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Investment hope lives despite fall in approvals

THE value of investments approved by the government in the last six months has fallen by more than 10 percent compared to the same period of last year, but analysts said yesterday that the market is showing signs of recovery.

Some 48 projects worth a combined US$1.078 billion were approved this year to the end of June, down 11.3 percent from the 52 projects totalling $1.217 billion granted the go-ahead in the same period 2009, Centre for the Development of Cambodia (CDC) statistics released yesterday show.

Both figures languish far below the $4.43 billion in investment projects approved in the same period 2008, though that year’s number includes a massive $3.8 billion tourist development earmarked for Koh Kong province by investors from the Chinese Union Development Group.

Despite those numbers, concerns over the present state of the global economy are beginning to recede, fostering confidence and increased investment in the coming months, CDC deputy secretary general Duy Thouv said.

“Cambodia will receive more investment in the future, because the world economic situation has been improving,” he said.

University of Cambodia professor of economics Chheng Kimlong said that Cambodia’s overall investment situation was undergoing recovery, driven by resurgent export industries and growth in the agricultural sector.

“Now is the time for Cambodia to see growing investment because the world economic situation is recovering, but I do not think growth will be fast,” he said yesterday.

The latest statistics do, to an extent, support their views.

Approved investment projects have jumped month on month, with nine projects worth a total of $153 million granted approval during June, up from four projects worth a combined $18.7 million approved in May, according to the CDC statistics.

The CDC signed off on seven projects worth a total $129.2 million in the industrial sector and two in the agricultural sector worth a total $23.8 million during the most recent month. In May, all four approved projects were in the garment industry.

During June, Malaysia was the largest source for foreign investment in the Kingdom, with fellow ASEAN members putting forward a total of $107.6 million.

CDC officials said June’s approved foreign direct investment came from a diverse array of countries, including Malaysia, Vietnam, Taiwan, Hong Kong, Australia, Britain and China.

However, former Asian Development Bank senior country economist Eric Sidgwick warns that it is important to focus on the overall trend with the CDC’s investment figures, as they tend to vary from month to month.

“Investments in a small economy like Cambodia are lumpy, and figures for one month do not necessarily entail any change in the underlying trend,” he said earlier this year.

He added that investment was concentrated in areas such as hydroelectricity, garments, rubber plantations, farms and other small-scale businesses.

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