The future of Cambodia looks increasingly Chinese

PM Hun Sen says China is his 'most trusted friend' but critics say the premier's one-party state is allowing Beijing to 'colonize' the country for short-term gains

 SIHANOUKVILLE, AUGUST 5, 2018

Sihanoukville, once Cambodia’s premier seaside resort, has been transformed into a bustling Chinese casino town.

The first thing a visitor inevitably notices is the bright red and yellow Chinese lettering on virtually every sign. It’s impossible to walk down any town street without passing a Chinese-built casino or Chinese-owned business.


Even the advertisements plastered on the backs of ubiquitous tuk-tuks are written in Mandarin. “Now Chinese all,” said one Cambodian man standing outside a beachfront restaurant wearing traditional Chinese clothing to lure in Chinese tourists.

Sihanoukville is a glaringly visible example of China’s rising domination of Cambodia’s economy. It also serves as a cautionary tale of the downside risk of overreliance on Beijing for the small country’s future development and prosperity.

Chinese largesse has enabled, if not encouraged, Prime Minister Hun Sen’s recent lurch from multi-party democracy to a de facto one-party state, a transition to full-blown authoritarianism consolidated at rigged elections on July 29.

Chinese investment has supplanted the Western aid that previously bankrolled Cambodia’s national budget, funds that often came with strings attached for democracy and rights promotion. Beijing’s rich disbursals have come with no such demands.

Nowadays, the premier often refers to China as Cambodia’s “most trustworthy friend” and asserts that the regional superpower is necessary for Cambodia’s sustained development.

Chinese President Xi Jinping (left) walks with Cambodian Prime Minister Hun Sen at the Peace Palace in Phnom Penh on October 13, 2016. Photo: AFP/Tang Chhin Sothy

But critics claim that in ceding territory and other long-term economic concessions to China, Hun Sen’s government is effectively enabling China’s de facto “colonization” of his country as it yields more and more to Beijing’s ambitions and demands.

Nowhere is China’s rising economic domination more apparent than in Sihanoukville, which increasingly looks, feels and acts like a Chinese city. The transformation is being driven by a fast surge in Chinese tourism, which grew 126% from 2016 to 2017.

The influx is not coincidental, as Hun Sen himself has urged China to invest in the once somnolent coastal town. Yet some critics say China is effectively exporting its vices to Cambodia by establishing casinos in the kingdom while it’s still illegal to gamble in China.

colonialization

The risk of dependence on the notoriously fickle and highly opaque gaming industry is rising in Cambodia. Many of Sihanoukville’s giant, China-invested mega-casinos are typically vacant, according to gamblers who spoke with Asia Times.

That’s the business model, however, as Cambodian and Chinese women deal cards to empty tables in front of cameras for online gamblers based in China who no longer need to travel abroad to place their bets.

Sihanoukville’s Chinese-owned WM Casino is a case in point. On a recent evening at the resort, half a dozen gamblers gathered around three tables while the remaining 15 or so were occupied by women dealing cards to phantom players.

A Chinese casino lit up by night in Cambodia’s Sihanoukville. Photo: Facebook

Chinese-led casino development has drastically shifted Sihanoukville’s economics, seen in skyrocketing property prices. Where a local house in the town until recently rented for US$250 a month, landlords are now demanding upwards of US$3,000, according to people familiar with the situation.

While Western entrepreneurs are feeling the financial pinch of rising rents, Cambodians that don’t own the land they occupy are being driven in droves from the town.

English business owner Thomas Powell and his Cambodian wife are currently embroiled in a legal dispute with his landlord after he allegedly illegally attempted to evict him to make room for Chinese investors.

“The reality is that there is a blatant disregard for contracts,” he said. Many landlords are refusing to renew leases, knowing that they can get a bigger payday from a Chinese renter. There are reports that even those with airtight contracts are being forced out.

“It’s not just foreigners getting screwed over, it’s Khmers as well. And Khmers with families,” he said. “Many people don’t have the wherewithal to fight it.”

Powell said not all Cambodians are losing out – some landowning Cambodians are winning big – but the losers far outnumber the winners, he claims. And there could be bigger losses on the horizon, some analysts predict.

