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Logo of Phnom Penh Post newspaper Phnom Penh Post - Sihanoukville plays the waiting game

Sihanoukville plays the waiting game

This is what Sihanoukville Port will look like in 2015 to people flying in from other countries, when the new 4.3 billion yen ($41.3 million) development and expansion plan is completed. The port authority is waiting for government approval to draw on the loan from Japanese banks.

I

n Sihanoukville, everybody waits for something.

* The port authority waits for a new government to sign a note with the Japanese

Government that will trigger the banking of a 4.1 billion yen (US$41.3 million) loan

for stage two of the port expansion.

* The manufacturing industry waits for a new government to pass a law enacting Cambodia's

first Special Economic Zone, a $28 million pilot growth project for the whole country.

* Port staff wait for their new headquarters to be completed, signalling an escape

from the strange labyrinth they currently inhabit.

* A unique but squalid fishing village, slowly being throttled by a pincer movement

of port expansion, waits to see whether anyone will survive the bulldozers.

* The downtown business area, weathering a local slump, waits for the money-go-round

to revive confidence.

* Contractor Ariston waits for final sign-off from the Civil Aviation Authority to

open the new Kang Keng Airport to scheduled flights on April 12.

* The hotels and casinos (what's left of them) wait for a flood of new arrivals to

fly in, wanting to unwind after doing Siem Reap.

* Sokimex waits for TELA to decide whether it will build its own offshore fuel unloading

pipeline, or continue to pay Sokimex's high delivery prices.

* Golfers wait for the completion of the new nine-hole course at the beach.

* The Taiwanese owners of the new town market wait and hope they will get enough

vendors on board to open soon. It was built five years ago but something went dreadfully

wrong.

* Local investors who have taken a punt on the beach area reaching new heights of

popularity, especially with a wastewater treatment plant now under construction,

wait to see whether they'll get their money back.

* Foreigners who have gone into business with a Khmer partner, wait to see whether

the gamble pays off.

* "Illegal" thatched roof bars and cafes along the beach, encroaching on

the no-go zone, wait to see whether the government will enforce its order to deconstruct

and decamp.

* All wait to see whether a claim to the whole peninsula by a Phnom Penh business

mogul will win in court. In the meantime, so-called "titles" are changing

hands for big bundles of cash - much of it ending up in military pockets.

In Sihanoukville, everybody waits ...

The Port

Major expansion of the port has been identified as the key to the future growth of

the Cambodian economy (leaving aside the obstacles of strong corruption and weak

governance).

The port is growing at the rate of 8 percent a year, which represents about 100 meters

of new reclamation and berthage. The total berthage length is now over 1,000 meters.

The Japan International Cooperation Agency (JICA) carried out a long term development

study for the Port Autonomous of Sihanoukville (PAS). This concluded that not only

does the national poverty reduction strategy depend on industry, commerce and jobs

being created downstream from port expansion, but the port has to lift its game to

survive against direct competition for shipping business from other regional ports,

particularly Vietnam's Ho Chi Minh City, which will have super-freighter berthing

in operation by 2009.

JICA brokered a 4.3 billion yen loan from the Japan Bank International Corp, which

was approved by the Japanese Government on December 10, 2003. It needs only an exchange

of notes between the Japanese and Cambodian governments to be activated and the PAS

deputy director-general Ma Sun Hout says this will happen within a week of the formation

of a new government.

A massive development program stretching through to 2015 will be triggered. The major

items are: a 240m container ship berth, general cargo berth (265m), seven new cranes,

515,000 sq m of land reclamation, 61,000 sq m of container yard pavement, 900,000

sq m of dredging, a $5 million IT-based corruption-proof card-access security system,

a power house, water reservoir and roading. The loan terms are: 10 years interest

only, 1 percent interest rate, 30 year repayment.

To gain a competitive edge over rival ports, the PAS in February introduced flat-rate

ship and cargo handling fees, meaning there are no extra charges on weekends and

public holidays.

