New directions for a former casino city

IF you want to get rich, build a road first. This principle has guided China’s development since its reform, and under the Belt and Road Initiative, this model has now found its way to Sihanoukville in Cambodia..

With Chinese funding, the Cambodian government has stepped up infrastructure construction in the past 2 years. Sihanoukville now has 34 asphalt roads, with a highway to the capital of Phnom Penh slated to open in July – Cambodia’s first highway, which will cut travel time between both cities from 6 hours to just 2.5 hours.

Sihanoukville is also expanding its airport and deep-water port, as well as underground drainage. A power plant backed by Chinese state-owned generator China Huadian Corporation is being built too.

Having ventured into real estate development in Sihanoukville back in 2015, Singapore-listed HLH Group has witnessed the convoluted trajectory of the city’s development. Executive deputy chairman and chief executive officer Ong Bee Huat told Lianhe Zaobao that the online gambling ban and the pandemic have devastated Sihanoukville’s economy – but also present an opportunity for the city to adjust its development strategy.

Ong, who has worked in Cambodia for more than 15 years, said Sihanoukville’s ageing infrastructure had been inadequate for its rapidly growing population. “Before, the roads were in poor condition, and there were always traffic jams. There was not enough water, not enough electricity, and frequent blackouts.”

The downturn of the last 2 years provided an opportunity for infrastructure upgrading, to stand the city in better stead for future development, he added. “Sihanoukville’s biggest draws are its beautiful beaches and deep-water port; these are natural and can’t be replicated. As long as the infrastructure can keep up, I believe tourists and investors will naturally come back.”

Lawrence Lennon, managing director of CBRE Cambodia, agreed that “breathing space” was exactly what Sihanoukville needed. “Imagine you try doing that when you have 2 million tourists coming through the city on an annual basis, it just wouldn’t be possible.”

“So the time has been used wisely and effectively to pave the way for future developments.”

Lessons from Shenzhen on diversification

Learning from the experience of the southern coastal Chinese city of Shenzhen, Sihanoukville is developing sectors such as tourism, agriculture, and logistics to diversify its economy and reduce dependence on gaming.

Late last year, the Cambodian government appointed the Urban Planning & Design Institute of Shenzhen to draw up a blueprint for Sihanoukville as a “multi-purpose special economic zone”. Sihanoukville’s potential in logistics and tourism is starting to attract investors.

With Cambodia’s only deep-water port, Sihanoukville has a natural advantage and immense potential in logistics. The Japanese government said last year that it was providing Sihanoukville port with preferential loans to build a new container port. At the start of this year, Japanese retail giant AEON revealed plans to build a 30,000 square metre multi-purpose international logistics hub there.

Sihanoukville’s natural beauty remains a huge draw for tourists. HLH Group’s Ong believes the 30-odd pristine islands nearby – such as Koh Rong, Koh Rong Sanloem and Koh Sang Saa – could rival the Maldives.

Tourism would also complement the city’s gaming industry. Noting that the government intends for “tourism and gaming (to) go hand in hand”, CBRE Cambodia’s Lennon said: “We anticipate… that there will be a shift in the positioning of Sihanoukville to more of a premium gaming destination, similar to that of Singapore’s integrated resorts.”

He observed that although online gambling is banned, physical casinos can operate, though the government may limit the industry’s scale via licensing.

Daryl Lim is a journalist with Lianhe Zaobao’s Foreign News Desk. This article is part of a collaboration on a series of weekly features translated from Lianhe Zaobao. The original story first appeared on July 3. The next package on July 18 will take a look at Chinese electric vehicle companies and their plans in South-east Asia.