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?
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
"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,'"
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
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