The flow of foreign direct investment in Cambodia dropped by 50 percent in the first six months of 2009 compared with the same period last year, local officials have said.

Investment by China and the Republic of Korea - the two biggest investors in 2008 - decreased by 93 percent and 58 percent respectively, while Japan ’s investment surged beyond expectations, the Council for the Development of Cambodia (CDC) said in its latest report.

The council revealed that China ’s investment dropped from 3.86 billion USD to 242.4 million USD, with most of the capital poured into real estate, mining, small-sized hydroelectric power projects and garment-textile plants.

The RoK’s investment fell to 109.2 million USD from 258 million USD in the first half of 2008, focusing on property, agriculture and tourism projects.

Meanwhile, Japanese investors pumped a total of 4.76 million USD in hotel development and tourism services in Cambodia . This volume represented a big leap as Japan did not invest in any projects in Cambodia during the first six months of 2008.

Deputy Director of the CDC’s Evaluation and Incentive Department, Yun Heng, attributed the decrease in the FDI flow to the adverse impacts of the ongoing global financial crisis, which forced China and the RoK to channel their investment to small-scaled projects instead of big ones as previously.

Lower competitiveness in the Cambodian investment environment is also a reason behind the FDI drop, Yun Heng added.

Head of the RoK Trade and Investment Promotion Agency’s representative office in Phnom Penh , Lee Hyoung-seok, said his country cut down overseas investment largely due to the world economic downturn.

Investment opportunities in Cambodia are now no longer great like two or three years ago, he said, adding, however, that Cambodia will be attractive to investors again once the world economy bounces back.

As a big credit provider for Cambodia , Japan signed a deal on August 10 to give the country a 72 million-USD loan to help develop the Sihanoukville seaport’s infrastructure facilities.

Japan also decided to grant 10 million USD to Cambodia in 2009 and 2010 to support its socio-economic development projects./.