Cambodia: An improbable paradise or a vassal state?

Beach in Kep (Photo: Helen Kudrich for TIME)

Improbable Paradise

Thursday, May. 29, 2008
By Krista Mahr/Kep
Time Magazine

"This is their chance to be a real country. This is their chance to have a real economy. If they screw it up, they'll be a vassal state" - Joseph Mussomeli, U.S. Ambassador to Cambodia

Whoever says money can't buy happiness hasn't shelled out for their own beach in Cambodia. Before the crew of the Sea Breeze can even drop her anchor, Alexis de Suremain is in the water, swimming straight for 90 yards of white sand: his 90 yards of white sand. A wall of tangled jungle rises to the east; to the west, the sun sinks into its own reflection over the Gulf of Thailand. "See that?" de Suremain asks, waving at the sun as it bisects the beach view. "Right down the middle."

If all goes according to plan, these 35 acres (14 hectares) of sand, rock and jungle will in a few years host a plush eco-resort of palm trees and solar-powered bungalows. De Suremain, a French expat who runs guesthouses in Phnom Penh, says he combed Cambodia's shores for three years before he settled on building his resort on the remote island of Koh Rong. "I wanted something where you couldn't hear karaoke, where the neighbor's dogs don't bark and where the cocks aren't crowing in the morning," he says. "I wanted something completely isolated."

He's got it — for now. The postcard-perfect beaches of Cambodia's scores of islands and 270 miles (435 km) of southern shore have gone largely unnoticed by developers for the past 40 years. But in 2007, a record 2 million tourists visited Cambodia, signaling that the country was beginning to shake its killing fields image as an impoverished backwater where wandering off the beaten path could mean finding yourself astride an unexploded land mine. Cambodia is starting to register as a must-see destination, and it's not all about Angkor Wat. Brackish mangrove swamps and remote beaches are being envisaged as golf courses and plots for five-star bungalows with private pools. Indeed, there are signs of vitality in other sectors of the impoverished country's once moribund economy. Cambodia's GDP grew 10.4% in 2006 — the highest rate in Southeast Asia that year — and foreign investment shot up some 400% to nearly $4 billion. Thirteen foreign companies, including Chevron, have licenses to explore Cambodia's offshore blocks for oil and natural gas; the government says domestic oil production could begin within three years. The rush for Cambodia's gold coast is on, raising hopes that the economic torpor of this aid-supported nation will finally end. "This part of the country has been a revelation for me," says Steve Smith, a Londoner who finances his endless summer as a dive instructor in southeast Asia. "I didn't even know there were beaches in Cambodia."

The Undiscovered Country
To witness this awakening up close, I recently borrowed a wreck of a bicycle for a slow ride through the sleepy Cambodian seaside town of Kep, near the Vietnamese border. After limping along the potholed coastal road past unkempt plots of oceanfront land with crumbling colonial-era manses, I stopped to look at a billboard — the only one in sight. On it was a picture of a home that would not have looked out of place in a Denver subdivision. A young man pulled up on a motorbike next to me. "You want to buy?" he asked. I told him I wasn't in the market, and so he handed me a flyer for his business, Sunny Tours, that bore a stern warning: NOW IS THE TIME TO ENJOY KEP!!

Five years ago, Sunny Tours' catch-it-while-you-can marketing wouldn't have been very effective. In the early 20th century, Kep-sur-Mer was established as a getaway for French civil servants running the colony, and it served as an enclave for rich Khmer after independence in 1953. (The former King, Norodom Sihanouk, built a royal residence there that, like most of the old estates in town, now stands empty.) The holidays ended in the 1970s after an American bombing campaign brought the first wave of more than two decades of war, including the Khmer Rouge-led genocide that killed nearly 2 million Cambodians between 1975 and 1979.

Stability has been slow to return to Kep and to the country as a whole. But today nearly every Asian nation has a stake in Cambodian industries, from hydroelectric dams to oil exploration to real estate development. In Kep, three Modernist homes have been restored into Knai Bang Chatt, a striking boutique hotel owned by two Belgians. At the other end of town, the early 20th century La Villa de Monsieur Thomas is being revamped into a five-star resort by a Khmer developer. And in February, Sokimex, a powerful Cambodian company that imports most of the nation's petroleum, began converting a colonial casino on Bokor Mountain into a flashy new resort. "All of a sudden there's interest," says Joseph Mussomeli, the U.S. ambassador to Cambodia, who last year hosted the first American business conference in Phnom Penh. The country is "lucky to be stuck between 85 million Vietnamese and 65 million Thai," he says. "It's hard to ignore this place now."

More projects are in the works. About an hour's motorbike ride down a red dirt road that trails off the coastal highway, residents of the fishing village of Angkoal have started selling their small holdings to real estate developers. One family, residents of a palm-fringed knob of land that slopes into the water, says their property is regularly visited by speculators. "They come every day," says Sry Mau — even though the place where the young woman's family has lived for 23 years has already been purchased by a Cambodian hotelier for $8,000. With the money, they bought a new, considerably smaller piece of land across the road and a new fishing boat.

