business

Sihanoukville Struggles Due to Exodus of Chinese Investors

The pandemic-fuelled mass exodus of Chinese investors from Preah Sihanouk province has left a swath of abandoned half-built buildings and a stagnant economy.
A man walks past an abandoned half-built building in Preah Sihanouk province. Kiripost/Penh Chamroeun
A man walks past an abandoned half-built building in Preah Sihanouk province. Kiripost/Penh Chamroeun

PREAH SIHANOUK PROVINCE. Yim Sreymao recently relocated to Preah Sihanouk province to set up a small grocery store next to an unfinished building where her husband once worked.

The Chinese owner had halted construction and failed to pay her husband for six months, so she moved from Kampot province to set up a shop selling drinks and cigarettes.

Yim Sreymao speaks to journalists in a small grocery store next to an unfinished building in Preah Sihanouk province. Kiripost/Penh Chamroeun
Yim Sreymao speaks to journalists in a small grocery store next to an unfinished building in Preah Sihanouk province. Kiripost/Penh Chamroeun

“I’ve never seen the owner, he went to China already,” Sreymao, who is five months pregnant, said standing next to the building. It was abandoned at four storeys tall and has since turned into a state of dilapidation, is gray and surrounded by plants.

Some of the derelict buildings are now home to motorbike repairs.

The unfinished building that Sreymao’s business sits beside is one of hundreds of abandoned constructions in Preah Sihanouk province after Chinese investors left before and during the Covid-19 pandemic.

Mang Sinet, deputy governor of Preah Sihanouk province, said authorities are seeking ways to solve the problem with unfinished buildings. He said he does not have a specific number of incomplete projects.

He added that some of the contracts with local landowners have expired. “Some of the buildings now belong to landowners, but the problem is that landowners don't have the finance to continue the construction while building owners also don’t really stop construction yet.”

“This is a worry for all of us,” said Sinet. “To solve this and which way, I am not sure.”

Local investors are essential for recovery across Preah Sihanouk province after it was hit by Covid-19 and amid declining Chinese investment, a business executive said.

With newly paved roads and statues, in recent years Preah Sihanouk province has also seen hundreds of unfinished buildings abandoned and left to the elements of the rain and sun, shadowing other skyscrapers.

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Unfinished buildings shadow other skyscrapers. Kiripost/Penh Chamroeun
Unfinished buildings shadow other skyscrapers. Kiripost/Penh Chamroeun

Hong Bunty, president of the Young Entrepreneurs Association in Cambodia (YEAC) in Preah Sihanouk province, said despite the limitations for local investors to deal with these unfinished buildings, they can contribute in other ways.

“Now, we are working hard to mobilize local investors to invest in Preah Sihanouk province from other provinces, either Phnom Penh and Siem Reap or nearby provinces,” said Bunty, who is also CEO of T&J Asia.

“As locals, we must show outsiders what potential we have so they can come and develop in the province,” he added.

“Economic decline is not just in our country but around the world, a lot of events have happened and hurt economies as a whole, so foreign investment to us has decreased by a lot. Chinese investment still continues but it is not like in 2018.”

Bunty said he is hoping that the local private sector will engage more and hold further talks with YEAC members on what the province can offer besides the sea and beaches.

“We do not want just Chinese investors, we want Preah Sihanouk to be an international financial hub, and there is other potential for investment in big factories,” Bunty said.

Hong Bunty, president of YEAC in Preah Sihanouk province. Kiripost/Penh Chamroeun
Hong Bunty, president of YEAC in Preah Sihanouk province. Kiripost/Penh Chamroeun

He projected that Preah Sihanouk province will improve next year when the new expressway is set to open. This will cut transportation time by 50 percent.

YEAC, which has 450 members who operate more than 800 companies in Cambodia, was created in 2009 partly with the objective to work with incoming Chinese investors at the time. Now, YEAC is working with non-profit French group Action Education to help local startups and entrepreneurs grow.

Entrepreneur Sath Kok Ann said exporting bird nests to China is hard due to its strict requirement on agricultural products. He can currently only supply them to the local market.

There is rising demand for bird nests for food and health related needs in China but the country is not a good place to raise them, he said, adding that Southeast Asia provides the perfect environment to raise birds.

“We are not able to export to China because they have restrictions on food imports, they fear that it might have viruses. If in the future, our royal government can sign an agreement, an MoU, for agricultural exports, it would be good for business in Cambodia,” Kok Ann said.

Entrepreneur Sath Kok Ann speaks to journalists in Preah Sihanouk province. Kiripost/Penh Chamroeun
Entrepreneur Sath Kok Ann speaks to journalists in Preah Sihanouk province. Kiripost/Penh Chamroeun

He currently sells between 30 and 50 kilograms of bird nests a month in Phnom Penh and Preah Sihanouk, costing $650 and $750 per kilogram.

Chan Anna, CEO of a travel company in Preah Sihanouk province, said business has started to pick up slowly. She is organizing to take a group of Cambodian tourists on a trip to the United Kingdom later this month for the first time since Covid-19.

The group consists of 10 Cambodians on a two week trip, Anna said, adding each person pays between $5,000 to $7,000. “I feel excited that we can help the economy recover,” she said.

The increase in flights from Cambodia is not only catering to holidaymakers, Anna noted. She said among those who go on holiday to Thailand, Australia, and Europe are people seeking medical attention abroad.

Other passengers include people who were stuck in Cambodia and are now returning home, as well as those accompanying their children abroad for their studies.

Anna said during Covid, her business was affected. However, she had other businesses to counter the impact, such as running a mart. Anna was forced to slash staff salaries by 30 percent for six months.

“When Chinese nationals left the country, Kompong Som people were affected a lot. Chinese built buildings [and left them] unfinished and some Cambodians built buildings hoping to rent to the Chinese but the Chinese left. People in Preah Sihanouk have faced a lot of difficulties,” Anna said.

Chan Anna (right), CEO of a travel company, speaks to journalist in Preah Sihanouk province. Kiripost/Penh Chamroeun
Chan Anna (right), CEO of a travel company, speaks to journalist in Preah Sihanouk province. Kiripost/Penh Chamroeun

“Before, we had bad roads, roads are difficult to drive on but it was easy to make money. Now, the roads are nice but it’s difficult to make money,” she added.

Sreymao’s departure from Kampot was also triggered by a drop in mango prices. Working with mangoes, she hoped she would be better off in Preah Sihanouk.

“If there was a job in Kampot, I would go back because my home is there. My income here is not enough, my husband is a PassApp driver so it’s just enough to live,” Sreymao said.