S Korea group to build $2 bln city in Cambodia

PHNOM PENH, May 30 (Reuters) A group of South Korean companies said today it would spend 2 billion dollar on building a new city in Cambodia, the biggest single investment in the impoverished country still recovering from decades of war.

The residential, commercial, cultural and business complex would be built on 119 hectares (294 acres) on the northern edge of Phnom Penh, the group said in a statement.

The group, which includes Busan Mutual Savings Bank and property development company Landmark Worldwide Co., had been wary of Cambodia because of the country's violent recent history, marketing director Lee Yunyoung said.

''But actually when we came here we realised that it is really safe,'' he told reporters at the ground-breaking ceremony. ''So we want to start our project before others start.'' Deputy Prime Minister Sok An said the project would help attract more investors.

''Our population continues to increase sharply, so we need to expand our old city to meet the needs of the people,'' he said.

''Foreign investors also need good infrastructure to run their businesses.'' Cambodia's growth has been remarkably high in recent years. Its economy grew 10.4 per cent last year, when foreign direct investment (FDI) hit a record 4 billion dollar last year.

REUTERS SKB PM1350