In a country where 4.7 million people live on less than 50 cents a day, the surge of investment is changing lives and could help create jobs. The country desperately needs more employment opportunities. About a third of Cambodians are 15 years old or younger, and they'll be entering the workforce in droves over the next two decades. Hundreds of NGOs are already busy trying to fix Cambodia, and about 20% of the government's total budget still comes from foreign aid. The prospect of a tourism boom coupled with the start of domestic oil production offers the tantalizing possibility of a more independent way forward. With foreign aid, "you'll always be living according to somebody else's rules," says Rithivit Tep, director of the private-equity firm that owns Kep's Thomas villa and development rights to two islands. "We have wasted a lot of time."

Paradise or Vassal State?
A few hours drive down the coastal road, I was sitting inside the dusty office of Sokun Travel and Tours when the lights cut out. "No good," said the woman behind the desk, looking into the dark street. "Every day, two or three times." We conducted the rest of our transaction by candlelight. Mourn Sokun, who owns the travel agency, says Sihanoukville, the current hub of south-coast tourism, can't keep up with the rush of tourists. The number of foreign visitors to the city shot up by 50% between 2006 and 2007, and infrastructure, including electricity generation, is overtaxed. In 2007, the local airport reopened to shuttle tourists between Angkor Wat and the coast, only to close months later when a domestic flight went down, killing 22 people on board. It's still closed today. Som Chenda, Sihanoukville's minister of tourism, says the city needs more of everything — more hotel rooms, more restaurants, more hospitality training, more language teachers. "We need it all," says Som. Right now, Sihanoukville doesn't even have enough fresh produce coming in: "There are too many tourists and not enough food."

In a line of work that relies on clean beaches and clear water, Mourn, the travel agent, worries the authorities aren't working hard enough to protect the environment. As more guesthouses and bars pay their license fees to operate at the popular beaches, Mourn says raw sewage is being piped into the water and trash is being dumped onto the sand. "People pay their money, and the government closes their eyes," Mourn says. Government officials say they are aware of the growing problem. "The coast is not so good now because of the fast development," says Prak Visal, who heads the Sihanoukville branch of a regional coastal-management project. Solid-waste dumping, mangrove destruction, unsustainable fishing practices and illegal logging are a few of the challenges he says the area faces. But slowing things down? Not an option. "We protect, but we develop, too," Prak says.

Though some are happy with the money they've made, others living in valuable areas fear they'll lose their land, or lose it without being fairly compensated. Few families hold formal land titles, leaving many to rely on local authorities to vouch for them as landowners if a developer comes calling. Though efforts to provide documentation for landowners have been ramped up — almost 1 million land titles have been granted since 2004, according to the World Bank — there are millions more to go. Cambodians' scramble to secure their rights speaks to a fundamental anxiety: faith in the law is dismally low. For the past two years, the country has ranked near the bottom of Transparency International's Corruption Perception Index, and in a 2007 World Bank study, only 18% of respondents said they thought judges were honest. "Corruption is so pervasive it's part of the culture," says Theary Seng, executive director of the Center for Social Development, a Phnom Penh-based NGO. She worries that the billions coming in from private investment — particularly in oil — will not trickle down to the countryside where 80% of the nation lives. "If they want to do it right, they have lots of good models in the world," says Mussomeli, the U.S. ambassador, warning against Cambodia going the way of oil-cursed nations like Nigeria and Chad. "Or they could do it wrong and they could suffer the political consequences in 20 years. This is their chance to be a real country. This is their chance to have a real economy. If they screw it up, they'll be a vassal state."

The Road Ahead
Alongside road 4, the 143-mile (230 km) ribbon of asphalt connecting Sihanoukville and Phnom Penh, water buffalo graze in rice paddies that stretch from horizon to horizon. Kids in white school uniforms pedal their bikes in the dirt, moving alongside traffic like birds riding on air currents. It's places like these — in other words, most of Cambodia — where the five-star visions of the coast begin to get a bit blurry. Neither tourism nor oil alone can drive the national economy in a meaningful way. There must also be investment in agriculture and other sectors that employ most Cambodians, says Arjun Goswami, country director for the Asian Development Bank. "If one of these days I can go into Whole Foods and see a Cambodian export on the shelves, that's when I'll be a happy man," says Goswami.

In Phnom Penh, I stop by the offices of Rory and Melita Hunter, an Australian couple whose real estate company was recently granted a 99-year lease to build a luxury boutique hotel on Song Saa, a tiny pair of islands off the coast. They show me elaborate renderings of the future 40-room complex, replete with a wine cellar, air-conditioned library and 15 over-water bungalows designed to reflect the architecture of a nearby fishing village. The Hunters paid relocation costs for the 15 or so families living on the islands. They hauled away tons of trash that had been piling up for years, and started to revive the local coral reef that had been all but destroyed by overfishing. "Knowing that there had been all these other issues about how people had been relocated, we wanted to do it properly from the start," says Rory Hunter. "We're going to be doing business here for a long time." Maybe money will buy happiness for Cambodia; maybe it won't. But nobody said paradise was built in a day.