With no building in Phnom Penh higher than four storeys only 20 years ago, Cambodia's capital and many provincial cities have seen explosive development. But with the hard hats hung up on many smaller projects in recent months, how sustainable is the boom?
Months into the Covid-19 crisis, the clatter of construction has grown fainter and fainter.
The pandemic, like in so many other respects, has exacerbated great divides between the resource-rich and resource-poor on Cambodia’s construction and finance landscape. While the mega-sites of Koh Pich, the man-made island in the Mekong River off the banks of Phnom Penh, are still humming with activity, construction activity elsewhere in the city and the country has fallen off as streams of investment have withered.
But for many buyers, even those with no intention of living in their investment property, it may be a turn-off to be unable to see the place before signing off on any purchase agreement. That’s the current situation thanks to pandemic-prompted travel restrictions that have, for now, put a hard stop on globalised travel.
That’s part of what Stephen Higgins, managing partner at Mekong Strategic Partners, points to when describing the woes of the current development marketplace in Phnom Penh. But the bulk of restructuring came after the National Bank of Cambodia instructed financial institutions, specifically those in microfinance, to widen eligibility criteria due to the pandemic.
«It doesn’t necessarily mean that, when they restructure loans, there is a big risk,» Sothearoath said. «But are aware that some customers in tourism, garment factories are directly impacted by Covid-19».
«Out of 238K restructured loans, banks have around 17% while microfinance has about 73%,» he added.
Who would start a major project now? … You’d have to have rocks in your head
Stephen Higgins, Mekong Strategic Partners
This article was written by Andrew Haffner
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