Constructing the future of Cambodia: A Study on the Impact of Chinese Foreign Direct Investment (FDI) in the Construction Sector in Phnom Penh

Abstract: This qualitative research aims to address the impacts of China’s Foreign Direct Investment (FDI) on Cambodian labor in the construction sector by choosing the Diamond Island, a hub of China’s real-estate investment in Phnom Penh, as a case study. Based on the interviews with 35 Cambodian construction workers and nine key informants from the government, private sector, international organizations, international non-governmental organization, and research institute, the study assesses both positive and negative impacts from Chinese FDI. Findings and analyses show how Chinese FDI has successfully function in Cambodia and how it helps generate the employment and higher wages to the local workers. Simultaneously, it could also be a way to hinder the potential gains from its spillovers, including a knowledge diffusion, technology transfer, skilled development for local workers, as well as better labor standards and decent livelihoods if not granting compliance with law enforcement and a good collaboration among relevant agencies. Therefore, the advantages of inward FDI in Cambodia has prevailed, but the full benefits have not yet been fulfilled. Lastly, the study suggests a policy implication for future research in order to derive greater benefits from Chinese investment.