Real estate brokers in Cambodia worry that current economic instability in the US and other international markets could affect foreign business investment at home
Chim
Written by Kay Kimsong
Monday, 22 September 2008
But local real estate broker seeks govt reassurances
REAL estate brokers in Cambodia worry that current economic
instability in the United States and other international markets could
affect foreign business investment at home.
"I think the economic slow-down in the US has made some potential
investors wary of putting money into land or property," said Sung
Bonna, CEO of Bonna Realty.
He said the government needs to reassure investors over stability in
Cambodia in light of the bankruptcy of the US financial services firm
Lehman Bros, announced last week, and the government bailout of AIG,
formerly one of the US's largest insurance and financial management
firms.
Sung Bonna said a new government must be announced as soon as possible
and policies should be implemented to encourage greater investment in
the banking and real estate sectors.
Fewer property deals
Government measures to curb inflation by increasing capital reserves
requirements for banks have led to a 50 percent drop in new real
estate loans, Sung Bonna said.
"The government needs to encourage investment and demonstrate that the
economy and political situation here is stable," he said.
Meanwhile, some in the banking sector say Cambodia remains largely
insulated from economic turmoil abroad.
"We've weathered this kind of crisis before, and I don't see any
problem for our banking sector," Nguon Sokha, deputy director of the
Research Department at the National Bank of Cambodia, told the Post.
She added that Cambodia, unlike Thailand, has few direct stakes in US
financial firms.
In Channy, president and CEO of Acleda Bank, said he has seen no
impact on commercial banks in Cambodia because they don't have
substantial stakes in the US stock market.
Overheated real estate
He added that anti-inflationary measures such as the hike in capital
reserves was intended to stabilise a booming real estate market that
saw rampant over-valuation in market prices since 2007.
"The problem with Lehman was a drop in share prices on the stock
market," In Channy said. "We don't have a stock market, so the direct
impact is minimal."
But Cambodia does have significant investments from Korea, China and
the European Union that could be subject to market fluctuations in
some international indexes, said Hing Thoraxy, senior research fellow
for Cambodia International Corporation for Peace.
The problem with real estate, for Hing Thoraxy, is not the global
crisis but local speculation.
"We are trying to protect our economy, and we will not allow a real
estate bubble due to speculation," he said.
The prospect of a housing crisis in Cambodia could further shake
foreign investors' confidence.
"If speculators artificially drive up prices on land in Cambodia, no
one will risk investing here," he said.
