Economists remain upbeat despite investment fall

via CAAI

Tuesday, 11 January 2011 20:29 Chun Sophal

Investment approved by the Council for the Development of Cambodia dropped some 54 percent in 2010, compared with the previous year, but experts believe the decline is not indicative of the Kingdom’s ongoing economic recovery.

Approved projects were worth some US$2.69 billion in 2010, a steep decline from 2009’s $5.86 billion, figures obtained Tuesday show.

Asian Development Bank senior country economist Peter Brimble said late Tuesday it was important to take “lumps” into account, noting a multi-billion dollar island development project approved in 2009 had distorted the figures.

“I certainly do not feel there was a decline of that magnitude [in the Kingdom’s economy],” he said. “We [the ADB] feel there is an economy recovery in 2010.”

The largest approval this year was the proposed new Siem Reap airport project, said to be worth near $1 billion.

Cambodia Institute for Development Study president Kang Chandaroth said that despite the fall, the large amounts of approved foreign investment in the Kingdom proved it was becoming a reliable country for business.

“We expect inflows of foreign investment capital will keep increasing this year and in other years because both Cambodian and the global economic situations are performing better,” he said.

CDC deputy secretary general Duy Thov said that although 2010’s pledged investment was less than in 2009, the inflow of foreign-based capital investment had increased.

In 2009, foreign pledges accounted for around $2.10 billion dollars, compared to $2.29 billion in 2010.

The figures do reveal some trends regarding investment by country and by sector, such as South Korea’s relative strength during 2010, according to Brimble.

He added that levels of foreign direct investment were often a better indicator of relative economic strength. FDI in the first three quarters of 2010 already exceeded all of 2009, he added.

Two more projects were approved in 2010 compared with 2009, with 74 of the 102 approvals being in industry, 23 in agriculture, three in tourism and two in services.

Approvals had topped $10 billion in 2008, before falling to $5.86 billion in 2009.

The CDC also noted the figures’ shortcomings, claiming it was important to look at multiple sets of data before coming to a conclusion on the state of the economy.

ADDITIONAL REPORTING BY JEREMY MULLINS