M ore hotels, a new power plant and a glitzy sound and light show. Susan Postlewaite

examines what's planned for Siem Reap, and talks to the man who wants to do the work.

SIEM REAP - If all goes as planned, in two years Angkor Wat will be transformed into

a nightly opera for 1,500 tourists. Walking through the 12th century temple, they

will see the spirit of King Suryavarman projected against the walls and hear the

sounds of the jungle and ancient battles.

"It will be the greatest show on earth," gushed Francis Yeoh, chief executive

officer of YTL Corp. of Malaysia, after receiving a thumbs up on his $20 million

sound and light show project from Cambodia's Prime Ministers Nov 7.

The show would be YTL's most ambitious creative project and it is only a small part

of the firm's plans to open up Angkor Wat to mainstream tourism. As the Ministry

of Tourism pushes ahead to prepare Angkor for an increase in foreign tourists, Hun

Sen and Prince Ranariddh also on Nov 7 gave preliminary approval to a 1,000 hectare

"tourism zone" between downtown Siem Reap and Angkor Wat. The lucky contractor?

YTL again.

And that's not all. YTL is involved in joint ventures with a Hong Kong company to

build two other hotels in Siem Reap outside the hotel zone. It also has a deal to

restore the Independence Hotel in Sihanoukville.

"Our exposure in Cambodia is quite huge compared to other countries. In terms

of tourism it will be my biggest exposure in Asia," said Yeoh. He put his planned

investment in Cambodia at $200 million over ten years.

Yeoh, YTL's 41-year-old CEO and the son of the company's chairman, said he became

interested in Cambodia a year and a half ago when he accompanied Malaysian Prime

Minister Mahathir Mohamad on a visit to Cambodia. "My prime minister told us

to have a serious look at Cambodia. He thinks Asia in the absence of war should be

prospering. There shouldn't be just pockets of prosperity."

"We think Angkor Wat has unlimited potential," said Yeoh. "It is one

of the areas in the world today not touched by commercial develop-ment." He

said his master plan would transform Siem Reap into "a dynamic sleepy little

town."

"It will be just like my little Eastern & Orient Express train [another

of his investments]. It choo-choos all the way. You wobble. It's a sleepy little

train. When you arrive in Siem Reap you will think, 'oh gosh. It's still preserved,'"

said Yeoh.

The arrangement with the tourism zone sets up YTL as the government's joint venture

partner. YTL will be responsible for developing the water supply, electricity and

the first hotel or hotels. Future investors would have to go through YTL to get a

site, and the government, as landlord, would make money in theory from rent and taxes.

The idea is that once the zone gets established, other investment, perhaps a half

billion dollars or more, will come in. The master plan over the next ten years makes

room for several hotels, a conference center, golf course, sports facilities, hospital,

art museum and residential housing - in a multi-complex, complete with moats, modeled

on the Ankgor temple.

An advisor to the Ministry of Tourism said the zone is a "fantastic opportunity"

for Siem Reap to get the infrastructure it needs for tourism without having to pay

for it. However it's not clear how YTL's planning to pay for it either.

Yeoh said he was not prepared to talk about how the project will be financed or how

revenues might be split. He said a combination of bonds and bank loans were options.

Costs have not been finalized, including the cost of a new power plant that will

have to be built to supply the sound and light show.

YTL,which got its start as a construction company in 1955, is a publicly held company

on the Kuala Lumpur Stock Exchange, with interests in construction, property development,

resorts and other ventures, including the Eastern & Orient Express, a train excursion

that runs from Singapore to Bangkok. Yeoh met the producers and promoters who will

create the sound and light show on the inaugural train trip.

YTL has made its profits in recent years by participating in Asia's infrastructure

building boom as an independent power producer, or IPP. Power plant building can

become a lucrative business. The IPPs build the plants and shift the risk to the

buyer by requiring them to "take or pay", commiting the buyer to purchase

a percentage of electricity generated, whether they need it or not.

In Malaysia YTL figured out a way to build plants at bargain costs by putting together

its own bond financing. By doing this instead of borrowing from a foreign bank, YTL

told the Far Eastern Economic Review in a recent article, it was able to produce

and sell power cheaper - at six cents per kilowatt hour instead of eight cents.

However in Siem Reap, no such bargains are being proposed. YTL has offered to build

an $8.3 million, five mega-watt plant, and sell the power to the government at 15

cents a kilowatt. Prince Ranariddh himself criticized the "high price"

at the signing ceremony. Later he said he would "urge the Minister of Industry

to speed up the negotiations."

