By Prak Chan Thul
PHNOM PENH, Jan 12 - Cambodia approved investment projects worth $2.7 billion in 2010, a 54 percent drop from 2009, and South Korea overtook China as the country's biggest foreign investor with $1 billion approved, data showed on Wednesday.
South Korea promised investments valued at $1.02 billion in 2010, a sharp increase from the $120 million in 2009, mostly in projects related to the construction of a new airport in Siem Reap, the country's second-biggest city and a tourism hub.
The data from the Cambodia Investment Board showed China's approvals were $694 million in 2010, down from $892 million a year earlier.
Local companies were the third-largest contributors, with approvals at $412 million, followed by Malaysia at $167, a significant increase from the $7 million in 2009.
Vietnamese projects were valued at $114 million in 2010, a 45 percent drop from 2009, while Thai investments fell 98 percent to just over $2 million.
However, Peter Brimble, a senior country economist at the Asian Development Bank in Cambodia, said the figures were misleading and foreign direct investment would probably increase from 2009 to 2010.
"I think it's completely misrepresenting the situation in 2010 in terms of the way we see the overall economy growing," Brimble said. " will increase in 2010 over 2009 for sure."
He said projects totalling $3.8 billion involving local conglomerate Royal Group in 2009, mainly in casinos, made it appear that investment was on the decline.
INVESTMENT DRIVE
Brimble said the ADB expected economic growth of more than 5 percent in 2010, reflecting similar projections by the Finance Ministry, adding that external factors were unlikely to affect GDP. The government is targeting 7 percent growth this year.
Following decades of civil war and political upheaval, Cambodia has enjoyed steady economic growth in recent years and is on a drive to attract foreign investment in its agriculture, mining, energy and tourism sectors.
It has approved legislation to boost transparency and tackle corruption, which economists say is one of the biggest factors deterring would-be investors. [ID:nSGE68Q0BO].
The government has allocated a sizable budget to agriculture for 2011 [ID:nSGE6AP08X] and is seeking investment in its fledgling rice-milling sector to achieve its target of exporting 1 million tonnes of rice a year within five years. [ID:nSGE67G0A9].
Chan Sophal, president of the Cambodian Economic Association, questioned the official data and said actual investment in tourism and agriculture was greater in 2010 and would probably increase further this year.
"The registered data doesn't mean anything," he said. "It doesn't show the actual investment money flow."
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