A motorcyclist rides near a proposed US$1.6 billion development site in Russey Keo district, which the Overseas Cambodia Investment Corporation will reportedly delay due to disputes with local residents. Photograph: Derek Stout/Phnom Penh Post

The developer of Phnom Penh’s US$1.6 billion Chroy Chungva City project has said ground would not be broken this year, raising questions about the future of the satellite city.

Overseas Cambodia Investment Corporation (OCIC) will delay the Chroy Chungva City project after what a local Chinese paper, The Phnom Penh Evening Post, said was “problems with residents living in the development area”.

Insiders said the Malaysian property developer Sunway Bhd, the original developer, left the project about a year ago due to eviction and relocation disputes.

Controversy surrounding satellite city projects in Cambodia have highlighted the challenges international property developers face in the country, experts said.

Sunway likely sold the concession for Chroy Chungva City, located in Phnom Penh on the peninsula of the same name, after concerns over transparency and compensation for evictees, a source with knowledge of the deal said yesterday.

“Due to the complexities of dealing with relocation, many international developers are concerned with investing in big projects in Cambodia. Local companies are more willing to take this on,” the source said.

“It's the same thing with Boeung Kak lake. Listed companies don't want to deal with this.”

A satellite city project at the lake in north Phnom Penh has seen thousands of families evicted forcefully since 2007, attracting a host of international scrutiny.

Last week, 13 women protesting at Boeung Kak were sentenced to two and a half years in prison after a three-hour trial, the Post reported.

OCIC could not be reached for comment yesterday. Sunway declined to comment.

Some locals living in the proposed Chroy Chungva City development zone said they were in the dark about the details of the plan.

“We don't know if we have to leave or not. We don't know about the compensation,” Som Vannak, a resident of Chroy Chungva commune, said yesterday. “Before the election, the government doesn't want to get a reaction from the people about this.” Commune elections start on Sunday.

A government notice concerning the project circulated in the commune about three months ago, Som Vannak said.

The notice barred new construction in the area where OCIC planned to build the city, he said.

Changes to government policy would be needed before international companies would feel comfortable investing in such large-scale projects, executive director at the Cambodia Institute for Cooperation and Peace Chheang Vannarith said yesterday.

“It's a matter of trust between international companies and the government,” he said. “So far, this hasn't been satisfactory. More transparency and better compensation policy is needed to attract international developers to the country.”

To contact the reporters on this story: Pi Xiaoqing and Don Weinland at [email protected]

With assistance from Peter Khim