Cambodia should continue to welcome the massive amounts of investment coming from China, but it should also redouble efforts to control that inflow of money by putting in place effective and far-reaching regulation, pundits said on Wednesday.
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Speaking at a discussion organised by the Khmer Times, Mey Kalyan, senior adviser to the Supreme National Economic Council, said Chinese investment, in principle, is good for the country, but the government needs to seriously consider its impact on society.
“In theory, Chinese investment is good and we welcome it. However, large investments over a short period of time could have negative consequences for the country.
“For instance, if there are too many Chinese investors in the coast, particularly in Preah Sihanouk province, local people may not be able to live there. It is a problem that we need to consider,” Mr Kalyan said.
“We saw a lot of investment from China in the coastal provinces, but we don’t know their long-term plans. We must come up with strategies to manage this investment to avoid problems in the future,” he said.
A possible course of action would be to hold government-level talks with China to jointly look for solutions to some of the challenges that large investments may present, Mr Kalyan said.
The government should also begin to “filter” investments, carefully deciding which projects create positive change, and which ones could have a negative impact on society, he said.
Finally, Cambodia should strive to diversify the sources of foreign investment, moving away from the current situation, where one country dominates the investment market, according to Mr Kalyan.
“We must diversify the sources of investment and our trade. We should not allow just one country to dominate investment in the region and in the country,” he said. “Cambodia is small, but we have to keep our country safe, prosperous and independent.”
He said Cambodia is not a unique case, with Chinese investment reaching all corners of the globe due to Chinese president Xi Jinping’s Belt and Road Initiative, which seeks to put China at the center of a global trade network.
According to government data, from January to June, Chinese investment was worth $5 billion, making China the biggest investor in the Kingdom. Chinese investors are involved in almost every economic sector, from energy to infrastructure, and from tourism to real estate and finance.
China is also the number one nation when it comes to foreign tourist arrivals. During the first six months of the year, 931,763 Chinese tourists visited Cambodia.
Taing Sochet Krisna, director of Preah Sihanouk province’s tourism department, acknowledged that the Chinese have dominated investment in the province in the last few years, but said that investment is having a positive impact on society.
“We recognized that in the last few years most developments have been done by Chinese firms. However, thanks to those investments, Sihanoukville is seeing more and more four and five-star hotels being raised,” he said, adding that by the end of the year four new luxury hotels will come online, amounting to an extra 2,000 rooms.
“Those investments are filling a demand in the market and are meeting the need of our visitors,” Mr Sochet Krisna said. “We support this type of investment, independently of its origin, because it fills a demand in the market, creates jobs for local people, and generates wealth,” he said.
However, he said it was important to regulate that investment by passing sound laws and implementing them.
“Every development and investment will have both positive and negative consequences. We need to strengthen regulation and implement the law to reduce the negative impact,” he said.
He said authorities in the province are working hard to implement existing regulation and stop illegal activities.
“We are raising awareness of the law and guiding businesspeople,” Mr Sochet Krisna said.
“We are cracking down on all illegal activities, include sex trafficking, drugs, illegal massage parlours, and gangsters to keep people and tourists safe,” he said.
Mr Sochet Krisna called on local investors to build guesthouses and non-luxury hotels to meet demand from local travellers and the emerging middle class.
“There is a great opportunity to invest in these type of establishments in the provinces. There is, of course, a lot of risk involved and a lot of competition, but that’s just the way the market works,” he said.
Lim Heng, vice president of the Cambodia Chamber of Commerce (CCC), told Khmer Times yesterday that the country should welcome Chinese investors with open arms.
“We asked them to come and invest, and that’s what they are doing, so we should be happy. We should be concerned if they weren’t coming,” Mr Heng said, adding that Chinese investment in the Kingdom was low compared to Laos and Vietnam.
“Our concern should be whether or not we have the necessary regulation in place to deal with this investment,” he said. “We are responsible for our country, and we have to make sure that the investment flowing in is good and follows the law. If not, we must take action.”
Mr Heng said Chinese are putting their money in the coast because it offers great maritime connectivity, particularly for the transportation of goods, with Sihanoukville being home to the nation’s only deep-sea port.
“There are more positive consequences than negative to Chinese investment. Everybody benefits from more investment: land prices increase, there are more jobs and less migration,” Mr Heng added.