Wednesday, March 26, 2008

The Government’s One-Sided Approach to Tourism

Recently the Phnom Penh Post ( published an article about the tourism industry, and the minister of tourism Thong Khon also stated that they want to develop cultural heritage and eco-tourism. Another article in the PPP, however, rightly points out that the definition of eco-tourism is rather hazy and everybody wants to hop on the bandwagon to profit from the changed perception of travelers, especially in Europe. Of course, the recent surge in tourist arrivals is principally due to the cultural heritage site Angkor Wat combined with the relatively low price levels in the service sector, which makes Cambodia an attractive destination. Now officialdom wants to add Preah Vihear to this, which certainly will give it an additional boost, though as with many parts in Cambodia, that part of Cambodia lacks the necessary infrastructure.

Public announcements and intentions by the government notwithstanding, things aren’t always what they appear to be. Following is the story about the experience of someone who for some time now has actively been looking for a site to build a, for Cambodia unique, small and romantic resort at the seaside. General aspects about tourism and a description of this resort were published on this blog in November 2007.

Initially, he wanted to build this resort in Kampot province believing that Sihanoukville, although having the superior beaches, would not fit the bill because of the hustle and bustle of a port town and its in part seedy character. The area between Kep and Kampot promised ideal parameters: it had a nice town with some restaurants, a private nearby zoo, the caves, the outlying islands, its proximity to Bokor, which would be re-developed, and to Sihanoukville, which guests could reach easily in 30 minutes, if they so chose, but beaches were scarce. The only suitable beachfront property had been bought by a French overseas Khmer who is currently in the process of improving the land into a resort.

The fact that otherwise land there was practically unsuitable, though, did not keep several land owners from asking outrageous prices of about $40/m2 for a rice paddy near a mangrove covered shoreline and praising the virtues of the location.

So on he went to Sihanoukville to check out Otres Beach, just to make sure he would not miss out on an unexpected opportunity, as they sometimes come along. He did not hold out much hope for that already high-priced area, though. There was a prime lot available and the owner was even willing to sell him only 1 ha, the size of land he needed for his project. But he wasn’t too surprised when he heard the price - $125/m2. Negotiating fiercely, he was able to talk them down to $100. His entire project would be approximately $5 million. But with this land price he needed partners to invest. While he was seeking investors he continued looking for alternatives. As it happens, a cabinet minister’s daughter who had bought it in 2001, most likely for a pittance, owned that piece of land. Finally he decided to forgo this land, as the numbers wouldn’t really work out for him. A few weeks later he learned that the entire beach had been sold to a consortium of Chinese and Khmer investors.

Someone pointed out the area around Stung Hao to him. He found an ideal spot, secluded, but still only 30 minutes from Sihanoukville. The road no. 145 is well paved and Phnom Penh is only a little over 3 hours away. Of course, an access road to the beach needed to be built, the power grid connected, and a well for potable water needed to be drilled. Not an easy task given the circumstances. The village chief said that they had a master development plan for the area but couldn’t give any specifics. This, of course, could mean that someone might decide to build a fish factory right next to the lot. The allure of a romantic getaway would vanish overnight if that happened, and with it the guests.

The price was all right (he doesn’t want to say how much exactly so as not to put any ideas into anybody’s mind). But the catch was that they had 9 ha for sale and did not want to split up the block. But he kept going back and forth in the hope to persuade them to cut off the required 1 or 2 ha.

In the meantime, someone contacted him and wanted to sell him a piece of the Ream National Park. Anybody who has been there knows how beautiful the beaches there are. He pointed out that this land can’t possibly be for sale, as it is state property to begin with, and part of the national park. So he didn’t put much credence into that offer and let it pass.

When he returned to Stung Hao he found out that the 9 ha had just been sold to the highest-ranking general in Cambodia.

And lo and behold, right around that time he found out that 1000 ha of Ream National Park had been leased to a Chinese company for 99 years. They are to build a golf course, resort, and casino on the southern coast of Ream National Park. Construction of a road has already begun. All relevant ministers had signed off on the deal - the Minister of the Interior, the Minister for the Environment, the Minister of Commerce, the Minister of Finance, the Minister of Tourism, and the CDC. One really has to wonder how much money changed hands for that deal to happen.

Just a couple of months earlier an acquaintance, who operates three boutique hotels in Phnom Penh, had met with the CDC to gain access to a small piece of land in Ream National Park for an ecologically balanced, small resort, complete with solar power, waste composting, etc. He wanted to lease it for 15 to 20 years from the state. His total investment was to be about $200,000. This would give the park some additional attraction as accommodations there have so far been lacking completely. The impact on the environment would have been negligible. It would have blended into the scenery of the park perfectly. The CDC just laughed at the proposal. They are looking for the big bucks. If it’s not at least $10 million they won’t even give you the time of the day. Well, selling out a National Park like this clearly shows they don’t put their money where their mouth is when they profess to seek to develop eco-tourism. Of course, 500 rooms, a golf course, and a casino all blend in very well within a National Park.

Obviously, this decision has a lot to do with the construction of a bigger airport in Sihanoukville. Airlines had pointed out they wouldn’t consider instituting direct flights for lack of appropriate accommodations. So the government is obviously thinking that by having those large developments they will gain those much sought direct flights. So far plans for three major resorts have been announced, one by the Sokha Group, another one by the Queens Group from Greece (a casino operator in Greece, although noted on the London stock exchange), and now this Chinese project. Will that be enough? Hardly, if you look at the number of rooms they will create. A previous article on the development of tourism on this site takes a closer look at this question. It is clear that much more than a few multi-million dollar projects are needed to re-vamp the entire coastline to convert it into a major tourist destination. The current emphasis on big projects alone won’t be able to accomplish this. A good mix is the way to go.

Well, to get back to the search for a suitable piece of land, he found another slice of beach in the Stung Hao area. Since access by road is not possible at the moment he motored over in a small fishing boat to take a look. The owner, a simple fisherman, went with him. It wasn’t the greatest piece of land for such an undertaking, but it would do. It had the right size, and it was beachfront. But the owner didn’t know how much to ask. He needed to get back to his friends for advice. They all owned about 50 ha in the area. It goes without saying that they didn’t have any hard title. So the first problems loomed on the horizon. Finally, a few days later he got back and said he couldn’t agree on anything with his friends. Our friend also learned that there were indeed ownership problems. So here went another chance down the drain. Probably he was also just too late to get into this. The current land speculation craze plainly overtook him and has steamrolled the project.

Seeing his inability to establish a smaller resort in the face of the current land craze, in his frustration he turned to a different business and bought a small rubber plantation in Kampong Cham province, which in addition to still affordable land prices produces a nice income right from the get-go.

Though he hasn’t given up on his plans for that boutique resort, he finds it increasingly difficult to deal with the current bureaucracy and its philosophy. We all don’t know whether to blame it on the personal greed of the involved officials or on their skewed planning, but it has become really hard for smaller and medium-sized investors to establish a business in Cambodia. We see the emphasis on large investors as unhealthy and it looks like a sell-out of the country to whoever pays the most. Or as one of our Khmer friends said, ‘Cambodia is a cake and the government cuts it up and sells it in big slices’, and maybe if they get lucky, a few crumbs will be left over for the smaller guys. But that’s the way the world runs, isn’t it?

No comments: