Casino colony

Casino colony

Cambodian identity among the possible casualties as Chinese money pours into Sihanoukville.

Cambodia's growing ties with China have made the latter by far the biggest and most influential investor in the country. Chinese money has been pouring in, particularly to the southern coastal city of Sihanoukville where Chinese-run casinos are mushrooming, with many more planned and a lot that also have online gambling operations.

Forty-eight of the 62 registered casinos in Sihanoukville are Chinese-owned, provincial police chief Chuon Narin told the Phnom Penh Post in July. The total is the highest in the country, surpassing that of the border towns of Poi Pet and Bavet, where the main customers are from neighbouring Thailand and Vietnam, respectively.

But last week, Cambodian Prime Minister Hun Sen for the first time signalled some push-back against the Chinese wave that western critics say threatens to swamp the country completely. He said his government would ban online gambling because the industry had been used by foreign criminals to extort money.

Casinos are not the only thing that China is planning to build in the country. The Wall Street Journal in July reported that Cambodia and China had signed a secret agreement allowing he latter's armed forces to use a Cambodian navy base near Sihanoukville.

The article quoted US and allied officials familiar with the matter as sources but Hun Sen derided the report as "fake news" -- the all-purpose catch phrase used by autocrats around the world when they are painted in a bad light.

But the Chinese casinos in Sihanoukville are very real and their presence has had both positive and negative affects on the local population. Yes, tourism numbers and job creation are surging, but so too are rents and the crime rate, say residents.

For now, the Phnom Penh government is pleased with the huge sums of casino and tourism revenue it is able to collect. Many local residents are also enjoying the city's economic prosperity as businesses are booming and property prices are skyrocketing. That is great news for property owners, but what about the majority of local people who do not own property?

'LITTLE MACAU'

From a sleepy beach town at the tip of an elevated peninsula on the southwestern coast of Cambodia, Sihanoukville, also known as Kampong Som, has been transformed into a busy "little Macau" featuring casinos, high-rise buildings and bright night lights.

Four years after China initiated its continent-spanning Belt and Road Initiative (BRI), Sihanoukville started to see dramatic change in 2017 when the first Chinese casinos and hotels started to sprout. As Chinese investors expand their footholds overseas, the number of Chinese tourists arriving there has also risen.

Out of the 1.8 million international tourists arriving in Sihanoukville in the first three months of 2019, 680,000 were Chinese, representing an increase of 35% year-on-year. Total international arrivals could reach a record 2.6 million by the year-end. That compares with an estimated 7 million for the whole country.

Figures from Sihanoukville Mayor Y Sokleng indicate that the city how has about 80,000 Chinese residents in a total population of close to 300,000. However, Kyodo News reported in July that the number of Chinese in Sihanoukville could be two or even three times higher than reported. The influx of Chinese money and tourists is driving the economy of the city, raising concerns among both local and international observers.

"[The influx] has created a lot of excitement for some that stand to benefit along with tremendous fear among the general public," Ou Virak, a political analyst and president of the local think-tank Future Forum told Asia Focus. "I think what's happening in Sihanoukville is presenting an enormous risk to Cambodia and to our sovereignty and is something we have got to pay very close attention to."

As Cambodia's biggest development partner, China is investing billions of dollars in the country, especially focusing on the capital Phnom Penh and Sihanoukville. To connect the two cities, China has funded a US$2-billion expressway, from which it expects to recover its investment through toll fees over the next five decades.

But casinos are the most high-profile sign of the Chinese presence. Of the 163 gaming licenses issued nationwide as of this year, 91 are in Sihanoukville, Ros Phirun, deputy director-general of the Ministry of Economy and Finance, who oversees the casino industry, told the Khmer Times.

As it hands out gaming licences like candy, the government expects to collect a huge sum in casino taxes. Last year, said Ros Phirun, the government earned $46 million and it expects the number to double this year. Pending legislation seeks to set a higher tax rate for casino games at between 4% and 5%, to match regional casinos such as Singapore.

Sihanoukville used to be a sleepy vacation retreat popular mainly with western backpackers, but it is now packed with Chinese gamblers.

Ou Virak, however, sees the growing reliance on China as a risk that is not worth taking. "It is becoming more and more a national security and sovereignty issue," he said. "A cautious approach to Chinese investment -- any single country's investment -- would be healthier."

SHORT-TERM GAINS

Since the arrival of Chinese casinos, Sihanoukville has witnessed a deterioration of security. In the city centre where the casinos are concentrated, townspeople often avoid visiting at night.

Sea Malavatey, a 23-year-old new graduate and local resident, acknowledged the city is very prosperous now with new buildings and high property prices, and many residents have benefited from economic growth.

"There are a lot of casinos in Kampong Som today, including the ones that have licences but haven't been built yet," she told Asia Focus, using the city's other name. "This is good for local residents who have their own houses here because they can rent their houses for a really high price."

"But for [Cambodian] people who come here to work and rent houses, it's bad for them because the landlord might discontinue the contract as the property value increases.

"At night around the beach and casinos, it's not secure and we locals don't usually go there unless we have jobs to do."

Prices of land and houses in Sihanoukville have increased as much as tenfold since the Chinese began arriving, she said. A two-bedroom house today rents for around $2,000 per month, compared with $500 to $800 three years ago, Norn Thim, a real estate agent at Sihanoukville Property, told Asia Focus.

