Cambodia’s Sihanoukville Pays Price for Gambling Itself Away

Once a sleepy, entrancing seaside resort in southwest Cambodia, Sihanoukville is sleepy again, bereft of Chinese nationals and tourists who have left following the closure of dozens of casinos in the city. This was a result of a government ban on all online and arcade gambling operations in the kingdom, which came into effect in January.

Fears of a coronavirus outbreak virtually completed the exodus, with reports of only 10 to 20 percent of Chinese nationals remaining, and few tourist arrivals from mainland China.

Many Asian places are feeling the pain of being too China-dependent in current times, but Sihanoukville has taken the cake as probably the most wretched. Its problem isn’t overtourism but development that destroys its status as a tourism jewel, critics say. It also isn’t so much about China dependency as it is about China centricity that squeezes out locals and other nationalities.

Named after former king and father of modern Cambodia, Norodom Sihanouk, Sihanoukville’s string of golden beaches and simple living made it a magnet for, as usual, first backpackers, then well-traveled Western tourists. But in a short stretch of time since 2017, its fishing village-feel changed beyond recognition as a result of massive Chinese investments in the city. The surge brought in thousands of Chinese employees, which in turn saw hotels, apartments, restaurants, signages, entertainment venues and other services centered on Chinese needs — apart from turning the city into a perpetual construction site.

Sihanoukville is “a landmark project” on China’s Belt and Road Initiative that incentivizes Chinese businesses to invest overseas in “special economic zones” where they can enjoy perks such as lower taxes and faster permits. According to The Economist, between 2016 and 2018, China invested $1 billion in one Special Economic Zone alone: Sihanoukville.

Booted out

The city’s fabric changed, its “Cambodian-ness” lost and with that, a number of tour operators have started to give Sihanoukville a miss, the latest being Australia’s Intrepid Group from the start of this year.

Others such as Abercrombie & Kent and Chic Locations UK ignore it and head straight for Sihanoukville’s offshore resorts such as Koh Krabey, Koh Russey, and Koh Rong, which they said are splendid.

Intrepid has pulled out whole countries from its tours before, including Myanmar and North Korea, but this is the first time it has axed a destination within a country that it is still featuring.

Sihanoukville had been part of its Cambodia itineraries since 2007. “But the sleepy, laidback beachside town has been significantly impacted by investment that, from Intrepid’s perspective, changed it in a non-positive way,” said Intrepid Group CEO, James Thornton.

“For example, more than 70 casinos have been built in the last three years alone. We’re seeing plastic bags and plastic litter in some of the beaches we visited. Our customers say the whole city is a construction site and there are waste management issues, frequent flooding, and so on.

“We understand that they [Cambodia and China] are keen to grow investments in Sihanoukville. Our concern is when development isn’t done on a measured and sustainable level and it starts to overwhelm the city. The negative aspects of that — crime, drugs, inequality with certain people prospering at the detriment of others — have all increased. We can’t justify visiting the town anymore as it’s not the experience Intrepid travelers want.”

There’s Hope

The ban on gambling shows that the government recognizes a huge issue and may in the long run change Sihanoukville for the better.

Philip Kao, president, Siem Reap Tourism Club, is hopeful of this. The government has budgeted $200 million to rebuild the image of the coastal city to be more friendly and accepted by all tourists, Kao said.

In the months following the gambling ban, announced in August, the Sihanoukville governor has made tremendous rebuilding efforts, including putting in tight safety and security controls and reclaiming beaches for public usage, according to Kao. “In a year’s time, there will be new modern city attractions and beach holiday destinations [aside from the offshore islands mentioned above],” said Kao.

In the meantime, however, locals are suffering more heavily than those in other destinations who are also feeling the loss of patronage of Chinese business.

Due to the China boom, many locals have, for example, taken loans to build apartments to rent out to Chinese nationals, according to a report in the Khmer Times. With the Chinese exodus, they are left with empty apartments and piles of debts.

“Cambodia somehow became the steam engine of the Belt and Road initiative in Southeast Asia. Sadly the country punched the ticket and is going to have to [ride it out],” observed BIll Barnett, managing director of C9 Hotelworks, a real estate and hospitality consultancy based in Thailand.

“The biggest single issue is how to mix a single market gaming destination in Sihanoukville, the industrial planning of a Pearl River-like lane [referring to plans to turn Sihanoukville into Cambodia’s very own Shenzhen], and the leisure tourism segment into the equation.

“Let’s just say, it’s going to be very challenging to do all three well, so our expectation is that tourism will lose out to commerce in the longer term.”

C9 Hotelworks’ Sihanoukville Tourism & Property Market Update January 2020 shows at least 18 key developments representing 30,549 condominium units. Six are mixed-use properties with hotels, shopping malls and office buildings.

More of the Same?

With other emerging countries in Asia including Laos and Myanmar courting foreign investments, there is cause for worry that another Sihanoukville in tourism lurks around the corner.

Although not a Sihanoukville by any measure, Nha Trang in southern Vietnam has also been booted out by Intrepid as it has become another “big tourist resort,” although Intrepid’s cycling trips continue to stop there due to Nha Trang’s good location, said the company.

“What’s going on is not a unique problem to Asia or a uniquely Chinese investment issue,” said Thornton. “We can date it back to the 1970s when tourism from the UK headed to the Spanish seaside resorts [such as Canary Islands, Balearic Islands], overwhelming them with those big, monstrous hotels, English pubs, English restaurants and so on. So there’s no local food, no local culture. It’s a problem that has been going on in different ways for a long time.”

“For us it is worrisome, because our trips give customers the opportunity to meet locals, try their food, get into the skin of the destination. Increasingly we have to find and highlight alternative places,” he added.

In Cambodia, among the new alternatives are Kampong Cham, Kampong Chhnang, Battambang and Kampot. Even the famed Angkor Wat complex in Siem Reap “is reaching the point of over-tourism,” said Thornton, thus Intrepid is trying to find less frequented temple ruins even if these aren’t as magnificent as the iconic ones.

“For the iconic ruins, we get passengers to go early in the morning or late in the day but it’s difficult to make even the sunrise and sunset experiences unique. Increasingly we feel getting our customers away from the crowds is also important,” said Thornton.

Overall, he said Cambodia “hasn’t been performing.” Bookings to the destination declined last year for Intrepid.

“Ten years ago, we would be carrying similar numbers to Cambodia as to Thailand and Vietnam. We saw a decline last year to Cambodia whereas there was excellent growth to Vietnam and good growth to Thailand. People do return and talk that their experience of Angkor Wat was not what they hoped it to be, also the plastic problem, the economic inequality — all this dampens enthusiasm to visit,” he said.

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