Construction continues at Bokor Mountain. Many large projects failed to materialise this year due to the downturn in Cambodia's property market. (Photo by: Tom Hunter)
Monday, 11 May 2009
Written by May Kunmakara
The Phnom Penh Post
Call from Sam Rainsy Party comes after Prime Minister Hun Sen previously threatened withdrawal of business licences for inactive projects.
OPPOSITION lawmakers have urged the government to erase inactive investment projects from government books, saying that potentially hundreds of companies registered in the country are no longer operating.
According to a 2008 report by the Council for the Development of Cambodia (CDC), 101 projects worth US$10.89 billion were approved last year.
Sam Rainsy Party lawmaker Yim Sovann said that since the global economy began shrinking, around 50 percent of companies have suspended or stopped operations, especially in the garment and construction industries.
"The government should pass the anti-corruption law, which will help keep away bad investors and build confidence," he said. "The government should also change our economic policy by encouraging both local and foreign investors to produce good quality items to compete with neighbouring countries and investigate whether these companies are actually operating after they receive approval from the government," he added, saying that some firms have used the economic crisis as a pretext to alter their business operations.
CDC figures said that last year $106 million was invested in agriculture, $715 million in the industrial sector, more than $1 billion in services and over $8 billion in tourism. Of this money, 68 percent came from overseas.
China was the top investor providing 40 percent of capital, followed by South Korea with 11.39 percent and the United States at 6.32 percent.
Yuon Heng, director of the Evaluation and Incentive Department at the Cambodian Investment Board, said last week that most of the projects approved last year were small-scale, adding that bigger investments always require a longer process.
"The reason that large capital investment companies have not started projects is because they are preparing a master plan and dealing with land disputes - it takes time," he said.
On a smaller scale
The difference last year, he said, was mainly due to a small number of large projects, such as the $100 million Bokor Mountain development, which boosted the level of investment. Such investments have been unaffected by the downturn, he added.
"I don't think those companies were impacted by the global financial crisis because I have not received any information that they are facing fund shortages," he said.
"However, I think those companies will be impacted by the challenges, and Chinese companies seem to be doing better than others," he added.
Prime Minister Hun Sen last month threatened to take back the development sites of inactive companies, urging Minister of Commerce Cham Prasidh and the CDC to review the proposals of companies investing in golf courses that had not started construction.