Anwita Basu, an analyst with the Economist Intelligence Unit, says Sihanoukville’s China-led development may help promote growth through construction and tourism in the short-term, but warns of possible problems in the future, including political risks.

“[Rising Chinese investment] will price out the locals from the property market and therefore may raise resentment against the Chinese,” she said, adding that many of the investments seem susceptible to corruption.

A Chinese lion dance in Sihanoukville in 2017. Photo: Youtube

Chinese investors have even bigger plans in the works for Sihanoukville. Enormous plots of land dotted with dozens of cranes can be seen along the town’s picturesque coast.

The Cambodian government, meanwhile, recently unveiled plans for “Wisney World”, a joint project between China’s AMC International and a Malaysian company. The US$1 billion self-contained resort project will host waterparks, hotels, casinos, and malls on 65 hectares of land.

The country’s banned opposition, the Cambodian National Rescue Party, believes that Hun Sen’s policies risk making Cambodia into a Chinese “vassal state.”

Sam Rainsy, co-founder of the now dissolved CNRP, alleges that Hun Sen is allowing China to build full-blown colonies in Cambodia.

“Cambodia’s Preah Sihanouk and Koh Kong provinces are becoming like Chinese colonies,” Rainsy said in a recent interview. “Hun Sen is selling off portions of Cambodia’s territories in order to have China’s support to help him cling to power through most undemocratic means,” he said.

Some independent analysts see the situation similarly. Bill Laurance, a professor at James Cook University and an expert on Chinese development abroad, said it would be “naïve” to think that China is interested in a mutually beneficial business relationship with Cambodia.

“It’s just not in their business culture – they focus almost exclusively on advancing their own interests,” Laurance said. “They can be like sharks in a feeding frenzy when the conditions are right for them and then vanish just as quickly if conditions change.”

A showroom model of a Chinese-invested complex including luxury residence condos and hotel in Sihanoukville, Cambodia, April 2018. Photo: AFP Forum

His global research shows that Chinese developers typically have no qualms about forcing locals off their lands to pave the way for their developments.

“In Africa, I have seen with my own eyes how Chinese mining and logging corporations are running roughshod over local Pygmy groups in the Congo Basin—tribes that have lived in those lands for many thousands of years,” he added.

Basu said she expects Chinese investments to continue inflating Cambodian property prices in Sihanoukville as well as in nearby Kampot and tourism-geared Siem Reap, home to the world famous Angkor Wat ruins.

Locals in Sihanoukville say that many landowners who struck it rich from Chinese buyers are now purchasing land in Kampot in speculation of a next wave of Chinese investments.

Cambodian businessman Try Pheap, owner of the Try Pheap Group, is building a port and oil refinery outside of Kampot town in cooperation with two Chinese companies, including the North Petroleum and Chemical Group.

Hun Sen has claimed the port, which will be capable of hosting vessels weighing between 10,000-30,000 tons, is part of China’s US$1 trillion Belt and Road Initiative, according to pro-government media outlet Fresh News.

Men walk past portraits of Chinese President Xi Jinping (center, L) and Cambodian King Norodom Sihamoni ahead of his visit to Phnom Penh, October 11, 2016. Photo: Reuters/Samrang Pring

It’s also leading to activist allegations of abuse. At a ramshackle crab-fishing village next to the port’s site, fishermen complain that the construction is destroying the ecosystem they rely on for their livelihoods.

The Try Pheap Group declined to respond to Asia Times’ request for comment on the allegations. The North Petroleum and Chemical Group could not be reached for comment.

“Before there were mangroves,” said one elderly man gesturing at the waters ahead of him. He says mangroves previously stretched from his fishing village across the area’s lowlands that filled up with water during high tide. The company has since filled in the land and cleared the mangroves, leaving only a thin strip of land behind.

“We used to be able to catch crabs here, but now we have to go far away. All the way to the sea,” the fisherman said while complaining about his diminished catch. He says the companies have plans to fill the canal completely, which will eventually block the village from accessing the ocean altogether.

“We have no power to go against the [Chinese] company, the [Cambodian] owner of the land, so we just let it be,” he said wistfully.