Investment approvals plunge, eclipsed by huge 2008 projects

Photo by: HENG CHIVOAN
Four major development projects approved in the first seven months of 2008, including a $1 billion plan to upgrade Bokor Mountain Hill Station, above, contributed to heavily inflated investment figures last year, officials said.

The Phnom Penh Post
Tuesday, 25 August 2009
Chun Sophal

Figures show $6.86bn drop in applications to invest in first seven months, but analyst says there is still growth in key industrial, agricultural sectors

AUS$6.86 billion drop in investments approved by the Cambodian government during the first seven months of 2009, compared with the same period in 2008, can be attributed to a small number of massive projects greenlighted last year, according to official figures.

Detailed figures from the Council for the Development of Cambodia (CDC), the government's investment arm, show that the value of approved investments dropped 82 percent, from $8.34 billion to $1.48 billion.

The biggest hit came in the tourism and service sectors, figures show.

"This year, the value of approved projects related to the tourism and service sectors is less than last year," said Youn Heng, deputy director of the Evaluation and Incentive Department at the Cambodian Investment Board, a body of the CDC.

A sector analysis shows nine tourism-related projects worth $487.1 million were approved between January 1 and July 30 this year.

This compares with nine projects worth $6.97 billion in the corresponding period last year.

These include Evergreen Success and Asia Resort Development's proposed $1.8 billion development in Ream National Park; Sokha Hotel Co's proposed $1 billion Bokor mountain development in Preah Monivong National Park; and a $3.8 billion proposal by Chinese company Union Development Group Co to build a coastal development in Koh Kong.

Removing these, the three biggest tourism-related projects from that period, worth a combined $6.6 billion, from the total actually shows an increase of around $117 million in tourism-sector approvals.

The services sector was also swelled last year by GS Cambodia Development Co's $967 million International Finance Centre complex.

However, there were just two approvals in the services sector this year - a $234.6 million telecommunications project and a $6.8 million water supply deal.

Silver lining
Stripping out last year's statistical outliers, worth $7.56 billion, however, actually results in a jump in approvals over the period from $780 million to this year's $1.48 billion, the figures show.

A project-by-project breakdown of approvals was unavailable Monday to determine whether any significant projects were approved this year.

But Kang Chandararot, director of the Cambodia Institute of Development Study, said the apparent decline in investment in the service and tourism sectors was not as important for the developing economy as the increase in the agriculture and industrial sectors.

"We had some major investments in the service and tourism sectors last year, and this year we may or may not attract investment in these sectors," Kang Chandararot said.

"But we don't think that it is a bad sign for our economy," he added.

CDC figures show 15 agriculture projects worth $426 million were given the go-ahead in the first seven months of this year, compared with three projects worth $81 million a year earlier.

The garment sector saw a downturn in investments in line with a global drop in export orders, but 18 projects worth $68.8 million were still approved over the period.

Three shoe manufacturing applications worth $7.12 billion were also approved.

The industrial sector as a whole, which includes garments, saw 38 projects worth $323.6 million approved in the first seven months of this year, almost double the value of the 42 projects worth $173.9 million approved in the corresponding period last year.

ADDITIONAL REPORTING BY NATHAN GREEN