exceed seven percent this year.
According to financial analysts even if the global economy slows,
Cambodia is well prepared to deal with it, partly because of strong
foreign investment. But the billions of dollars flowing into the
country are also raising concerns about the political and social
impact from massive development projects.
Cambodia has posted strong economic growth in the two years since the
2008 global financial crisis. Foreign investment, a growing tourism
industry and a strong agricultural sector have been key to that
growth.
The country's garment and textiles sector is also doing well, with
exports set to rise by 40 percent this year.
"The Cambodian economy is probably in the best shape it has ever been
in - absent is what is going on the rest of the world," said Stephen
Higgins, chief executive officer for ANZ Royal Bank in Phnom Penh.
"The economic growth this year we think will be in the range of seven
to eight percent, and the normal global environment we would expect
probably eight to 10 percent in the next few years."
But Higgins says inflation must be kept under control, especially with
regard to rising food prices.
Despite economic uncertainty in Europe and the United States, the
Asian Development Bank (ADB) estimated growth this year at 6.8 percent
and only expects the rate to decrease slightly next year.
Analysts say foreign investors from Japan are seeking alternatives to
China and Thailand. They are joining long standing regional investors
such as Vietnam and South Korea.
But China remains the country's top investor. Chinese state media
report that investors have poured in about $5.5 billion in the first
seven months of the year.
Among the investments is a luxury property development project worth
$3 billion. China has also provided money for hydropower and road
construction. And two of China's leading banks, the Industrial and
Commercial Bank of China and the Bank of China, opened branches in
Cambodia this year.
ADB senior economist Peter Brimble says while funds from China are
welcome, Chinese aid can be restrictive.
"Chinese aid is extremely tied; [there is] no bidding. It's quite
likely - especially if it's a loan rather than a grant - you may
actually be paying more for what you are getting just because the
Chinese don't believe in competitive bidding. I think the government
knows that."
Critics say China's economic influence is linked to its political
concerns. They point to an incident in 2009 when Cambodia deported 20
Muslim ethnic Uighurs who sought asylum after fleeing violence in
China. Soon after their departure, a senior Chinese official arrived
in Cambodia to sign 14 trade deals worth $850 million.
David Carter, president of the Australian Business Association of
Cambodia, says Cambodia has welcomed investment from China.
"Certainly it has a big influence on the place," said Carter.
"Bridges and roads are being built. So there's a feeling that a lot of
Chinese money around the place, but I think most people are aware it
will come with obligations attached. So it's good, but you have to pay
your bills back at some time."
The development projects funded by those investments can have a
dramatic impact on one of South East Asia's poorest nations. While
officials have welcomed investments in upgrading Cambodia's
infrastructure, there have also been thousands of evictions to make
way for new projects. In 2010, rights groups estimate 30,000 people
were forced from their homes by mining, agriculture and hydropower
projects.
The Housing Rights Task Force, a rights group that has been critical
of government resettlement policies, says up to 150,000 people may be
evicted in the coming years. They say at least 80,000 evictions could
occur in the capital, Phnom Penh.
Hang Chayya, director of the Khmer Institute for Democracy, says
foreign investors must respect human rights in order to maintain long
term relationships in Cambodia.
"Any bilateral relationship with China has to be done on one that
respects human rights and democracy in the country," said Chayya.
"And this is what is not happening in the government taking the option
of dealing with China."
Cambodia's economic performance will be highlighted in 2012, when
Phnom Penh hosts the annual meetings of the regional Association of
South East Asian Nations (ASEAN).
Analysts say Cambodia's economic future increasingly lies with the
fortunes of its close neighbors Thailand, Vietnam and Laos, and its
distant neighbor to the north, China.
September 30, 2011
Foreign Investment Brings Cambodia Growth, New Issues
http://www.voanews.com/english/news/asia/southeast/Foreign-Investment-Brings-Cambodia-Growth-New-Issues-130847333.html