Kong Yuth, a young businessman who sees a good future in Sihanoukville. He started out with one mototaxi, now has 10, and has just purchased this building on Victory Hill, where it will double as a restaurant and private accommodation. The tenant paid his 10 year lease in advance, which provided the bulk of the purchase price for Yuth. "I come from a very poor family, I had no help to get started. If I can do it so can anybody," said Yuth. Even though he doesn't really need to, Yuth still meets the buses for customers, saying it keeps him in touch with the visitor community and he always meets interesting people.

Special Economic Zone

PAS also hopes to gain an advantage from the other major proposal from JICA: a fully-serviced,

one-stop-shop-style, fast-tracked, corruption-free, tariff-free, bonded Special Economic

Zone (SEZ) located within a secure 43-hectare area linked directly to the container

terminal. Total cost $28.7 million; estimated internal rate of return 21 percent.

The SEZ concept has come from the Phnom Penh-Sihanoukville Growth Corridor Study

and the government has placed all its bets on this scheme actually delivering results

in terms of poverty reduction.

The SEZ is an attempt to attract private investment capital into Cambodia and earn

foreign exchange through exports. Currently, weak governance and rampant corruption

are huge disincentives to foreign investment. Managed by a special authority the

SEZ will give privileged treatment, significant tax concessions and virtual guarantees

of rewards. In essence it offers no tariffs on raw materials coming into the port

and no tariffs on goods going out which have been manufactured or processed from

those materials. Anyone who invests $250,000 minimum will be granted permanent-resident

status by the Cambodian Economic Zone Authority, for themselves, spouse and dependent

children under 18 years without need for special authorization from the Ministry

of the Interior.

The first zone at Sihanoukville is expected to create some 10,000 jobs. If it works

as planned, the study document says zones can be created in other strategic locations,

anywhere and as large as a whole municipality.

Koji Yamada, the JICA team leader, says the study "presents the goals and strategies

necessary to improve the economic condition of the Growth Corridor area, encompassing

the areas of Phnom Penh, Sihanoukville and five provinces in between. The Growth

Corridor area is expected to play the role of the engine of economic development

of Cambodia. As one of the urgent projects, the study proposed a special promotion

zone in Sihanoukville to attract foreign investment and promote domestic enterprises

in parallel. This will be a first step to the diversification of export industries,

leading to better use of locally available resources for sustainable development

of Cambodia."

A 26-page law has been drafted to establish the legal framework and mechanisms for

planning and monitoring the SEZ. It awaits adoption by the next government.

Tumnub Rolork Fishing Village

The picturesque but squalid and illegal sprawl of shacks housing families, businesses

and workshops, is right in the path of port expansion and is essentially doomed.

"Port expansion is the key to the health of the Cambodian economy. It cannot

be compromised by a few illegal shacks," says PAS chairman Lou Kim Chhun. "It

is a difficult situation to deal with, because most of the houses have been built

by middlemen and rented out; they can build these houses overnight, some own 15 to

20 houses, and they are still being built every day. I feel sorry for the tenants

and families. We are trying to deal with it peacefully and fairly. The first 38 houses

have been removed, and we have compensation agreements with the owners of another

40. We are paying compensation, but it's confidential because each one is different.

"Getting access to that land just takes care of our immediate needs. The container

terminal must be linked physically to the Special Economic Zone industrial area near

the fishing port and ultimately a lot more houses and buildings have to go, including

the Koh Kong ferry terminal and the boat building yard. It is not our responsibility

to relocate these businesses and people. Maybe it's something an NGO or human rights

organization should look into."

Around 2000 fishing trawlers operate out of Sihanoukville. Their catches have been

declining in recent years and the single processing factory has gone out of business.

Thousands of people living in the village and town depend on fishing for a living.

Building new trawlers at Tumnub Rolork fishing port and village, Sihanoukville. These boats are 16 metres long, cost about $25,000 to build, carry a crew of up to 10 and can spend a month at sea. Locals hear their Mitsubishi V8 engines throbbing all night and all day, dragging for a diminishing resource within Cambodia's limited territorial waters. They compete with trawlers from Thailand and Vietnam, which have the advantage of a much wider territorial range. Locals say there are about 2,000 of these trawlers operating out of Sihanoukville, and they support a village population of several thousand people who live illegally on land which is rapidly being consumed by port expansion.

