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.


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

Guatemala Mudslide Death Toll Rises to 86

Death toll is expected to continue to rise as emergency crews dig through tons of earth for an estimated 350 people still missing More

Debris Found in Search for Missing Ship

Objects located Sunday have not yet been confirmed to be from the 240 meter container ship, El Faro, which disappeared in the eye of Hurricane Joaquin, according to US Coast Guard More

Survivor: Gunman Spared 'Lucky One' to Give Police Message

Law enforcement official says a manifesto of several pages was recovered; contents not revealed More

This forum has been closed.
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.
Russia’s Syria Involvement Raising Concerns in Europei
Luis Ramirez
October 02, 2015 4:45 PM
European nations are joining the United States in demanding that Russia stop targeting opposition groups other than the Islamic State militants as Russian warplanes continue to conduct raids in Syria. The demand came in a statement from Britain, France, Germany, Qatar, Saudi Arabia, Turkey and the United States Friday. VOA Europe correspondent Luis Ramirez reports.

Video Russia’s Syria Involvement Raising Concerns in Europe

European nations are joining the United States in demanding that Russia stop targeting opposition groups other than the Islamic State militants as Russian warplanes continue to conduct raids in Syria. The demand came in a statement from Britain, France, Germany, Qatar, Saudi Arabia, Turkey and the United States Friday. VOA Europe correspondent Luis Ramirez reports.

Video First Self-Driving Truck Debuts on European Highways

The first automated semi-trailer truck started its maiden voyage Friday, Oct. 2, on a European highway. The Daimler truck called 'Actros' is the first potentially mass-produced truck whose driver will be required only to monitor the situation, similar to the role of an airline captain while the plane is in autopilot mode. VOA’s George Putic reports.

Video Nano-tech Filter Cleans Dirty Water

Access to clean water is a problem for hundreds of millions of people around the world. Now, a scientist and chemical engineer in Tanzania (in East Africa) is working to change that by creating an innovative water filter that makes dirty water safe. VOA’s Deborah Block has the story.

Video Demand Rising for Organic Produce in Cambodia

In Cambodia, where rice has long been the main cash crop, farmers are being encouraged to turn to vegetables to satisfy the growing demand for locally produced organic farm products. Daniel de Carteret has more from Phnom Penh.

Video Migrant Influx Costs Europe, But Economy Could Benefit

The influx of hundreds of thousands of refugees and migrants is testing Europe’s ability to respond – especially in the poorer Balkan states. But some analysts argue that Europe will benefit by welcoming the huge numbers of young people – many of them well educated and willing to work. Henry Ridgwell reports from London.

Video Botanists Grow Furniture, with Pruning Shears

For something a bit out of the ordinary to furnish your home, why not consider wooden chairs, crafted by nature, with a little help from some British botanists with an eye for design. VOA’s Jessica Berman reports.

Video New Fabric Helps Fight Dust-Related Allergies

Many people around the world suffer from dust-related allergies, caused mainly by tiny mites that live in bed linen. Polish scientists report they have successfully tested a fabric that is impenetrable to the microscopic creatures. VOA’s George Putic has more.

Video Burkina Faso's Economy Deeply Affected by Political Turmoil

Political turmoil in Burkina Faso over the past year has taken a toll on the economy. The transitional government is reporting nearly $70 million in losses in the ten days that followed a short-lived coup by members of the presidential guard earlier this month. The crisis shut businesses and workers went on strike. With elections on the horizon, Emilie Iob reports on what a return to political stability can do for the country's economic recovery.

Video Fleeing Violence, Some Syrians Find Refuge in Irbil

As Syrians continue to flee their country’s unrest to seek new lives in safer places, VOA Persian Service reporter Shepol Abbassi visited Irbil, where a number Syrians have taken refuge. During the religious holidy of Eid al-Adha, the city largely shut down, as temperatures soared. Amy Katz narrates his report.

Video Nigeria’s Wecyclers Work for Reusable Future in Lagos

The streets and lagoons of Africa's largest city - Lagos, Nigeria - are often clogged with trash, almost none of which gets recycled. One company is trying to change that. Chris Stein reports for VOA from Lagos.

Video Sketch Artist Helps Catch Criminals, Gives a Face to Deceased

Police often face the problem of trying to find a crime suspect based on general descriptions that could fit hundreds of people in the vicinity of the crime. In these cases, an artist can use information from witnesses to sketch a likeness that police can show the public via newspapers and television. But, as VOA’s Greg Flakus reports from Houston, such sketches can also help bring back faces of the dead.

Video Thailand Set to Build China-like Internet Firewall

Thai authorities are planning to tighten control over the Internet, creating a single international access point so they can better monitor content. VOA Correspondent Steve Herman reports from Bangkok on what is being called Thailand’s own "Great Firewall."

Video Croatian Town’s War History Evokes Empathy for Migrants

As thousands of Afghanistan, Iraqi and Syrian migrants pass through Croatia, locals are reminded of their own experiences with war and refugees in the 1990s. VOA's Daniel Schearf reports from the town of Vukovar, where wartime scars still are visible today.

Video Long Drought Affecting California’s Sequoias

California is suffering under a historic four-year drought and scientists say even the state's famed sequoia trees are feeling the pain. The National Park Service has started detailed research to see how it can help the oldest living things on earth survive. VOA’s George Putic reports.

VOA Blogs