain, also said the environment is more secure than ever for investment.
“I won’t halt any development projects because of the good environment,” he said. “I feel warm and comfortable,” he added.
In Channy, president and CEO of Acleda Bank, said some new foreign investors may be waiting until after the July 27 vote, but Korean and Chinese businesses are still investing at the same rate.
“The region to them is a normal environment,” he said. “I haven’t seen that go down.”
Bank loans are still being issued in increasing amounts but at a slower pace, In Channy said, adding, however, that this was because of the recent doubling of banks’ reserve requirements at the National Bank and not the election.
Chy Seila, owner of several local businesses including BB World fast-food restaurants, said his property development company has encountered many buyers who have said they are concerned about the election and will delay decisions until after the ballots are counted.
“They would rather keep their money before the election,” he said.
Even so, Chy Seila said he expected things to get back to normal quickly after the poll, and he hasn’t delayed any plans to open new business ventures.
Douglas Clayton, CEO of Leopard Capital, a private equity fund targeting Cambodia that launched in April, said elections in Southeast Asia often cause restraint among investors but Cambodia’s election next month is not a concern to him or his investors.
His fund, which plans to raise $100 million, was created because the country’s political environment appears stable, he said. Leopard Capital plans on making its first deal, worth approximately $3 million, before the election, he added.
“The trend has been for more democratic and more peaceful elections, each one getting more stable than the last one,” Clayton said.
Still, Clayton said, the Cambodian economy has slowed down overall in the past six months, possibly because of increased inflation—which was last marked by the government at 18.7 percent from January 2007 to January 2008. He added that economic woes in Vietnam also may have slowed some business down.
(Additional reporting by Yun Samean)