Airport at Ream

Kang Keng Airport, about 20 km out of Sihanoukville on the road to Ream national

park, will open on April 12, according to Martin Standbury, project manager for Ariston

Sdn Bhd which carried out the upgrade and will operate the facility for the government.

The manager will be Geoff Rider, an Australian.

"We're just waiting for installation of baggage x-ray equipment to get final

sign-off from the State Secretariat for Civil Aviation," Standbury said.

The airport, originally a civil/military field, has not seen a scheduled flight land

for several years. Ariston has resealed the runway and lengthened it by 100m, and

built a control tower and passenger terminal.

The runway is capable of handling turboprop ATRs, but Standbury says Ariston is now

negotiating with Bangkok Airways to add 300 meters to allow Boeing 737s to land,

opening up the tourism triangle of Phnom Penh, Siem Reap and Sihanoukville and the

region.

Golf Course

The new nine-hole golf links on the flat ground between Ochheuteal Beach and the

Kbal Chay escarpment is also being built by Ariston, the project managed by Standbury.

He's hoping to have the course and clubhouse finished by the end of the year. The

hotel will come later.

It was designed by Ted Parslow, who is based in Malaysia, and Standbury says it will

be a tight, challenging course. "We're hoping to acquire land to extend to 18

holes eventually."

Hotels and Casinos

The biggest visitor industry investment is the Sokha Beach Resort, which had a low-key

"official" opening yesterday (April 8) to prepare for an influx of guests

for Khmer New Year.

This is a $20 million development with its own water supply and wastewater treatment.

The hotel has 180 rooms, ranging in price from $130 to $1,000 a day for the Presidential

Suite, and more will be built in future on the 21 hectare property.

The complex is a major local employer. According to sales manager Keo Sith, Sokha

has 256 staff, comprising nine in management, 58 kitchen, 42 housekeeping, 23 front

office, 51 food and beverage and 73 others including human resources, finance, sales

and marketing, engineering, security.

Sokha Hotels and Resorts is owned by Sok Kong, the majority owner of Sokimex Petroleum.

He plans more hotels and resorts in the Sihanoukville area as demand grows.

The old Independence Hotel is being renovated for opening in June.

Three casinos have closed in the past five years; two survive.

Tela and Sokimex

The talk around town is that Tela Petroleum Group objects to paying the high delivery

prices demanded by Sokimex and is investigating building its own pipeline to an offshore

unloading facility for oil products.

Numerous phone and email requests for information to the Tela chairman, Chhun On,

and the director-general, Muong Kompheak, were not answered.

Waste-Water Treatment

Sihanoukville will soon have two waste-water treatment plants. Cambrew has recently

built a plant to meet tougher discharge standards set by the government, and currently

a $10 million plant to serve 12,000 connections is being built behind the golf links

at Ochheuteal Beach.

This is an anaerobic system with discharge quality meeting Japanese, British and

American standards. Ponds are being built now and the second phase starts on May

31, due for completion about 18 months later. The work includes a collection system.

The project is financed by an ADB loan to the Ministry of Public Works and Transport;

the contractors are Hyundai Engineering, Hyundai Mobis and Seng Enterprises Ltd.

Psar Leu Thmey

An unusual chain of events has resulted in Sihanoukville having two local trading

markets, one of which is sitting empty.

Psar Leu on 7 Makara St becomes like a pigsty when it rains as heavily as it did

last week, and is probably close to being shut down on health grounds.

Recognizing that Psar Leu was reaching the end of its useful life, Psar Leu Thmey

was built four or five years ago by a Korean investor 200 meters down Omui St, the

old route to Otres Beach and Phnom Penh.

However, after the building was finished, there was a change of Governor and the

investor, having already paid a rumored $2 million for building consents and various

other charges, refused to pay again. He eventually sold it to a Taiwanese buyer who

put a gang of men in to spruce it up. Now what's happened is that many vendors are

balking at the relocation costs and possibly higher rents as well, so the new market

remains unused.

