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Logo of Phnom Penh Post newspaper Phnom Penh Post - Bid for investment in Mekong sub-region

Bid for investment in Mekong sub-region

B ANGKOK - Cambodian Minister for Planning Chea Chanto has called for private investment

to help fund millions of dollars of infrastructure projects to secure Cambodia's

place in the Greater Mekong sub-region.

His call, made at a three-day regional seminar in Bangkok last week, was echoed by

a chorus of senior international development bankers.

The Greater Mekong Sub-Regional Growth Summit was held to promote greater business

and development cooperation between Cambodia, Laos, Myanmar (Burma), Thailand, Vietnam

and the southern Chinese province of Yunnan.

The six states make up the Greater Mekong sub-region, offering a potential market

of more than 225 million people.

The conference discussed ambitious proposals for inter-connected networks of road,

rail, river and air transport facilities between the states.

But it was widely agreed that the huge cost could not be borne solely by their governments

or by international development financiers such as the Asian Development Bank (ADB),

a prime mover behind the proposals.

In a paper presented on his behalf at the conference, Chanto said investment was

needed to develop major roads in Cambodia, particularly the more remote regions.

Funding was needed not only from bilateral and multilateral donors but also the private

business sector, Chanto said

Cambodia had much to offer private investors. It had "exploitable hydropower

resources" capable of producing 8,000 megawatts of electricity, along with commercially

viable oil and gas fields.

Tourism assets, natural resources and an "unlimited labor force at reasonable

cost" had great potential.

Chanto said Phnom Penh's priorities were to achieve macro-economic stability, structural

reform, human resource development and improved physical infrastructure.

He pledged support for regional cooperation, saying that Cambodia was "seriously

committed to cooperate in any beneficial undertaking to further the economic cooperation

and development of the region."

In 1992, the six Greater Mekong sub-region countries launched a program of economic

cooperation, later reaching agreement to develop areas such as transport, energy,

tourism, telecommunications, human resources, trade and investment.

The governments have so far supported 77 priority projects - 34 in transport, 12

in energy and 11 concerning the environment.

A recent ADB assessment presented at the conference detailed the range of major infrastructure

projects that Cambodia would participate in, mainly in the transport sector.

A key area of collaboration proposed is a regional network of highways linking Bangkok,

Phnom Penh, Ho Chi Minh City and the Vietnamese port of Vung Tau.

The ADB estimated the cost would be between $123-207 million, and would have to include

a completely new road between Bangkok and Phnom Penh.

Meanwhile, a further $50 million would be needed to link northeastern Thailand, southern

Laos, northwestern Cambodia and central Vietnam.

Other possibilities included improving roads between southern Laos and Sihanoukville,

giving Laos access to a seaport through Cambodia.

Also slated in the ADB's proposals are river navigational improvements between Laos

and Cambodia, but "critical security constraints" made detailed surveys

impossible at present.

Although there were road, railway and river projects proposed, the ADB recommended

the highest priority be given to roads as they were "the dominant mode for freight

and passenger transport in the region."

Tram Iv Tek, Secretary of State for the Ministry of Public Works, told the Post that

external funding was needed for road projects in western Cambodia.

This was especially so for a proposed road link from Thailand's Tak province, on

to Cambodia's Route 4, and then Veak Ranh to Hu Thien in Vietnam.

Tek said Cambodia hoped to make road investment a priority under its next loan payment

from the ADB, but private investment was also required.

ADB director of programs (west) Noritada Morita said the bank had provided over $280

million in loans for priority road and air transport, and energy, projects in the

sub-region. A further $7.6 million had been given in technical assistance grants.

Between 1996-98, the ADB was set to lend more than $250 million for more such projects.

But a "major constraint" to implementing all priority projects was that

their total costs exceeded "the financial capacity of the six governments and

official development assistance commitments."

"Private sector finance, expertise, management skills, technology and capital

are important ingredients to the development of the six countries," he said.

"It is the investment, production and marketing decisions of firms that can

provide the push for cooperation in the Greater Mekong sub-region."

Former Thai deputy prime minister Dr Supachai Panitchpakdi also raised concerns about

the lack of private sector involvement.

He added that Thailand's financial sector was "willing to make itself avail

for these projects" and to "draw on our financial resources and the overseas

banks that are based in Thailand."

But he also noted that private investment needed to be "kept under control"

to ensure investments were beneficial to companies and socially responsible.

The Chief Economist for Stand Chartered Bank (south-east Asia), Dr Wong Yit Fan,

raised doubts about the viability of many of the projects raised by the ADB.

"The interesting question was whether the Greater Mekong sub-region was viable

or not," he said.

"If it is viable and the private sector sees that it is viable, not withstanding

whether they are from Burma, or Thailand - or even from Europe...there would be even

more action, more activity on the private sector to get involved."

"The curious thing is the lack of private sector initiative, the distinct lack

of it here brings about a few questions," he said.

He also questioned whether the investment in the cross-border infrastructure could

not be better spent on local projects within the individual countries.

"Could [the countries] not use these resources to build up the infrastructure

in individual countries so as to bring out those products that they are producing...

to the global market in a timely, cost-effective and efficient way?"



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