In 2018, 43 percent of the US$3.6 billion in FDI originated from China. Chinese money has transformed once-sleepy towns and lively fishing villages into tourist hubs.
Although SEZs are intended to boost local employment and redistribute wealth to rural areas, Chinese-run projects have been described as “classic enclaves” operated by private companies that contribute little to the local economy. While most FDI ventures manufacture export goods for foreign markets, Chinese businesses also often import the materials needed for production instead of procuring them locally. It seems that Chinese investment has locked Cambodia’s economic growth into a closed loop leading back to the homeland.
According to a report on investment in Sihanoukville, at least 60 percent of the local population is negatively affected by Chinese development. Not only do Chinese companies have free rein over how they develop a SEZ, they are also allowed to open informal businesses once run by locals, such as massage parlors, restaurants and food stalls.
The lucrative prospects of doing business in Cambodia have attracted more Chinese nationals to take up work and residence in the country. In the coastal province of Sihanoukville, Chinese people now make up 20 percent of the population. Their growing presence has been accused of diluting local culture, transforming the native environment, and causing rent prices to soar.
Unable to compete with these new Chinese businesses and to afford rising rent prices, many locals have been forced to migrate to other areas.
Foreign direct investment comes with the promise of jobs and development-driven growth—but this has come at a cost to Cambodians.