Cambodia ended the year 2000 with $270 million in pledged capital by private investors, the lowest figure in the last six years and a 43 percent drop over investment pledged in 1999.
Ninety-seven projects were approved last year by the Council for the Development of Cambodia, a government investment agency. The total amount of fixed assets for those projects was $200 million less than the $470 million pledged for 95 projects approved in 1999.
The figures for 2000 are the worst since the government started tracking the country’s investment trend in August 1994.
Pledged investment peaked for Cambodia in 1995, when 126 projects worth $2.2 billion were approved, according to CDC.
The value of proposed investment remained stable between $700 million and $850 million during the following three years, and dropped to $470 million in 1999.
The CDC did not have figures for how many approved projects were actually implemented in 2000, but the agency estimated that more than 85 percent of projects approved in 1999 were active.
In past years, CDC officials said, less than half of the investment projects were implemented. Economic observers say the drop in 2000 can be attributed to internal and external factors.
Sok Hach, macroeconomist with the Cambodian Development and Research Institute, said investors are still suffering from the 1997 Asian financial crisis. Many economies in the region have not fully recovered, he said.
“The recovery is not enough for Asian investors to go outside of their own countries,” Sok Hach said. “They are still investing in their own countries. Cambodia is not a priority for them.”
Kimthy Chao, an economic analyst with the IMIC Indochine Research, said internal factors also discourage foreign investors from investing in Cambodia.
“Not mentioning about rampant corruption, political issues and security concerns, fundamental problems need to be taken care of first,” he said.
He said the government should draft new and better laws for investment, strengthen the rule of law and improve infrastructure. Better national transportation systems should be available for industries, while cheaper and more reliable telecommunications and electricity should be provided, he said.
In 2000, approved investment in industry was $166 million, a drop of about 27 percent from 1999. The service sector, including transportation and telecommunications, saw an 85 percent decline from $209 million in 1999 to $30 million last year.
There was an increase in pledged tourism investment during 2000 and stable investment in the garment and textile sector.
Tourism investment jumped from $25 million in 1999 to $70 million last year, due in large part to plans to develop a tourism center and six hotels worth $60 million in Siem Reap.
Fifty-one garment factories received permission to operate in 2000, up from 44 in 1999.
Economists say Cambodia must mobilize more domestic money to develop its own country and encourage foreign private investment, instead of relying on public investment financed by international donors.
CDC data shows that pledged domestic investment also dropped in 2000 to $59 million from $274 million in 1999.
Hoping to improve Cambodia’s investment environment, the government has organized another public forum with private investors early next month.
Van Sou Ieng, president of the Garment Manufacturers Association of Cambodia, said his industry will urge the government to strengthen the rule of law immediately.
“Cambodia has peace now, but its internal structure is not established well,” he said. “Still there is no legal structure and no transparency. This is discouraging investors and confusing them.”
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