Bei­jing’s deep­en­ing eco­nomic pres­ence is bring­ing progress — but at what cost?

Bangkok Post - - ASIA| FOCUS - By Kenji Kawase in Hong Kong and Ph­nom Penh

Just a few blocks from the Royal Palace, in the tra­di­tional heart of down­town Ph­nom Penh, sits one of Cam­bo­dia’s most renowned Chi­nese schools. Over the past cen­tury, the Tuan Hoa School has wit­nessed the many ups and downs of the cap­i­tal. To­day, it has front-row seats to an un­prece­dented boom.

Run by a lo­cal eth­nic Chi­nese or­gan­i­sa­tion, the school is one of the largest Man­darin-speak­ing ele­men­tary and ju­nior high schools out­side China and Tai­wan. It cur­rently has more than 11,000 stu­dents, in­clud­ing those at its branch cam­pus. For Loeung Sokmenh, head­mistress of the main cam­pus, things have im­proved to an as­ton­ish­ing de­gree.

She has been a fac­ulty mem­ber since the school re­opened in 1992 af­ter be­ing forced to close in 1970. Those in­ter­ven­ing years were a time of tu­mult that ac­com­pa­nied a US-sup­ported coup headed by Lon Nol, the dev­as­tat­ing rule of the China-backed Pol Pot regime and the sub­se­quent in­va­sion by Viet­nam.

“The good re­la­tion­ship be­tween Cam­bo­dia and China is def­i­nitely help­ing,” Loeung told the Nikkei Asian Re­view, re­call­ing harder times 25 years ago, when the school re­opened its doors with 1,700 stu­dents. “More and more lo­cal par­ents feel that learn­ing Man­darin will help their chil­dren find jobs. Even par­ents with no Chi­nese back­ground, in­clud­ing gov­ern­ment of­fi­cials, are send­ing their chil­dren here.”

Chi­nese in­vest­ment in Cam­bo­dia has cre­ated a lot of em­ploy­ment op­por­tu­ni­ties. The Coun­cil for the De­vel­op­ment of Cam­bo­dia says China has been the big­gest source of for­eign di­rect in­vest­ment since 2011, with the cu­mu­la­tive to­tal to De­cem­ber reach­ing US$4.9 bil­lion. New build­ings are go­ing up ev­ery­where, and most are be­ing funded with Chi­nese money.

One of the most no­table projects is One Park, or Ph­nom Penh No.1, as the com­mer­cial and res­i­den­tial com­plex is called in Chi­nese. Head­ing the un­der­tak­ing is Gratic­ity Real Es­tate De­vel­op­ment, a low-pro­file de­vel­oper based in Bei­jing. The first phase is be­ing built on 7.9 hectares of re­claimed land once cov­ered by Boe­ung Kak Lake. The to­tal cost is un­known, but the con­struc­tion fees alone will amount to $130 mil­lion, ac­cord­ing to China State Con­struc­tion Engi­neer­ing Corp, which won the con­tract. Another 11.1 hectares of re­claimed land has been set aside for fur­ther de­vel­op­ment.

One of the sales staff for the prop­erty is a 23-year-old grad­u­ate of Tuan Hoa. The woman, who re­quested anonymity, is a third-gen­er­a­tion Chi­nese-Cam­bo­dian and said her Man­darin skills “helped me get this job”, where she deals with su­per­vi­sors and clients from China.


The chang­ing sky­line may draw the most at­ten­tion, but Chi­nese in­vest­ment in Cam­bo­dia goes far be­yond real es­tate.

On March 6, Prime Min­is­ter Hun Sen and Chi­nese Am­bas­sador Xiong Bo sat on sep­a­rate con­struc­tion ve­hi­cles in Ph­nom Penh. The of­fi­cials, along with about 600 lo­cal res­i­dents, were at the ground­break­ing cer­e­mony for the western por­tion of the No.2 ring road. Such scenes have played out count­less times across the coun­try, with the am­bas­sador and dig­ni­taries on hand to cel­e­brate the com­ple­tion of new roads, bridges and other Bei­jing-backed projects.

