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Poll fears hurt investments

Source: KhmerTimes

Total investment in the kingdom plummeted in the first quarter amid election fears, dropping to the lowest figure for many years, according to the Council for the Development of Cambodia.

CDC figures indicated the country approved 21 projects with a total value of $131 million in the first quarter, compared with $955 million and 37 projects in 2016, a year-on-year fall of about 90 percent.

According to a breakdown of the figures, the value of approved investment into the industries sector took the big share of more than $100 million in the quarter, followed by agriculture, services and tourism.

David Van, country managing director for consultancy firm Bower Group Asia, said people will not put much money into investments this year and next, when the national election takes place, because they are “keeping eyes on the political situation”.

“People expect from now to the July 2018 legislative elections to be somehow turbulent, so businesses in general are at a standstill waiting to kick off again once the uncertainties subside post-election,” Mr Van said.

“This has been traditionally been the same during every election cycle.”

“The official win in the commune elections for the ruling party still does not quite reassure the business community,” he added.

However, he said the first quarter results this year may have fallen drastically for many reasons.

“Some countries have fiscal years ending at different times so decisions to disburse investments might not be made in the first but rather the second quarter.

“Hence the picture may get a bit distorted in such a short period of comparison. Looking at the first two quarters together may offer more clarity,” he added.

Stephen Higgins, the managing partner of consulting firm Mekong Strategic Partners, said official figures should always be treated with caution, because they were for projects approved which might never get built, rather than actual investments.

“I’m not too concerned about the apparent drop in investment from the first quarter last year, which was unusually high thanks to approvals for some big Chinese tourist development projects,” Mr Higgins said.

“The most important thing for me is that planned investment in manufacturing is holding up fairly well.

“In any country, you would expect uncertainty from upcoming elections to impact investment decisions, and Cambodia will be no different.”

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