Dr Kim Heang: What concerns me most is that foreign investors don’t come and Khmer take no action
Many business executives have suspended their projects for fear of themselves of their workers being affected by the spread of the COVID-19 pandemic, which remains a serious threat to global health with no certainty when it will be resolved. However, as an outstanding real estate investor in Cambodia, Dr Kim Heang continues to develop his company’s real estate project.
Responding to a reporter who asked why he was continuing to develop his project in the midst of this fearful virus, he replied that “this is the right time for local investors to develop…to create jobs for the people, to generate tax revenue so that we can help our government.”
He mentioned this in an interview with a local journalist on the topic of “real estate sector in Cambodia after the Covid-19 outbreak and the tax exemption” on March 9, 2020.
In an interview on 09 March 2020 with a local journalist on the topic of the real estate sector in Cambodia after the Cambodia COVID-19 outbreak and tax exemption, he said, “If we don’t continue our construction projects with excuses that we already have money. What concerns me most is that foreigners don’t come and Cambodians don’t take actions. That’s a big deal! Without FDI, surely we are greatly affected, but rich Cambodians have to step up their constructions. We admit that it is not as easy as it used to be because people are afraid to give money. But if we go on to carry that same inactive mentality, then we are stuck.”
The COVID-19 pandemic has severely impacted and deprived the global economy in a short period of just over three months. By the end of April, more than 80 countries have requested financial assistance from the IMF. Even worse, the crisis is likely to lead to another economic recession, according to a release from Modern Diplomacy.
Parallel with global developments, the real estate sector and major construction projects in Cambodia, including public and private projects, continue to be hugely affected. On the afternoon of 4 March 2020, the head of the Royal Government announced that state-funded development and construction projects of the 2020 plan not underway were suspended for the rest of the year.
In addition to the state-owned projects, large-scale private property development projects have also been delayed from Q2 onward. Research by CBRE research in the first quarter indicated that most real estate projects – condominiums, landed property, commercial offices, retails, and certain numbers of commercial building constructions etc. saw less impact due to the fact that some remaining projects from 2019 spilled over into Q1 2020.
Of particular concern, however, is the decline in investment confidence from April onward, according to CBRE. This trend will only drag down economic activity in the real estate market, which is an undesirable scenario.
The delay on construction projects is a major concern, but losing business confidence of investors due to fear of lost profits is the most worrying aspect for economists. A loss of interest and confidence in spending money will create economic inactivity, which in turn will add weight to the global economic downturn from which it will be difficult to recover from once the crisis is over.
Investors’ inability to invest during a recession is one of the main drivers of the current economic downturn. Worse still, they do not seize the opportunity to turn a fortune into a reward.
“Many people postpone construction, stop trading. For the rich people who have money even if they do business for some time, they still have money to spend. But how about our followers who will lose their jobs? … This time we can find more contractors, cheaper labour, more available construction materials, and cheaper administrative processes. So, it’s easier and less expensive. So, if we invest now, rather than a few years later when the disease is gone, we can sell out with a lot of money,” explained Dr Kim Heang.
“At this time, we are lacking construction developers because of the delay in foreign investment. When foreign investors delay coming to build our country, if we Khmer do not build it, then who will?” Heang continued.
Another good opportunity is buyers being able to put pressure on sellers. In other words, now is the time to buy because the goods are of high value and buyers have more options that give them better bargaining power. In this situation, if we have the money and are reluctant to buy, then we will miss the opportunity to buy goods at such a cheap price again in a few years after the global crisis is over.
Based on the above, it is still difficult to predict the impact of the COVID-19 pandemic on the Cambodian economy as a whole. Yet, what is clear to all is that each of us can contribute to determine the future of our economy.
According to experts, in addition to the tax-exempt measures for licensed property developers who are mostly the rich, the government should have more long term and systematically flexible measures or policies to encourage more local investors, which can benefit all. In this regard, local investors should continue to invest as much as possible in our economic activities so that we can help to keep our country’s economy remains afloat during this dark period.
“… But if we do nothing, if we just sit back and watch because we claim that we already have money to survive.… And we don’t care about our people, the workers, our own staff who depend on us, then we are alone…But for them, they will lose jobs, have no money, and this is one of the things that we should be worried about for the future of our economy,” Dr Kim Heang concluded.
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