Chinese Companies to Invest Billions on Cambodia Projects

Source: NY Times

By REUTERS Published: January 3, 2013

PHNOM PENH — Two Chinese companies have reached a deal to build a 400-kilometer rail line, a steel plant and a seaport in Cambodia, worth a combined $11.2 billion, in what would be by far the impoverished country’s biggest-ever investments.

Cambodia Iron & Steel Mining Industry Group has hired China Railway Group to build the 250-mile railroad to link a steel facility in Preah Vihear Province, in the northern part of the country, to a port on the southern commercial island of Koh Kong, Zhang Chuan Li, the Cambodia Iron & Steel chairman, said Wednesday.

The rail link and port are expected to cost $9.6 billion and the steel plant $1.6 billion.

The deal is the latest sign of China expanding its footprint in the frontier economies of a booming Southeast Asia as the United States vies for influence in the region.

Loans and investment have won China some useful political allies in the 10-member Association of Southeast Asian Nations, which is set to become an integrated trade community by 2016.

All three projects in Cambodia will start this year and will take as long as four years to complete, Mr. Zhang said.

“There is an important demand for transport of mined materials for export to China and to the world,” he said.

Cambodia Iron & Steel is a Chinese company based in Phnom Penh and established in 2006.

The agreement was made Monday and came three days after Sinomach China Perfect Machinery Industry and Cambodian Petrochemical announced that they would jointly build a $2.3 billion oil refinery, Cambodia’s first, capable of processing five million metric tons of crude oil a year.

Chinese companies are also planning to build a separate $7 billion, 400-kilometer high-speed railroad through the neighboring country of Laos and are trying to win contracts to build new lines in Thailand.

Mr. Zhang did not provide details on where the billions of dollars for the Cambodian rail, steel and port projects would come from.

Mr. Zhang said that a groundbreaking ceremony for the railroad would take place by the end of this month and that construction of the steel plant in Preah Vihear Province would start in July.

A three-kilometer bridge will connect an island in the southern coastal province of Koh Kong with the mainland, and the project is expected to bolster the economies of the four provinces the link will pass through, the company said in a news release.

Peter Brimble, senior country economist at the Asian Development Bank, said he was surprised by the size of the rail project.

“It must be the largest-ever project in Cambodia,” said Mr. Brimble, who has been involved in the bank’s rehabilitation work on 650 kilometers of disused railroad lines in Cambodia. “Perhaps it’s easier to build a new one. Let’s wait and see.”

A version of this article appeared in print on January 4, 2013, in The International Herald Tribune.


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