TOURISM development plans in Siem Reap are mired in a demarcation conflict, with

two lucrative projects slated for the same area by rival government agencies.

Apsara, the umbrella agency responsible for Siem Reap tourism development, has called

for tenders to develop a piece of land already earmarked by the Ministry of Tourism

for Malaysian developer YTL.

Minister of Tourism Veng Sereyvuth has effectively challenged Apsara's control of

the land, publicly saying that the government should stick by a deal he signed with

YTL.

The Prime Ministers - who approved both the YTL deal and a sub-decree giving Apsara

authority over tourism development in Siem Reap - have yet to deliver their verdicts

on the fray.

As acting co-chairmen of Apsara, they are expected to attend a meeting of the agency's

governing body by next month to try to solve the dispute.

Apsara, established by Royal decree early last year, was in October given control

of 560 hectares of prime Siem Reap land to manage.

Less than four weeks later, Sereyvuth signed a memorandum of understanding with YTL

to develop 1000 hectares - including the 560 hectares given to Apsara.

The memorandum said that the deal was signed by the Ministry of Tourism "on

behalf of the Royal Government" and "the Apsara authority". The Prime

Ministers attended the YTL signing ceremony.

Two months ago, Apsara invited bids for tender to build infrastructure projects on

60 hectares of the same land.

Sereyvuth went public late last month with complaints that Apsara's action contradicted

the YTL deal.

"I want to be absolutely clear. I am not a minister who will set a bad example

that...this government cannot honor the contract it had already signed."

Apsara officials, meanwhile, say they have clear responsibility for the disputed

land, and suggest that the YTL deal would not be as profitable to the government

as it should.

"We are not opposed to YTL," said an officer working with Apsara. "We

are not opposed to private investors as long as they respect the Apsara guidelines."

On June 21, Prince Norodom Ranariddh wrote to his co-Prime Minister Hun Sen asking

whether he agreed to the Apsara tender.

The Prince said that both of them had the power to decide whether to approve it or

not.

Ly Thuch, Ranariddh's spokesman, said he was not aware of any answer from Hun Sen.

Nobody from Hun Sen's cabinet was able to comment. Apsara's deputy chairman, Secretary

of State for Culture Vann Moulyvann also declined comment but a spokesman for him

said that Hun Sen wanted transparency in tourism development.

"That is why there was this tender, open to everyone, even to YTL," said

the spokesman said.

However, the tender specifications issued by Apsara appear to preclude YTL from bidding.

Only companies which "originate" in Cambodia or those from what is described

as the "Franc zone" - countries whose currencies are either the French

franc or are linked to the franc - can enter bids. The provision, which YTL, as a

Malaysian firm, does not qualify for, is apparently because a French development

bank will fund the project.

YTL, meanwhile, says it is unsure of its situation.

The company's coordinator of Cambodian projects, Intan Cornell, said YTL had from

the start been asked to "deal only with the Ministry of Tourism."

But since signing the memorandum with Sereyvuth, YTL had twice met with Apsara officials,

she said.

"The last meeting, in May, was quite positive and Apsara seemed to understand

what we wanted."

Apsara's calling for tenders in June had left YTL "a little bit shocked"

but so far there was "nothing much we could do," she said.

YTL planned to invest more than $1 billion in Siem Reap, and wanted to "stick

to our commitment."

"We cannot push the government. We just sit and wait. We have taken a big risk

and if it is not us, right. But we made a promise to the Prime Ministers and we would

like to honor it."

The YTL memorandum of understanding signed with Sereyvuth was for the company to

develop a sound and light show at Angkor Wat.

It also gave YTL the first option to build electricity, water treatment, sewage and

telecommunications infrastructure in a 1000-hectare "master-plan tourism development"

zone.

The memorandum does not specifically detail these projects, leaving that up to further

discussion.

Later negotiations were held, and it was decided that YTL would build the infrastructure

out of its own pocket.

It would then be allowed to make revenue by selling long-term leases of building

sites to companies for constructing hotels or other developments.

YTL would get 95 percent of the proceeds of these sales, and the Cambodian government

5 percent. The company would also pay a $500,000 "establishment fee" to

the government and an unspecified annual fee.

Under the tender proposed by Apsara, the winning company would build the infrastructure

with money from a $7 million loan from the French bank Caisse Française de

Dévelop-pement.

The company would then hand all the land over to Apsara, which would sell leases

on blocks of land and pay back the bank loan from the proceeds.

Apsara director Ros Borath said the proposal was a better deal than the YTL deal

because the government would profit from leases of land.

"If the development is completely done through a private company like YTL, there

will be a loss of money for the government and a loss for the public interest. With

Apsara, whoever is the private investor, we remain the developer."

But, as all sides appear to be waiting on the final words of the Prime Ministers

on the dispute, Apsara and YTL can apparently still do business. On July 30, Apsara

announced the awarding of an unrelated contract to build a 32-room hotel in another

area of Siem Reap - to none other than YTL of Malaysia.