As bridges go, the New Chroy Chang­var Bridge, com­pleted in 2015 with a con­ces­sional loan from China, is packed with sym­bol­ism. The 719-me­tre span over the Tonle Sap River in the cap­i­tal was built by the state-owned China Road and Bridge Corp and runs along­side the Chroy Chang­var Bridge, also called the Cam­bo­dia-Ja­pan Friend­ship Bridge, built with Ja­panese as­sis­tance in 1966 and re­built with Ja­panese do­na­tions in 1994.

Tokyo used to be a ma­jor donor to Cam­bo­dia, but it now pales in com­par­i­son to Bei­jing. Ac­cord­ing to Moody’s In­vestors Ser­vice, China has since 2012 sur­passed all mul­ti­lat­eral or­gan­i­sa­tions com­bined and the Euro­pean Union in an­nual aid to the coun­try.

China’s pres­ence in Cam­bo­dia’s power in­dus­try is also grow­ing. The of­fi­cial web­site of the Chi­nese Em­bassy states that Chi­nese com­pa­nies pro­vided around 80% of all the power gen­er­ated in the coun­try in 2016. Black­outs still hap­pen, but they are less fre­quent now that the to­tal elec­tric­ity sup­ply has surged from 180 megawatts in 2002 to over 2,000MW last year.


The stepped-up Chi­nese busi­ness ac­tiv­ity is in line with Bei­jing’s over­seas de­vel­op­ment ini­tia­tive. Am­bas­sador Xiong says com­pa­nies should “con­trib­ute proac­tively to so­lid­ify the eco­nomic ba­sis of the fullfledged strate­gic al­liance”.

He made the com­ments fol­low­ing Chi­nese Pres­i­dent Xi Jin­ping’s first state visit to Ph­nom Penh last Oc­to­ber. Dur­ing his two­day stay, 31 of­fi­cial doc­u­ments were signed. The deals in­cluded debt waivers, a dou­bling of China’s im­port quota for Cam­bo­dian rice, the re­moval of dou­ble tax­a­tion and nearly $2 bil­lion in in­fras­truc­ture build­ing.

Cam­bo­dia is con­sid­ered a cru­cial part of Xi’s pet project, the One Belt, One Road ini­tia­tive. Bei­jing also re­gards Cam­bo­dia as an in­dis­pens­able part of its “string of pearls” mar­itime strat­egy con­nect­ing Hong Kong to Su­dan via the In­dian Ocean. Si­hanoukville, the largest Cam­bo­dian sea­port, is one of the pearls along the string.

Tak­ing a cue from Bei­jing, Chi­nese com­pa­nies are ar­riv­ing in grow­ing num­bers. China Min­sheng In­vest­ment Group led a del­e­ga­tion of over 100 com­pa­nies to Cam­bo­dia in De­cem­ber. Its chair­man, Dong Wen­biao, pledged to in­vest in an in­dus­trial park new Ph­nom Penh and set up an in­fras­truc­ture fund worth sev­eral hun­dred mil­lion dol­lars.

On paper, the com­pany is a pri­vate en­tity, but its ma­jor share­hold­ers in­clude mem­ber com­pa­nies of the All-China Fed­er­a­tion of In­dus­try and Com­merce. While the fed­er­a­tion is a busi­ness or­gan­i­sa­tion, it re­ceives guid­ance from the Uni­fied Front Work De­part­ment of the Cen­tral Com­mit­tee of the Com­mu­nist Party of China.


Not all China-led projects are thriv­ing, how­ever.

In down­town Ph­nom Penh, the show­room and sales of­fice for the Sino Plaza, one of the largest Chi­nese de­vel­op­ment projects, sud­denly closed with­out no­tice at the end of Fe­bru­ary.

Last Jan­uary, a high-pro­file an­nounce­ment boasted how the China Cen­ter — as it is called in Chi­nese — would con­sist of a ho­tel, con­do­mini­ums, com­mer­cial space and a theatre, spread across 13,000 square me­tres of land. The con­struc­tion costs alone were put at $240 mil­lion.