"The price of real estate here is really high right now since the Chinese arrival," he said. "Most of them will rent out a house or a building with 10 to 15 rooms which charge around $1,000 per room per month."

But some of these buildings, he claims, are also being used as headquarters for online gambling operations.

Moreover, as rental prices rises, some Cambodian tenants are also being thrown out in favour of rich Chinese nationals, said Ms Malavatey. Some tenants receive hefty compensation if they have proper documents or lease contracts. But those without the right paperwork are forced to move out without any settlement.

Nevertheless, people in the city are richer and they are spending more, she observed.

"From businesspeople to salaried workers to motor taxi or PassApp (similar to Grab) drivers, they are all receiving more profits because the demand is high and the supply is relatively low."

For example, a job advertisement by Golden Royal Hotel & Casino in Sihanoukville for online dealers quotes monthly wages ranging from $350 to $700, while card sorters can earn $300 to $500. The jobs come with free accommodation and food. The pay alone is well above the national minimum wage of $182.

Cambodian construction workers who are building the Chinese casinos in Sihanoukville are also earning three times more than the $2-3 a day that their peers would get in other provinces. But most of the casinos are hiring more Chinese construction workers than locals.

In any case, if local construction workers are not already residents of Sihanoukville, they cannot afford the $100 to $130 per month it would cost them to rent a room in the city. That compares with $50-80 that they would pay in Phnom Penh.

In the meantime, it is not clear how long the Chinese-fuelled boom will last, if investors decide to do something else once their existing 10- or 15-year contracts end.

"For now, everyone benefits from this. But in the long run, Chinese nationals will dominate our economy," said Ms Malavatey who studied international relations. "They will start to have their own businesses just like us -- from selling fruits, vegetables, meat and fish to driving motor taxis or tuk tuks. They even send their experts here."

Her concern is echoed by Ou Virak, who fears for the future of Cambodia and Sihanoukville in the long term.

"My fear is that Cambodia has passed a point of no return and we are already losing control, and the destiny of Sihanoukville might not be in the hands of the Cambodian people," he said.

"Gambling is a source of crime and money laundering and other issues detrimental to social security," says San Chey, executive director of the Affiliated Network for Social Accountability SUPPLIED

LONG-TERM LOSSES

A report by Sihanoukville provincial authorities suggested that Chinese now own more hotels, guesthouses, restaurants and casinos than local people do. It said 150 out of the 156 hotels and guesthouses, 48 out of 62 casinos, and 95% of 436 restaurants are owned, invested or managed by Chinese nationals, as reported by the Phnom Penh Post.

Local businesses will not be able to compete with Chinese businesses as the latter offer better prices, and Chinese tourists like to support their own people's businesses.

"Many of the Chinese are here and settling in to stay and operate their own businesses that cater to their nationals," Ou Virak said. "[Local people] are priced out and suffer as a consequence."

Whether they want to or not, locals are being forced to rent their houses to Chinese people once their neighbours do the same. This is because Cambodians cannot handle living next to loud Chinese tenants, a local resident said.

"Perhaps in the next five years, [Sihanoukville] will be full of Chinese if Chinese people continue to stay here. We Cambodians stay among ourselves; the Chinese will stay among themselves," said Ms Malavatey.

As the number of casinos rises, the problems of crime, gang and mafia activity, money laundering and kidnapping are among the concerns for provincial authorities as well as the residents. A Preah Sihanouk provincial report noted 105 gambling-related crime cases in 2018, a 25% increase from 2017.

"Gambling is a source of crime and money laundering and other issues detrimental to social security," San Chey, executive director of the Affiliated Network for Social Accountability told Asia Focus.

He worries about Sihanoukville becoming a victim of Chinese economic colonisation, and has urged the government to manage the influx of Chinese nationals and casinos to ensure public security. He called for casino regulation and taxation to prevent illegal gambling activities.

"While Cambodia faces limitations of law enforcement and administering foreigners, legal and illegal casinos have to be well monitored and need clear mechanisms to prevent authorities benefiting from those investments and industries," he added.

The Sydney Morning Herald reported that the previous Sihanoukville governor, Yun Min, said the influx of Chinese had also brought Chinese criminals who kidnap punters and get into fights around casinos, creating chaos and insecurity. Yun Min resigned recently after the collapse of a Chinese-owned building under construction killed 30 Cambodian workers.

The huge amount of construction around Sihanoukville requires more workers than the province can supply; thus, a number of people from other provinces and China are coming to work there. Typically, Chinese workers are more skilled than Cambodians and receive double the wages of locals, according to a report by Equal Times, a website that specialises in rights and development issues.

The government has passed a new law regarding work permits for foreigners, especially in low-skilled jobs. Foreigners are to be barred from jobs such as street vendors, taxi or tuk tuk drivers, barbers or small business, Ministry of Labour spokesperson Heng Sour told the Khmer Times in July.

This is to ensure that low-skilled jobs are still available for local people who need to support their families, he said. According to a ministry report, about 100,000 of the 160,077 foreign workers in Cambodia are Chinese.

Sihanoukville, if left as it is today, faces two possible futures, in the view of Ou Virak.

"It could be an industrial hub that creates jobs for tens of thousands for the Cambodian people," he said. "Or it could become a de facto Chinese colony with China controlling all the main ports and potentially with Chinese arm presence."

Help Wanted: A job advertisement for the Golden Royal Hotel and Casino in Sihanoukville. SUPPLIED


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