September 20, 2011

Shanghai firm lead the way


National Road 6A in Phnom Penh
SHANGHAI Construction Group has announced it will complete US$700 million in projects in Cambodia over the next five years, highlighting China’s dominant and still-growing presence in the Kingdom.
The company presently oversees nine bridge and road construction projects in the Kingdom, according to government relations officer in Cambodia Yang Shali.

Shanghai Construction Group, which built the 492-metre Shanghai World Financial Center and Beijing’s National Grand Theatre, will begin work on the Tonle Bassac Bridge next month, a nearly $18-million endeavour that will connect National Roads 1 and 2, she said.

Chinese companies have filled a void in Cambodia’s transportation works with $550 million in ports, highways and bridges built to date, Yang claimed.

“If [Shanghai Construction] and other Chinese companies hadn’t undertaken these road and bridge projects, Cambodia’s economic development would be much slower,” she said.

“Before Chinese companies came in, it could take seven to eight hours to get from one province to the next. We’re saving lots of time.”

Shanghai Construction will need at least five years to complete current projects but could continue building in Cambodia for much longer, Yang said, adding the company’s projects are built on long-term, low-interest loans from the Chinese government.

China became the biggest source of foreign direct investment in Cambodia in July, pumping some $1.13 billion dollars into the Kingdom during the first seven months of the year, according to Council for the Development of Cambodia statistics. That figure represented a year-on-year increase of 83 percent.

According to a recent announcement on the government of Shanghai’s website, Shanghai Construction began work on Cambodia’s National Road 7 in 2004.

Also, it has laid more than 870 kilometres of road in the country and built the Phnom Penh Autonomous Port. Construction on National Road 6A is also underway, according to the statement.

The company is discussing a freeway project between the city of Siem Reap and the capital Phnom Penh as well, according to the website. The freeway would be the first in a country where prolonged civil war saw the deterioration of domestic transportation systems.

During a visit from high-level Chinese officials last month, a Shanghai Construction executive inked a contract with Cambodian Minister of Public Works and Transportation Tram Iv Tek for construction on National Road 214. Recent large-scale investment from China has ignited accusations of unfair bidding for construction projects in the Kingdom, University of Cambodia business and economics lecturer Chheng Kimlong said yesterday.

A recently passed law governing public investment calls for multiple bidders on projects, though he claimed the legislation’s effects have yet to be felt. The law may need time to mature before it draws public investment from other countries such as South Korea in the future, he said.

“If the law was more [effective], there would be other countries coming in and investing in big projects,” Chheng Kimlong said. Chinese companies in Cambodia have long irked conservationists and civil society in Cambodia, Chheng Kimlong said.

Recent attention paid by Chinese investors to environmental issues, however, is a positive signal for healthier and sustainable growth, he added.

“They have started to care about the environmental impact of their projects. This is a good sign,” he said, adding that a Chinese company recently delayed a dam project because of potential environmental damage.

“[Chinese companies] have had a bad reputation with locals. In the past there was no concern [for the environment].”

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