The clo­sure of the show­room sparked ru­mours that the project had run out of money or even gone bankrupt. Mary ThongLin, an ad­min­is­tra­tive staff mem­ber of the project’s main de­vel­oper, Nat­u­ral Lucky Real Es­tate De­vel­op­ment, dis­missed such talk as “all ground­less ru­mours and lies”.

She said the build­ing hous­ing the show­room had a leaky roof and other prob­lems and had to “go through re­pairs”. The ground­work for the com­plex was in­deed un­der way, eye-wit­nessed by the Nikkei Asian Re­view, though she hinted that the orig­i­nal grand open­ing date of Au­gust 2019 may be pushed back. She did not say why.

Prob­lems per­sist at the One Park megapro­ject, where a dis­pute over land rights has led to au­thor­i­ties crack­ing down vi­o­lently on lo­cal pro­test­ers. There have been a se­ries of ar­rests and even im­pris­on­ments.

On Feb 23, Tep Vanny, a lo­cal com­mu­nity rep­re­sen­ta­tive and land ac­tivist, was sen­tenced to two and a half years in prison, as well as given heavy fines, for a protest she joined in 2013 to fight a forced evic­tion or­der from the Boe­ung Kak Lake area.

Naly Pilorge, deputy di­rec­tor of ad­vo­cacy at one of the state­ment’s sig­na­to­ries — the Cam­bo­dian League for the Pro­mo­tion and De­fence of Hu­man Rights — said the au­thor­i­ties are “once again pun­ish­ing Vanny for her ac­tivism to send a clear mes­sage to any who dare crit­i­cise the gov­ern­ment that dis­sent is not tol­er­ated in Cam­bo­dia”.

What some see as an in­creas­ingly op­pres­sive gov­er­nance style is start­ing to alien­ate Western in­vestors, a trend that only in­creases Cam­bo­dia’s reliance on China.

But China is not of­fer­ing Cam­bo­dia any free lunches. Along with a re­newed em­pha­sis on eco­nomic sup­port for Ph­nom Penh, the joint com­mu­nique signed by Xi Jin­ping and Prime Min­is­ter Hun Sen pub­lished last Oc­to­ber stated that they had agreed to “fur­ther en­hance co­or­di­na­tion and co­op­er­a­tion within var­i­ous mul­ti­lat­eral frame­works” and to main­tain close, timely and ef­fec­tive com­mu­ni­ca­tions on mat­ters con­cern­ing their sig­nif­i­cant in­ter­ests to “of­fer force­ful sup­port for each other”.

In 2012, while serv­ing as ro­tat­ing chair of Asean, Cam­bo­dia pre­vented the for­eign ministers from is­su­ing a joint com­mu­nique for the first time in the bloc’s 45-year of his­tory. The prob­lem was due to word­ing over dis­putes in the South China Sea. Par­rot­ing China’s stance, Cam­bo­dia in­sisted those mar­itime prob­lems were bi­lat­eral is­sues.

Since then, China’s in­flu­ence on Cam­bo­dia has only grown stronger. More than ever, Bei­jing will ex­pect the coun­try to fall in line with its agenda.

(Nikkei staff writer Yusho Cho in Shang­hai con­trib­uted to this re­port)

“Even par­ents with no Chi­nese back­ground, in­clud­ing gov­ern­ment of­fi­cials, are send­ing their chil­dren here” LOEUNG SOKMENH Head­mas­ter, Tuan Hoa School


Men walk past por­traits of Xi Jin­ping and Cam­bo­dian King Norodom Si­ha­moni prior to the Chi­nese pres­i­dent’s visit to Ph­nom Penh in Oc­to­ber last year.


A new Chi­nese-built bridge (right) spans the Tonle Sap River in Ph­nom Penh, run­ning par­al­lel to the bridge Ja­pan helped con­struct in the 1960s.

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