News / Asia

Foreign Investment Brings Cambodia Growth, New Issues

A train prepares to start during the official recommencement of commercial train services on a rehabilitated rail corridor in Phnom Penh October 22, 2010.
A train prepares to start during the official recommencement of commercial train services on a rehabilitated rail corridor in Phnom Penh October 22, 2010.

Multimedia

Audio
TEXT SIZE - +
Ron Corben

Cambodian officials say the country's economic growth rate is set to exceed seven percent this year. According to financial analysts even if the global economy slows, Cambodia is well prepared to deal with it, partly because of strong foreign investment. But the billions of dollars flowing into the country are also raising concerns about the political and social impact from massive development projects.

Cambodia has posted strong economic growth in the two years since the 2008 global financial crisis. Foreign investment, a growing tourism industry and a strong agricultural sector have been key to that growth.

The country's garment and textiles sector is also doing well, with exports set to rise by 40 percent this year.

"The Cambodian economy is probably in the best shape it has ever been in - absent is what is going on the rest of the world," said Stephen Higgins, chief executive officer for ANZ Royal Bank in Phnom Penh. "The economic growth this year we think will be in the range of seven to eight percent, and the normal global environment we would expect probably eight to 10 percent in the next few years."

But Higgins says inflation must be kept under control, especially with regard to rising food prices.

Despite economic uncertainty in Europe and the United States, the Asian Development Bank (ADB) estimated growth this year at 6.8 percent and only expects the rate to decrease slightly next year.

Analysts say foreign investors from Japan are seeking alternatives to China and Thailand. They are joining long standing regional investors such as Vietnam and South Korea.

But China remains the country's top investor. Chinese state media report that investors have poured in about $5.5 billion in the first seven months of the year.

Among the investments is a luxury property development project worth $3 billion. China has also provided money for hydropower and road construction. And two of China's leading banks, the Industrial and Commercial Bank of China and the Bank of China, opened branches in Cambodia this year.

ADB senior economist Peter Brimble says while funds from China are welcome, Chinese aid can be restrictive.

"Chinese aid is extremely tied; [there is] no bidding.  It's quite likely - especially if it's a loan rather than a grant - you may actually be paying more for what you are getting just because the Chinese don't believe in competitive bidding. I think the government knows that."

Critics say China's economic influence is linked to its political concerns. They point to an incident in 2009 when Cambodia deported 20 Muslim ethnic Uighurs who sought asylum after fleeing violence in China. Soon after their departure, a senior Chinese official arrived in Cambodia to sign 14 trade deals worth $850 million.

David Carter, president of the Australian Business Association of Cambodia, says Cambodia has welcomed investment from China.

"Certainly it has a big influence on the place," said Carter.  "Bridges and roads are being built. So there's a feeling that a lot of Chinese money around the place, but I think most people are aware it will come with obligations attached. So it's good, but you have to pay your bills back at some time."  

The development projects funded by those investments can have a dramatic impact on one of South East Asia's poorest nations. While officials have welcomed investments in upgrading Cambodia's infrastructure, there have also been thousands of evictions to make way for new projects. In 2010, rights groups estimate 30,000 people were forced from their homes by mining, agriculture and hydropower projects.

The Housing Rights Task Force, a rights group that has been critical of government resettlement policies, says up to 150,000 people may be evicted in the coming years.  They say at least 80,000 evictions could occur in the capital, Phnom Penh.

Hang Chayya, director of the Khmer Institute for Democracy, says foreign investors must respect human rights in order to maintain long term relationships in Cambodia.

"Any bilateral relationship with China has to be done on one that respects human rights and democracy in the country," said Chayya.  "And this is what is not happening in the government taking the option of dealing with China."

Cambodia's economic performance will be highlighted in 2012, when Phnom Penh hosts the annual meetings of the regional Association of South East Asian Nations (ASEAN).

Analysts say Cambodia's economic future increasingly lies with the fortunes of its close neighbors Thailand, Vietnam and Laos, and its distant neighbor to the north, China.

You May Like

Photogallery Pope's Easter Prayer: Peace in Ukraine, Syria

Pontiff also calls for end to terrorist acts in Nigeria, violence in Iraq, and success in peace talks between Israelis and Palestinians More

Abdullah Holds Lead in Afghan Presidential Election

Country's Election Commission says that with half of the ballots counted, former FM remains in the lead with 44 percent of the vote More

Russia-Ukraine Crisis Could Trigger Cyber War

As tensions between Kyiv and Moscow escalate, so too has frequency of online attacks targeting government, news and financial sites More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid