A slower global economy and an expected decline in development aid will

hit Cambodia more than the government admits, critics say

CAMBODIA'S foreign direct investment is set to drop more than the 30 percent claimed by the government, an opposition lawmaker warned Tuesday, adding that donor aid will also fall  further than expected.

Sam Rainsy Party lawmaker  Son Chhay said the economic slowdown is more serious than the government admits and that lower foreign aid payments  will add to the Kingdom's economic woes.

"I think the prime minister will not be able to get more than US$400 million from donor countries because those countries are suffering from the economic crisis," he said.

Son Chhay added that the government has recently increased expenses on public administration by 38 percent and called for new policies to encourage farmers to grow crops on public land and to increase productivity and job creation.

Prime Minister Hun Sen last week predicted a drop of nearly 30 percent in foreign investment in response to a widening financial crisis that has engulfed the Kingdom's principal investor countries.

In his address to the Government-Private Sector Forum on Friday, Hun Sen also said Cambodia could expect $500 million in foreign investment in 2009, down from $700 million this year.

"We think the decrease will not affect economic growth or our poverty-reduction strategies as long as we receive between $500 million and $600 million from official development aid," Hun Sen said.

The government plans to call for aid of at least $600 million from development partners and other countries at the donor meeting set for early December, Hun Sen said.

"How can we avoid the effects [of the crisis] on our economy if investment is decreasing?" he said.

Hang Chuon Naron, secretary general at the Ministry of Economy and Finance, said Cambodia's continued economic growth  depends on the Kingdom receiving $600 million in donor aid and more than $850 million in foreign direct investment.