A major airport project funded by China in Cambodia has been stalled as the Chinese company that was given the contract has allegedly run out of funds.
The estimated investment for the proposed airport on 300 hectares of land was billed to be more than $ 80 million but the Chinese company reportedly made huge losses due to Covid, ET has learnt. This episode has exposed the faultlines of some of the Chinese firms involved in overseas projects, according to sources.
The airport was scheduled to be built in Cambodia’s Mondulkiri province. It is the most sparsely populated province in the country despite being the largest in land area.
Cambodia is among China's closest allies in the Indo-Pacific region and a key pillar in the BRI to connect Southern China with the Indian Ocean Region.
Since 2010, starting with the Comprehensive Strategic Cooperative Partnership, there have been numerous pacts between Cambodia and China including the BRI in 2016 and the Cambodia-China Free Trade Agreement in 2020.
All of these agreements cover various segments, from trade and commerce, tourism and technology to military and law enforcement. China is Cambodia’s number one foreign direct investor, making up more than 50 per cent stake in total investments.
In 2021, the Council for the Development of Cambodia (CDC) approved fixed asset investments by China worth $2.32 billion, up 67 per cent from $1.39 billion a year ago. In 2021, bilateral trade rose 38 per cent year-on-year to $11.2 billion last year, with Cambodia continuing to register large trade deficits every year.
Sources said imports from China into Cambodia have been growing at a “much faster pace than exports”.
In terms of credit, China is the single largest bilateral lender in Cambodia with an outstanding loan of $4.05 billion as of December 31, 2021, and among the larger official development assistance (ODA), or aid partners.
Over projects have been bankrolled by China in Cambodia since 2004. Most were financed through concessional loans – 33 via grants, 66 via concessional loans and two financed through non-concessional loans.