Ly Yong Phat, the King of Koh Kong

One Cambodian entrepreneur runs the southwest corner of the country as his own personal fiefdom, but there is trouble brewing over fears of what his expansion plans could mean for the region

Thai-Cambodian relations have been defined high in the Dangrek Mountains ever since troops from both sides began clashing over the 12th century ruins at Preah Vihear five years ago. Further south, where the Kaoh Pao meets the Gulf of Thailand, it's a very different story.

TWO-WHEELERS FOR HIGH ROLLERS: Above left, motorcycle taxi drivers wait for customers across from a casino on Koh Kong. The development of the island has contributed significantly to the economy, but at substantial environmental costs. Above right, workers lay foundations for new homes in Botum Sakor National Park in Koh Kong province.

Here relations have thrived but in a quiet way, becoming a source of pride for Cambodian Prime Minister Hun Sen and tycoon Ly Yong Phat.

''Make the bosses rich in Cambodia,'' Hun Sen recently mused with homespun wisdom, evoking the words of former Chinese leader Deng Xiaoping who once said: ''Let some people get rich first.''

Until then Ly Yong Phat had enjoyed a quiet life, as opposed to mixing on the local celebrity circuit which is dominated by business moguls and their wealth, known collectively as the Khmer Riche.

Ranked 12th among Cambodia's richest people _ some say he should be at the top of the list _ Ly Yong Phat's signature is everywhere in Koh Kong, a province tucked away in Cambodia's southwest along the Thai border. The local capital, a frontier town if ever there was one, bears the same name.

His diversified investment portfolio includes hotels, casinos, a wildlife park, infrastructure projects and property, set among pristine beaches, isolated rainforests and the Cardamom Mountains _ home to an abundance of wildlife, including the Indochinese tiger.

Ironically it was the decades of war and destruction in Cambodia that ensured this wilderness area remained untouched while jungles elsewhere in the region were being harvested for their timber, the land cleared for development and the natural habitat destroyed.

The Khmer Rouge remained active in the area at war's end in late 1998.

KINGPIN: Ly Yong Phat.

Realising Koh Kong's strategic potential for trade with Thailand, Ly Yong Phat bankrolled a 1.9km bridge across the Kaoh Pao, a wide water course at the confluence of several rivers, at a cost of US$7.2 million. Completed in 2002, Ly Yong Phat has had a hold on cross border trade with Thailand through his LYP Group ever since.

He has the added advantage of being a senator for the ruling Cambodian People's Party (CPP) in a country where business and politics go hand in glove, and his connections with the Thai, European and Chinese business establishments are excellent.

A new port is planned with a railway line heading north towards Preah Vihear where Chinese companies are eager to extract iron ore to feed that country's enormous appetite for steel. Importantly, two separate 1,800MW coal-fired power plants are also planned.

There are, however, drawbacks.

His biggest issue is Koh Kong's unsavoury reputation. If Cambodia _ whether fairly or not _ is a country synonymous with corruption and violence then Koh Kong is its darkest side. Hard drugs and prostitution are common, pirated cigarettes and alcohol alongside electronic goods and brand name clothing routinely pass through its harbour.

Last year, well known environmentalist Chhut Vuthy was shot dead during a confrontation with a security guard who had been ordered by a Chinese company to seize his camera.

Reports of illegal logging, sand mining and land grabbing regularly make the pages of local newspapers while Ly Yong Phat's own company was caught using child labour to harvest sugar cane, an industry that has blossomed recently due to a generous European quota system designed to aid developing nations.

Pictures of children toiling in fields, instead of going to school, were splashed across the pages of The Phnom Penh Post adding some unwanted colour to what has become known as the ''blood sugar'' issue and calls to boycott Cambodian produced sugar in Europe and the US.

ECONOMICS TRUMP ENVIRONMENT: The Koh Kong Special Economic Zone will provide lots of jobs and generate fortunes for a few, but at what cost?

Under a European trade scheme named ''Anything but Arms'', small landholders were expected to benefit from favourable trade arrangements, but critics argue this has led to land grabbing by big companies including LPY, the consolidation of small plots into large sugar cane estates and then the hiring back of the original land owners to grow and cut sugar cane for a pittance.

A spokesman for Ly Yong Phat's companies wrote in a letter to The Phnom Penh Post that the use of child labour ceased immediately once it became known to directors. The letter also implied directors would take a dim view of the report if it cost the LYP Group money. The criticism continued.

