The international economic crisis may be starting to hit local business leaders as foreign partners fail to deliver on promised investment funds
Photo by: Heng Chivoan
A container ship waits to be unloaded in Sihanoukville port.
BUSINESS leaders say the global economic crisis is starting to affect local operations as foreign capital dries up. But the government maintains that Cambodia is still insulated from the financial meltdown.
Khaou Phallaboth, president of Khaou Chuly Group, which has operations across several different business sectors, told the Post on Wednesday that his latest venture - a US$11 million ready-mix concrete plant - has been delayed due to the global financial crisis.
"Our investment project for the concrete plant has been delayed due to the crisis. It affects our foreign partners. Now we are re-examining our investment strategy," he said.
Chan Sophal, president of the Cambodian Economic Association, agreed that the crisis has slowed foreign investment in the country, saying that local companies with foreign business partners will be affected more seriously.
"I think that foreign countries affected by the crisis such as South Korea will hesitate or stop their investment plans in Cambodia due to the crisis," said Chan Sophal.
"The crisis has severely affected local companies with foreign partners because foreign companies face financial constraints," he added.
Several South Korean developments projects have already been struck by global market pressure - slowing or suspending their building operations in Cambodia.
If businessmen say that they are affected by the storm, it is probably to avoid tax.
But Chan Sophal said Cambodia could weather the fiscal storm by relying more on other, less exposed sectors.
"Our banking system is still stable, and Cambodia has a lot of potential in many sectors such as mining, oil and gas, and agriculture."
Mong Reththy, president of Mong Reththy Group, which has invested heavily in the agricultural sector, said his business has not been untouched by global market turmoil, losing US$1.5 million in his palm oil ventures this year following lower purchase orders.
"We are seriously affected by the crisis, however, we are exploring ways to overcome the downturn and avoid layoffs," he said. "Even though there is a loss, we will continue to expand further on our 8,400 hectares of land."
"As a company, we have to face these issues.... We need to use saved profits to prevent a slowdown in operations."
Sok Chenda, secretary general of the Council for the Development of Cambodia, insisted Wednesday that Cambodia is not facing a severe economic downturn, but he acknowledged that the government is monitoring the situation.
"We have not seen an impact on foreign registrations with the government," Sok Chenda said. "I think that the storm is still distant.
"If business people say that they are affected by the storm, it is probably to avoid paying taxes."
Hang Chuon Narong, secretary general at the Ministry of Economy and Finance, also said Wednesday that Cambodia's relative isolation from world markets has kept it protected from the global financial crisis.