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Critics Doubt Construction Investment

A quarterly report by the government says more than 600 new construction projects worth nearly $1 billion were approved by the government in the first quarter of the year, a near doubling from the same period in 2008, but industry experts doubt the planned investment will come through.

The proposed projects came from small- and medium-sized investors from local and international companies, according to Im Chamrong, director of the Ministry of Urban Planning’s construction department.

“We are always worried about economic crisis, but investors are continuously applying [for construction licenses],” he told VOA Khmer in an interview. “There are some 10 or 20 big construction projects applied for by local and international investors every month.”

However, Sung Bonna, president of the Real Estate Assessment Association, warned that the figures only represented plans, and no actual work.

“They just applied first, but no actions were taken,” he said. “No money has been spent and there has been no work force.”

Sung Bunna said that the reality on the ground was that no large projects had begun construction. Meanwhile, smaller projects such as housing have increased roughly 5 percent in 2009, after failing 30 percent to 40 percent in late 2008.

Consruction boomed in 2007, by 160 percent from the year before, but the global economic crisis stunted the growth, and led to the cancelation of at least three mega-projects.

Vorn Chan Thorn, president of Royal Investment Realty, said his costumers had completely fallen off since the crisis.

“There are only rental costumers, but no buyers at all,” he said.

Lim Sovanara, an economist for UNDP, said the numbers, which exceeded annual foreign direct investment, were “unbelievable” without further investigation.

“The large investment that exists only on the paper will interrupt the strategy in strengthening the construction sector during the economic crisis,” he told VOA Khmer.

Cambodia’s main economic drivers, garments and tourism, have been hard hit by the global downturn, so the construction figures were a surprise. Construction and agriculture have been major components of Cambodia’s galloping economic growth, which before the slump enjoyed near double-digits.

The government’s quarterly report, issued June 2, identified plans for 34 large construction projects of more than 3,000 square meters, amounting to $864.9 million in investment; 584 smaller projects were valued at $72.7 million. Among the 34 large projects, only one project was delayed, the report said.

In 2008, Phnom Penh, provincial and ministerial authorities approved 2,156 projects, with an estimated value of more $3 billion dollars.