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China investment in Cambodia up 40 pct

PHNOM PENH: Chinese investment in Cambodia surged 40 percent in 1999 and the trend is set to continue as local political stability and the regional economy improve, a Chinese business representative said.

Jimmy Gao, secretary general of the Chinese Chamber of Commerce, said there were some impediments to mainland Chinese investment in Cambodia including the lack of a proper land law.

But in general Cambodia's friendly business environment boded well for growth in a wide range of sectors from manufacturing and construction to tourism, he said.

"According to the Chinese embassy and informal sources, total investment in 1999 should see a 40 percent increase compared with 1998," Gao told Reuters in an interview late on Thursday.

"For the amount of Chinese companies, no matter private companies or state-owned companies, we see a very increasing amount coming to invest in Cambodia," he said.

Gao was unable to provide figures but Cambodia approved Chinese investment of $112 million in 1998, according to investment board statistics.

Gao said there were now more than 300 Chinese companies operating in Cambodia and he believed they were the biggest source of implemented foreign investment. Main areas were construction and garments and textiles, he said.

While Japanese companies won contracts for projects financed by Japanese aid, Chinese companies were more likely to compete for bids from lenders such as the Asian Development Bank or from the government, Gao said.

LACK OF LAND LAW HITS INVESTMENT IN AGRICULTURE

The Guang Xi International Cooperation Company recently won a bid to redevelop the airport in the tourist town of Siem Reap and a state power producer from southern China has an $80 million power generation project, Gao said.

Another Chinese firm, the Cambodia Haining Group Co Ltd, is involved in a palm oil and rice-growing project but the absence of a land law was impeding investment in agriculture, he said.

"Cambodia used to be a rice basket in the 1960s and a lot of Chinese companies do have an interest to make that kind of investment," he said.

"But the problem is a lot of Chinese companies are at the stage of survey, not really putting in their money."

"It's a problem of the investment environment in Cambodia, sometimes it's concerning government policy. For example, a big problem...is that Cambodia does not have a proper law yet about ownership of land," Gao said.

Tourism from China to Cambodia is set to boom with China's decision to list Cambodia as am approved destination allowing Chinese travel firms to begin package tours, said Gao, who is also director of travel firm Transpeed Group Co Ltd.

Gao said that despite the problems, including some corruption, the friendly business environment in Cambodia was an important factor for Chinese firms and their investment would grow. -Reuters