Villagers have claimed more than 200 families were thrown off their land after 2006 to make way for Ly Yong Phat's Koh Kong Sugar Industry and Koh Kong Sugar Plantation.

''Thousands of families have been kicked off their land and are facing food insecurity,'' Eang Vuthy, a programme manager for local NGO Equitable Cambodia, said recently.

Ly Yong Phat's lawyers maintained that compensation is fair and that many villagers had not produced titles to support their land ownership claims. However, this argument often lacks merit in a country where land titles were destroyed and millions of people displaced by 30 years of war.

Legal action is also being prepared by a US law firm on behalf of Koh Kong villagers whose case for compensation is expected to be heard at the European Court.

''We have been looking at where the crop has been going, and we fully intend to pursue that action in the court,'' American lawyer Mark Moorstein said recently. He added that if land is taken illegally from villagers, then the crops themselves still belong to them.

Ly Yong Phat is widely viewed as the front man for the Cambodian sugar industry. It was during the opening of a sugar refinery, built next to two sugar cane plantations owned by him, that Hun Sen lavished praise on this type of Chinese-styled millionaire with the argument that amounted to poor people need rich people, ''because when there are problems, for example when people need help with flooding, our local investors contribute a huge amount of money''.

''If a country has no millionaires, where can the poor get their money from?'' the prime minister asked.

Chinese companies have announced plans to spends billions of dollars along the Cambodian side of the Thai border, from Preah Vihear to Koh Kong. Work is expected to begin this year by Cambodia Iron and Steel Mining Industry Group (CISMIG) and China Railway Major Bridge Engineering on a 400km railway linking a planned iron ore expansion to a new port in Koh Kong for a total cost of $11.2 billion (334 billion baht).

Japanese motor parts manufacturer Yazaki Corporation, finished building a factory in Koh Kong's Special Economic Zone, making electrical wiring systems for cars.

China National Offshore Oil Cooperation has begun drilling for oil and gas off the coast of Koh Kong. Thai company PTT is also drilling while Hong-Kong-based Mirach Energy is also planning to drill.

But there are problems ahead. Iron ore and oil and gas reserves in Cambodia are unproven while the ''blood sugar'' issue is promising to pitch civil groups against the government and big business interests over the short term.

But the biggest headache for Ly Yong Phat, Hun Sen and the formidable array of international investors they have assembled could be the two coal-fired power plants needed to fuel their massive expansion plans.

At 1,800MW, each plant is about a third bigger than the electricity generating plant to be built by the controversial Xayaburi dam on the Mekong River in Laos. Coal-fired plants are dirty and an anathema for environmentalists hoping to protect one of the last wilderness areas left in Cambodia.

In early 2011, the east Malaysian state of Sabah was forced to scrap plans for a coal-fired power plant alongside a pristine stretch of beach on the east coast of Borneo. This followed a three year campaign by environmentalists.

At 300MW, the plant was just a tenth of the size of the two plants planned for Koh Kong, but its critics successfully argued that the damage it would cause to marine life meant it had to be stopped.

Ratchaburi Electricity Generating Holding of Thailand is again interested in partnering the Koh Kong project and has been conducting a feasibility study, putting the project back on the public agenda after it was put on ice once the fighting at Preah Vihear escalated. Under the plan, Thailand will buy electricity from the plant and feed it back across the border while Cambodia will bear any of the pollution costs.

Ratchaburi Electricity Generating Holding has established a joint company known as KK Power Co with Ly Yong Phat and is keen to expand its regional operations.

Whether the grand plans for Koh Kong materialise or not remain uncertain. Thai-Cambodian relations remain fragile at best and further hearings over the territorial dispute at Preah Vihear are pending, with a decision on the dispute due later in the year.

And how Ly Yong Phat, known as the ''King of Koh Kong'', copes and what he does next to create those extra millions of dollars will no doubt find the support of Hun Sen and the CPP _ but whether that support translates to the broader community remains equally doubtful.

CAUSE AND EFFECT: The two signs say it all—the chief danger to wildlife and the environment comes from rampant development.

POWER PLAY: Above left, the construction site of a dam being built by China National Heavy Machinery Corporation on the Tatay River in Koh Kong province, 210km west of Phnom Penh. Above right, an empty barge registered as Singaporean is towed to be filled with sand at a depot in southwestern Cambodia, where mining has caused environmental damage. The bulk of the sand is destined for Singapore.

About the author

Writer: Luke Hunt
Position: Writer