CAMBODIA'S military has begun leasing huge tracts of "military development"

land to foreign and local firms.

Provincial authorities and the Ministry of Interior have been shut out of the military's

real estate business and are not happy about it.

Neither, it is understood, is the money finding its way into the Treasury, as it

should under Cambodia's Budget law.

The military became probably the Kingdom's single biggest landowner in July 1994

after Chief of General Army Staff General Ke Kim Yan struck a one million hectare

deal with the two Prime Ministers.

The land - which amounts to more than five per cent of the entire Kingdom, in seven

provinces - was intended to be used for military development, including centers where

demobilized soldiers would be retrained for civilian life.

One Finance Ministry source described the deal as a "concession" given

by the PMs to the military "and [so] the military can do what they want with

the land."

Seventeen firms have already leased a 120,000 hectare block in Kompong Speu province

from the army. Occupying one of these blocks is an obscure religous cult headed by

a Vietnamese-born woman named Ching Hai who calls herself the "Supreme Master".

Army sources say that another 200,000 hectare block has been leased to a Malaysian

firm in one deal, possibly in Oddar Meanchey.

The army still has another 700,000 hectares of land at its disposal, in Koh Kong,

Mondulkiri, Pursat, Ratanakiri, Kompong Cham and another block in Kompong Speu.

The deals appear on paper to be at giveaway prices - one, at least, is a 70-year

lease costing just an eight per cent profit share from a flour mill, and an up-front,

one-time only payment of just $4 a hectare for 32,000 hectares.

Interior Ministry sources allege that the deals are open to corruption.

Interior co-Ministers You Hockry and Sar Kheng warned the Cabinet of Ministers in

an August 1995 memo of big problems by giving the RCAF permission to develop the

land.

Hockry and Kheng agreed with the need for military reform, but said the project should

be a much smaller experiment than the "enormous" one of more than one million

hectares.

No studies had been made, they said, pointing to the development likely affecting

natural resources - especially forests - "and land already given to local people

for settlement."

Hockry and Kheng said that even now many Khmers had no land to harvest. Land complaints

"were increasing and were complicated to resolve."

"In this situation," they said, "if the General Staff obtain such

a great amount of land, it could affect the general feeling of the local people."

The General Staff had neither the direction, strategy, equipment, resources nor practical

ability to develop the land it had been given, they said. If it was given to foreign

investors, problems and "difficult circumstance" will "unavoidably

arise."

Hockry and Kheng's submission was ignored.

Some six months before the Prime Ministers' July approval to give the RCAF the land,

General Ke Kim Yan had already approved and signed the carving up of 120,000 hectares

of land in Kompong Speu into 17 blocks. The Interior Ministry apparently only became

aware of the deals on May 23 - some 16 month after it was signed.

Much of the land - 16 blocks in all - went to private firms. One block was leased

to the Ministry of Agriculture. All the blocks have access to Route 4, the main highway

south, and are considered prime land.

The deals cut across other plans to develop Route 4 as an industrial strip - a patchwork

of industrial parks linking Sihanoukville port and Phnom Penh.

Singaoporean experts recommended such an industrial development be pursued, but it

appears that the military have instead gone on their own realty tangent.

One 32,000 hectare block of the Kompong Speu land was leased to Tri Star Limited,

owned by Leang Eng Chhin, who also owns the Pailin Hotel. The lease stipulates that

Tri Star will develop the area, growing and milling cassava starch into flour at

a mill, and also training demobilized soldiers as mill workers. Under full production,

Tri Star was to have employed 534 people, according to its contract.

The only money mentioned in the contract is that Tri Star must pay eight per cent

of its yearly profits to the military, and would also pay 2,000 riel a day to soldiers

acting as security guards.

Tri Star forecast an $11m annual turnover by the year 2001. Sources said that Tri

Star also paid $4 a hectare up front to the RCAF.

Tri Star, however, sub-leased the land to a religious sect called Ching Hai for an

undisclosed sum.

Ching Hai are in the process of building a hotel, where its believers will stay.

The group will also carve up its land into smaller lots for its believers to grow

vegetables and other produce.

The source from the Ministry of Interior said that all the ministry's initial concerns

about provincial authorities being shut out of the administration process had been

realized in this first case involving Tri Star/Ching Hai.

"We predicted this after the agreement was signed," he said, "Now,

in reality, this has happened. Provincial authorities have nothing to do with this

because nobody told them about the project."

While the ministry cannot oppose the project, it is understood that Hockry and Kheng

will prepare another report to the PMs "and will try to do our best to slow

it down," the source said.

Major Chheng Leng, the liason officer of the National Army Development office, said

that the army needed the money to set up its retraining camps.

"Even the UNDP can't support us because we're military, so how can we set up

our [retraining] centers," Major Leng said.

"CDC have approved these areas for development, and many factories will be set

up. Companies, real companies, have millions of dollars to develop," he said.

Leng said there were bigger problems of provincial authorities selling land titles

to soldiers who occupied other land along Route 4.

Some blocks of land had been sold three times.

"General Staff do not know how much land has been lost. It is the problem of

provincial governors giving illegal titles," he said.