While 7.5 or 8 cents per kilowatt hour is a reasonable price in Phnom Penh, 9 or

10 cents would be a fair price to pay in Siem Reap, according to a source close to

the negotiations. At 15 cents, YTL would take home $1.5 million a year in "excess

profit," the source said.

Without extra electricity, there will be no sound and light show. Siem Reap now has

about a 2 megawatt capacity. The sound and light show would require all that and

more, but only for a few hours in the evening meaning it doesn't really need all

that excess capacity.

Yeoh said the electricity price had to be higher in Siem Reap because of the cost

of transporting fuel during the rainy season. But insiders say it's because no bank

wants to lend large amounts of money in Cambodia at reasonable terms because of the

"country risk."

YTL wants to begin work in Jan 1996. Yeoh said he hopes to get all the permissions

he needs by Dec 31. He said in two years they could finish the sound and light show,

the power plant, water supply and roads, plus three hotels with 900 rooms. Others

said that sounded unlikely.

"They've got to bring in all the steel and cement. That's the big problem,"

said Siem Reap governor Toan Chhay. He said Siem Reap lacks trained construction

labor, but suggested construction might begin in 1997.

At the same time as construction is supposed to be ongoing, YTL is also scheduled

to be building two other hotels outside the hotel zone in a joint venture with Hong

Kong based General Hotel Corp.

One is a $6.5 million, 40 room Aman Resort slated for opening in early 1997 and the

other a $13.5 million, 135 room Chedi hotel to be opened six months later next to

the Hotel Grand D'Angkor, (slated for restoration by Raffles Intl.). Room prices

would be about $200 a night at the Aman and $150 at the Chedi.

"Obviously we've done pro-jections and we're optimistic," said Kendall

L. Oei, director of General Hotel Management Ltd. "We're bullish on Cambodia."

He said it was his company that actually introduced YTL to Siem Reap. He compared

Siem Reap tourism to Burma's industry. He said rates were about $30 a night when

Aman came in. "We were the first in Burma. Our Aman opened two years ago at

a rate of $200 a day. Now we're up to $270."

Other hotel deals have also been signed. Right after the YTL signing, the Ministry

of Tourism signed an agreement with another Malaysian company, Monomas, to build

a 200-room hotel to be completed by the end of 1997. Monomas is part of the Tan Sri

Tajudin Ramli group of companies, which also owns the Malaysian airline MAS and part

of Royal Air Cambodge. Minister of Tourism Veng Sereyvuth said he was negotiating

with Four Seasons to operate the hotel.

One other hotel deal was scheduled for signing. That one is a contract for a Le Meridien

Hotel in Siem Reap. It would also be outside the hotel zone.

Some existing hoteliers in Siem Reap said they were skeptical all these new ones

could find a market. Siem Reap has about 500 hotel rooms today, but only gets about

200 to 250 tourists a day. Two new hotels, Ta Prohm Hotel, owned by Thai partners,

and Angkor Village, owned by French architect Oliver Piot, charge in the $35 or $40

range and spokesmen for both said Siem Reap isn't an easy market.

"Even now there are too many rooms," said Piot. He suggested that one luxury

hotel might be built, but not five. "I would be very happy if there were one

luxury hotel like Raffles, because they would spend millions on advertising and it

might change the image of Cambodia," he said.

Another question is why so many of the new hotels have been approved for outside

the tourism zone. "I don't know how to say this diplomatically, but when you

authorize many hotels outside the zone you have risk for the city of Siem Reap,"

said Ros Borath, the architect and director of Apsara, the agency recently created

to oversee the protection of Siem Reap and the temples as economic development occurs.

He explained that the reason for the tourism zone was to enable Siem Reap to "keep

its historic character."

About 1,000 families now live and farm on the tourism zone land. Gov. Toan Chhay

said that the villagers have already been informed they will be moved to new land

a few kilometers away. "They're not happy , but we will try to give them some

assistance," he said. He said the new land they will be offered is better for

farming than the tourism zone land.

Veng, the tourism minister, said sometimes he worries about moving too fast, but,

"This country needs to move forward. We're worried to the extent of 'how can

we make it all happen?'"

Hun Sen cautioned at the signing that many obstacles lie ahead. Job training and

a support industry for the tourism industry are two. He said in addition to the electricity

and water supply problems, improvements to the Siem Reap airport and roads in Siem

Reap need to get underway, so that "the tourists don't miss their plane."

But he endorsed the project, announcing that, "We have to firmly grasp this

master plan."