Agriculture sector helps keep investment proposals firm

THE government approved 33 fixed-asset investment projects worth more than $985 million in the first four months of 2009, official figures obtained by the Post this week show.

The projects approved by the Council for the Development of Cambodia (CDC) include six infrastructure projects worth a combined $445.7 million, 10 agriculture projects worth $319.4 million, $185.4 million earmarked for four tourism projects and $34.7 million in proposals for 13 industrial sector projects. The total value approved was $985.2 million.

Youn Heng, director of CDC's project analysis department, said the agriculture and agri-business sector had been the biggest winner after just $106.7 million worth of agriculture projects were approved for the whole of 2008.

"Investments increased in the agricultural sector, and this is partly because the Cambodian government is trusted," he said, adding it was impossible to say whether the boost to the agriculture sector would be maintained until the end of the year.

The single biggest proposed investment approved this year was Angkor Sugar Co's plan for a 6,523-hectare sugar cane plantation and factory that would create 2,333 jobs.

Two other companies also won approval for sugar cane plantations, with Tonle Sugar Cane pledging to spend $14.6 million in a project that would create 1,233 jobs and Cane and Sugar Valley Co eyeing a $14.8 million plantation that would create 1,133 jobs.

Seven rubber plantation and factory projects worth a combined $146.3 million were also approved.

Chan Sophal, president of the Cambodian Economic Association, welcomed the increased investment when compared with the same period a year earlier, saying that it reflected the huge potential of the agri-business sector to attract foreign investors.

How much of the money will be spent we do not know yet.

But he warned that it remained to be seen how much of the proposed investment would be realised. "The money only shows the aims of the project," he said. "How much of the money will be spent we do not know yet."

Other big projects approved include Sotelco Ltd's $234.7 million investment in its Beeline mobile phone network, which launched last month, a $91.1 million plan by JSM Holdings (Cambodia) to build the JSM Siem Reap Centre, and a $113 million investment by Cambodia Power Grid in power transmission lines.

Though the approved investments for the first four months of the year compare favourably to the 43 projects worth $328.8 million approved for the same period in 2008, they make dismal reading when compared with the 101 investment projects worth $10.89 billion approved for full year 2008.

However, Youn Heng warned against making comparisons because of the effect of particularly large investment projects on the overall figures. "The comparison between figures cannot be 100 percent clear because there were many big projects in 2008 while in 2009 there have not been any big ones yet," he said.

Removing the four biggest projects approved by the CDC in 2008 leaves a full-year fixed-asset investment figure of around $3.25 billion.

These include Evergreen Success and Asia Resort Development's proposed US$1.8 billion development in Ream National Park, Sokha Hotel's proposed $1 billion Bokor mountain development in Preah Monivong National Park, GS Cambodia Development Co's $967 million International Finance Complex, and a $3.8 billion proposal by China's Union Development Group Co to build a coastal development in Koh Kong.

GS has since put its project on hold and is considering a less ambitious development, and Youn Heng said Union Development's so-called Seven Dragon City project was still awaiting a feasibility study before it could begin.

Son Chhay, a Sam Rainsy Party MP, was surprised by the figures, saying they were inflated by the value of concession land offered and should thus not be classified as fixed-asset investment. "There is no basis for counting investing in rice-growing concessions for Arab countries because even though they have applied for approval of the project, real action never happens."

He said the government was simply inflating the figures to show that it was not facing any investment problems.

However, Youn Heng dismissed the criticism, pointing out that the figures released were clearly about approved investments and not money spent.

Figures showing how much of the approved investments from 2008 had been spent to date were not available Thursday. However, figures from the Korean Embassy show Korean firms received $1.2 billion  worth of approvals for 484 projects in 2008 but spent just $472.8 million.

Opposition lawmakers urged the government early last month to erase inactive investment projects from government books, saying that potentially hundreds of companies registered in the country are no longer operating.