Land Tenure

According to someone who has been living in the area for the past five years, in

1999 there were only two buildings on the unofficially named "Serendipity Beach"

at the west end of Ochheuteal: a billiard room on the site of what is now Unkle Bob's,

and a small wooden house, which is still there, between Malibu and Coasters.

"The whole peninsula and hill was an unfenced wilderness area, great for walking.

There was a little fishing village with shops and cafes for locals, perched at the

rocky end of Sokha Beach, from below Malibu Bungalows, round to where the dragon's

tail is now."

The only houses on the hill were squatters' shacks on the Sokha side, a few of which

remain.

An American named Chuck started the ball rolling with the first beach restaurant,

where Eden is now. He rented the land from a military officer.

At that time the military headquarters up the hill from Ochheuteal, had a block of

land right down to the beach, surrounded by a two-meter-high concrete-post-and-barbed-wire

fence. Gradually a string of thatched roof bars and restaurants began springing up

along the beach in front of this wall. The soldiers began collecting rents from them.

Later a monsoon storm pounded high up the beach, demolishing many of the temporary

structures, but also propitiously, most of the gendarmerie's barbed-wire fence. With

that gone, shacks were built inside the military boundary higher up the beach on

safer ground, under the trees, with room for deck chairs, and business has boomed

for both landlords and tenants.

In 2002 the Minister of Tourism declared that the shoreline was government land and

that nobody could own it. A spokesman regretted the law was not being enforced. At

the same time, Ariston was given title to 4.5 hectares for a golf links and hotel

behind Ochheuteal Beach, and a further eight hectares near the shoreline for use

as gardens and public walkways.

In 2003 police and local government officials took action against buildings blocking

the view from the new golf course being built. A two-story disco bar built by Europeans

was removed, and other thatched roof buildings had to take down their walls. Threats

of heavier action subsided after Legal Aid of Cambodia (LAC) and a local human rights

group intervened.

A spokesperson from LAC said the issue of who holds land titles needs to be resolved

before legal action can be launched.

Young English couple Patrick and Julia McGarvey, part of a wave of foreign entrepreneurs

investing (with the obligatory Khmer partner) in the visitor industry, say "we

could all be squatters" in the beach area, but hope their tenure is secured

by some big-name neighbors who are building palatial retreats in this litttle paradise.

The McGarveys have spent their life savings on building a set of thatched-roof bungalows

that are naturally air-conditioned by the rising sea breeze. Such is the demand by

backpackers that they opened on March 1 with no advertising and have not had a room

vacant since. Likewise Geoff Howell at Ocean View is building a new kitchen for his

sea-level restaurant and plans to open a second café up the hill.

A law passed in 1996 stipulates that buildings must be more than 30 meters from the

water's edge. Local real estate agent Pech Arunn says his understanding is that the

restriction applies to between 50 and 80 meters above mean high water.

All dressed up, ready for business, but there are no vendors in sight. This is the new Taiwanese-owned Sihanoukville Trade Center (or Psar Leu Thmey), built as a replacement for the old Psar Leu. The new market occupies an area 70 meters by 100 meters and has over 1,200 lockups.

One of the former gendarmes involved in the land business is Kong Sun. He claims

to own the land at Serendipity Beach occupied by Ocean View restaurant and guesthouse

and collects $700 a month rent from that; he collects $160 a month from the Sunny

Shack beach bar, and he has just leased for 10 years (rent paid in advance), a section

at Serendipity to a German visitor.

Asked how he came to own land, Sun said: "The Government bought it for me for

$50,000." He says it was his soldier's retirement pension for many years loyal

service.

Sun says he also rents from the government Bamboo Island, one of a group of pristine

retreats about 45 minutes offshore by boat. He has built a dining area, toilet, put

in a well and several bungalows.

He said he knew nothing about Phnom Penh businessman Kong Triv (owner of the KT Pacific

Group and vice-president of the Cambodian Chamber of Commerce) having a claim on

the whole Ochheuteal peninsula based on occupation rights dating back to 1993.

Triv did not respond to Post questions about this claim, emailed to his office over

the past week.

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