Cambodia reliant on China for a range of infastructure projects
Cambodia suffered through the economic downturn that came about following the financial crash toward the end of 2008. In 2009, the economy contracted 1%, which wrought significant hardship for many hundreds of thousands of people, most notably those employed in the garment sector as the export of clothing fell by around 20% in value.
This year, the economy is picking up and is expected to grow by 5%, driven primarily by the returning health of world trade and a growing tourism industry. These sectors are significant; the garment industry alone contributes 70% to Cambodia’s export earnings. But, of even greater importance, according to government, is the development of the country’s infrastructure, which will lay the ground work for future economic development.
The recession hit infrastructure development programs in the country hard, foreign investment plummeted from over US$10 billion in 2008 to just US$5.88 billion in 2009. As the world economy picks up once more, China is expanding its presence in the country with a range of infrastructure projects.
One of these is the construction of a hydro-electric power plant 180 kilometres west of the capital, Phnom Penh. The plant will generate 338 megawatts when it is completed and will cost around US$550 million to develop. The dam is just one aspect of a much larger national plan for hydroelectric power, which envisions 9 additional hydroelectric power plants operating in the country by 2019.
These plants would add 2 gigawatts of power to the country’s national grid, according to Cambodia news reports.
The cost, which would run well above US$5 billion, is more than the Cambodian government can afford through domestic investment initiatives and this is where China will play a major role in the development of the country.
Already, the China Export-Import Bank is funding the development of the 338 megawatt dam, which will be built by the China Huadian Engineering Company. This dam on its own will more than double the entire energy-generating capacity of Cambodia and will vastly improve electrification of the country.
Currently, only 20% of Cambodian homes have permanent electricity.
China’s investment in the country is therefore essential to the long-term viability of the economy, which is expected to grow by almost 7% next year, and the China Export-Import Bank is investing in other areas apart from hydroelectric power production.
A US$310 million project to improve the country’s irrigation systems has received funding of US$240 million from China. Such a project is important in Cambodia where more than 67% of the employed population work in the agricultural sector.
China has been expanding its reach beyond Cambodia, however. In addition to heavy investment in Africa, the Asian powerhouse is developing its influence across the Southeast Asian, Central Asian and Northern Asian regions, most notably in the area of essential infrastructure projects.
The possibility of a Trans-Asian Railway only got real attention after China threw its weight behind the project, which would see a 14,000 kilometre railways line for freight transport built between Turkey and Singapore for the fast and efficient transport of goods. Such a project would have huge benefits for the Asian countries involved, including Cambodia.
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Cambodia reliant on China for a range of infastructure projects
Cambodia is in need of foreign investment for a number of major infrastructure projects and China is becoming the country’s biggest investor on several key ventures. This is part of a broader expansion in China’s influence in Asia as the country continues to develop into the world’s second superpower.
Cambodia suffered through the economic downturn that came about following the financial crash toward the end of 2008. In 2009, the economy contracted 1%, which wrought significant hardship for many hundreds of thousands of people, most notably those employed in the garment sector as the export of clothing fell by around 20% in value. Read more
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