Chinese investors and tourists are betting big on the Cambodian resort city of Sihanoukville – but the locals are losing out
The coastal city of Sihanoukville is undergoing a massive transformation. Once perceived as a seedy haunt for lethargic backpackers and expats, a flood of Chinese tourists and investors is now changing the landscape with everything from gaudy casinos to towering luxury resorts as well as restaurants, street stalls and shops on the once-sleepy city streets.
But as the beach town changes and the government welcomes the surge in development spending, it is becoming clear that Chinese investment has created a closed loop with few new opportunities for Cambodians, forcing locals out of potential economic gain.
While Sihanoukville has long been part of government plans to develop Cambodia’s next tourism hotspot after Siem Reap, the provincial tourism chief, Taing Socheat Kroesna, says this year has seen a dramatic surge in Chinese visitors primarily drawn to Chinese-run casinos.
Currently there are 24 legal casinos in Sihanoukville, up from 15 at the end of 2015, he says, with the vast majority owned and operated by Chinese investors looking to cash in on increased flight connections from the mainland.
“The Chinese are being drawn to Sihanoukville because they like to gamble, and there are more casinos and junket operations that cater to them,” he explains, adding that the beach town is now connected to eight Chinese provinces with charter flights.
Chinese arrivals skyrocket
According to tourism statistics, Chinese arrivals skyrocketed 170 per cent in the first nine months of this year, reaching 87,900. The total number of foreign tourist arrivals this year stands at 347,000, an increase of 18.4 per cent.
While Kroesna says the arrivals have spawned a huge increase in Chinese investment, he admits that the benefits to the economy have been lopsided, with the majority of new jobs going to staff that the Chinese fly in themselves.
“The Chinese have their own tourism operators and buses that bring tourists from the airport directly to casinos and resorts. And they have their own restaurants and businesses to cater to them because we don’t have Cambodians with the right skills for the job,” he explains.
Sok Song, vice president of Preah Sihanouk Chamber of Commerce, downplays concerns that locals are losing out on the development of what he dubs “Chinatown”, adding that the main concern was that “dirty” money or speculation was fuelling Sihanoukville’s unprecedented boom.
“While there are some labour concerns, we are more concerned that there are Chinese investment commitments that may not materialise,” he says, adding that 20 new Chinese hotel and casino projects are expected to break ground next year.
However, he says that land and rental prices have already tripled in some areas since the beginning of the year as the Chinese have bought entire residential areas and unfinished developments to house their staff.
“We need to closely control how much investment is coming in, especially if growth is going to be led by speculative casino investments,” he warns. “If we don’t, then we all lose out, especially the land owners who are renting to the Chinese.”
Despite the economic potential of hotels, casinos and increased tourism numbers, Cambodia’s gambling industry has long maintained a murky reputation, with the coastal destination rarely earning positive headlines.
Major General Kul Phaly, deputy commissioner of the provincial police, admits that money laundering, illegal casino operations and human trafficking have become acute concerns.
“But we are fully capable of handling any criminal element with our team of spies and special expert units that patrol 24 hours a day to check for valid work permits and monitor gaming operations,” he says.
Special units had raided and shuttered five Chinese-run online casinos so far this year, he adds.
However, Jonny Ferrari, managing director of the Sihanoukville-based online Ferrari Gaming site, says a lack of effective government regulation and a culture of bribery has created an environment “where it is easier to get a casino licence than a restaurant licence”.
“It is no secret that the local authorities can be paid off to look the other way and let unregulated Chinese casinos operate,” he says. “But the problem is that it makes around 90 per cent of the Chinese casinos fly-by-night investments, which can quickly close up shop by breaking lease agreements.”
While Ferrari predicts there will be no slowdown in gaudy new Chinese casinos, he maintains that the day will come when many poorly managed operations close, allowing big names and players to step in and make Sihanoukville the “new Macau”.
But until then, local businesses are struggling to adapt and many are afraid that they will be further edged out by the influx of Chinese investment.
A closed loop
By Vanny, who runs the Beautiful Beach 168 bar on Ochheuteal beach, says the influx of Chinese tourists has hurt local businesses, as many are unwilling to go to Cambodian-owned venues. What’s more, she adds, as businesses catering to Chinese tourists push out ones that traditionally catered to Westerners and locals, there are fewer other tourists to patronise the local businesses that remain.
“We don’t receive any business from the Chinese,” she says. “I am not happy with the growth of Chinese tourists and investors, and I am worried that if all they attract is gamblers, it will be a disaster for us.”
Restaurant owner Chay Piseth is even more vehement about damage Chinese tourists and investors would inflict on the once-sleepy town.
He fears that his Nice Ocean restaurant on Serendipity Road will be shuttered next month after being handed an eviction letter saying that an unnamed Chinese investor had purchased the land for “renovations”.
“I can’t survive the flood of Chinese tourists and investors because they only support each other and don’t care about locals,” he says. “When I lose my business next month, I will just be another slave to Chinese investors unless the government helps to block them from entering the industry.”
“The Chinese view Cambodians as low-class workers, while they take up all the high positions, despite some of us having businesses here for over 10 years,” he adds.
However, not everyone is bad-mouthing the boom.
Robert Heiduczek, a German who has been operating Sun Tours, a boat service company, for the last 13 years, says he has little sympathy for the local businesses that “have and will continue to close as Chinese set up shop”.
“The Cambodian business model down here has never been sustainable, and finally some real cash is just starting to come in,” he says.
“How can local businesses sell 50 cent beers along the beach and expect to remain open?” he asks, complaining that local businesses had already cannibalised themselves by keeping prices artificially low to remain competitive. “Chinese investment is the best thing to happen to Sihanoukville and it is finally putting the town on the map.”