Cambodia a capital success [... only for the rich and powerful]

Jun 22, 2011
By Julie Masis
Asian Times Online

PHNOM PENH - Cambodia's capital today is unrecognizable compared with five years ago. Then the tallest structure was a seven-story hotel and vast areas of the city would have appeared dark due to a lack of reliable electricity.

Now there are nine buildings of 20 or more stories and 55 structures of between 10 and 19 stories, according to the city's department of construction. More high-rises are on the way: projects have been approved to build at least 200 additional buildings with more than 10 floors, including a 60-story skyscraper.

New apartment blocks are proliferating and land prices are soaring, to as high as US$3,000 a square meter from around $100 five years ago.

The building spree has propelled Cambodia's recent fast economic growth, the second-highest in Asia after China over the past decade, and increased consumer spending power. Prime Minister Hun Sen has presided over the country's rapid capitalist transformation after decades of debilitating civil war - although about one third of the population still subsists under the poverty line.

Jean-Michel Filippi, a university professor who leads guided tours of Phnom Penh, says that when he first arrived in the city it looked like "a giant village". Streets were unpaved and muddy; chickens, pigs, and ox carts roamed freely across the city; residents often threw their garbage right out of their windows; there were few motorbikes and even fewer cars.

His impression was that the city than was populated with "non-urban dwellers" who "reproduced the structure of the village in an urban place". This was not far from the truth. In 1975, when the Khmer Rouge seized Phnom Penh, the radical Maoists expelled the city's population to the countryside to build an agrarian utopia. Nearly two millions lives were lost in the process over the next four years. After the Vietnamese invasion ousted the regime, Phnom Penh was repopulated with people who had never lived in a city.

In recent years, Phnom Penh has been transformed into a bustling urban metropolis. Ox carts have disappeared and dusty roads have been paved and are regulated by traffic lights. Once quiet streets are now packed with rush-hour traffic jams.

The number of vehicles in Cambodia has tripled in the past five years, reaching more than 1.5 million for the country's nearly 15 million population, according to the government. The vast majority of those vehicles have been registered in the capital. Every day about 80 new cars are registered in Phnom Penh, compared with only one car per day in all of Cambodia's provinces, according to Ung Chun Hour, director general of transport at the ministry of public works and transport.

"The number of motorbikes and cars is still going up, and it's going up faster in Phnom Penh than in the provinces," he said.

The growing gridlock is indicative of rising prosperity. Annual growth of around 9% over the past decade has been driven by services and manufacturing, centered around the capital.

"If we look at the drivers of growth - mainly garment exports - the factories are based around Phnom Penh or in Phnom Penh," says Neak Samsen, a poverty specialist at the World Bank office in Cambodia. "There's a lot of development in Phnom Penh City compared to other parts of the country."

Until recently, Phnom Penh's economy was entirely cash-based. The first ATM machine in Cambodia opened here in 2004. Now there are more than 500, with one on almost every corner of the city. Of the 35 different banks that operate here, only three maintain branches outside of the capital, says World Bank economist Huot Chea.

For the city's residents, the rapid development has translated into a significant improvement in their standard of living. While the average income in Cambodia is still around $1 a day, the average monthly income in Phnom Penh is three times higher, or about $100 per month, according to National Institute of Statistics' Cambodia's Socio-Economic Survey for 2010.

While around 30% of the population still lives under the poverty line (defined by the government as subsisting on a little less than 75 cents per day), fewer than 1% of Phnom Penh residents are poor by this definition, according to a joint World Bank - National Institute of Statistics Study.

Heng Sinet, a Phnom Penh college student, said that 10 years ago her family had no phone or computer, and relied on an old black and white television set for news and information. Now, her seven-member household owns two computers and nine mobile phones.

Sovan Chanrathana, another Cambodian college student, said that in 2003 she just had one pair of shoes, two shirts and two skirts to last her a whole year - and bought her clothing second-hand. Now she purchases new clothes, owns three pairs of shoes, rides a motorbike instead of a bicycle, and can afford to go out to eat.

"Before, when I went to school, I never bought something to eat," she said. "Now when I'm hungry, I eat out."

New businesses, meanwhile, have mushroomed to meet rising consumer demand. Air-conditioned supermarkets, 24-hour convenience stores attached, and high-end restaurants and clothing boutiques have sprung up over the past five years. The past year has seen an explosion in Western style coffee-shops offering up wireless Internet, $3 iced coffees and freshly baked pastries.

Ten years ago most people in Phnom Penh didn't even know what a muffin was, says Dana Langlois, who owns Cambodia's first American-style cafe, which celebrated its 10-year anniversary earlier this year. She estimates that the city is now home to at least a hundred upscale cafes and says all the new competition has not hurt her business.

"Now the market is times ten," she says. "Before you were dealing with 10,000 expatriates, now you've got a million Cambodians as a potential customer."

Julie Masis is a Cambodia-based journalist.