Boom time hits Cambodia, but not all are smiling

30 Jan, 2008

After decades of war and upheaval, including the Khmer Rouge "Killing Fields", Cambodia is enjoying an unprecedented boom, its economy expanding at around 10 percent annually for the last five years.
But the breakneck growth, fuelled mainly by garment manufacturing, tourism and real estate development, is turning its once-sleepy capital into a building site and forcing many ordinary Khmers from their homes.
"I will move only when they pay me enough to find another place to live," said 49-year-old Ngay Tun, a fisherwoman living on Boeung Kak, a 120 hectare (300 acre) city-centre lake about to be drained and filled in to make way for a housing project.
"I worry about it every day, that they are going to come suddenly in the night to kick us out," she said, paddling a small wooden boat through floating banks of morning glory. While the outlook for the garment industry and tourism appears solid-especially while the US dollar, Cambodia's de facto currency, continues to fall-the same cannot be said for real estate, where prices are spiralling to dizzy heights.
Figures from Bonna Realty, a leading estate agent, suggest the price of prime Phnom Penh land doubled last year to $3,000/sq m-compared to less than $500 in 2000. By contrast, land in Bangkok's downtown Silom district is $5,000/sq m, while Ho Chi Minh City, the hub of neighbouring Vietnam's red-hot economy, prices can be as high as $15,000.
"There is a debate about whether there's already a bubble," World Bank country economist Stephane Guimbert said. "On the one hand, clearly the market was very depressed until a couple of years ago because there was little security and stability. But on the other hand, it's surprising that prices are increasing so fast," he said. In one of the first signs of overheating, annual price inflation has spiked to more than 9 percent in the last year, almost double its level in the preceding five years, and anecdotal evidence points to big upward pressure on wages.

Read Comments