Cambodian casinoville

Second in a series on changing cities

Walking along the long narrow stretch of Ochheuteal Beach on the Cambodian coast of Sihanoukville is like walking between two worlds. On one side, a small boy runs gleefully into the waves as the golden sun dips down to the ocean, the sky awash in purples and pinks. On the other, trash piles up on construction sites as the skeletons of buildings and tower cranes stretch to the sky.

At the center of town, the garish statues of two golden lions in the middle of a roundabout watch over what once was a quiet beach town popular among Western backpackers, expats, and local Cambodians. Yet today, large cement trucks rumble past high-rise Chinese hotels and casinos, the ocean air is polluted with dust, and the noise of construction continues day and night. Restaurant signs prominently feature simplified Chinese rather than Khmer or English and advertise food from different regions of China: Sichuan, Shanxi, Beijing. Walking down the street in Sihanoukville feels more like being in China than in Cambodia.

Although gambling is illegal for Cambodians, the city currently boasts about 30 casinos for Chinese tourists, with 70 more currently under construction. The largest is Jin Bei Casino & Hotel, lit up at night with multicolored lights and decorated with a 3D model of playing cards and dice in a clamshell above the entrance. Inside, patrons walk through a metal detector into a bright, spacious casino with a patterned carpet. Past rows of electronic slot machines, chain-smoking Chinese men place bets at green-felted baccarat tables as Cambodians deal the cards.

Chinese investors hope to turn Sihanoukville, named after the late Cambodian King Norodom Sihanouk, into a gambling and vacation destination for Chinese tourists. But more than the promise of a new Macao, Sihanoukville is also the only deep-water port in Cambodia and an important part of China’s ambitious Belt and Road Initiative, which aims to create a network of transportation, energy, and telecommunications infrastructure across Asia, Europe, and Africa.

In the tax-free Sihanoukville Special Economic Zone, which spans 4 square miles, Chinese companies run most of the existing factories. The goal is to open 300 factories and employ 70,000 workers to make garments and consumer goods at low costs. China is Cambodia’s closest ally and largest foreign investor, funneling $5.3 billion into the country between 2013 and 2017. At the same time, Cambodia’s reliance on China is growing: The West cut off aid after Prime Minister Hun Sen dissolved opposition parties and jailed political leaders ahead of last July’s elections.

While Sihanoukville’s construction boom has created more jobs for Cambodians, resentment toward the Chinese newcomers is also growing. The massive overdevelopment has destroyed beaches, priced locals out of the area, and increased crime as the casinos attract money laundering and Chinese gangs. Cambodians complain that Chinese money ends up back in Chinese pockets: Tourists stay in Chinese-run hotels, eat at Chinese-run restaurants, and hire Chinese drivers, putting locals out of business.

ON ONE SIDE OF THE ROUNDABOUT, Western and Chinese tourists enjoy fresh-baked pizzas, flatbread dipped in hummus, and large bowls of spaghetti bolognese at Olive & Olive Mediterranean Restaurant. Ethnically Turkish owner Fahrettin Korhan opened the restaurant seven years ago when the town was still small. At the time, he felt frustrated that he couldn’t find any restaurants in the area with good food and good hygiene, so he opened his own, hiring local employees and cooking with imported ingredients. Since then Olive & Olive has become one of the most popular restaurants in town.

When Chinese workers came to town three years ago, Korhan was prepared. Olive & Olive was the first restaurant to feature a Chinese-language menu, and he was excited that the Chinese wanted to invest in Cambodia and its people. He had grown tired of unambitious Western expats who staffed their restaurants and guesthouses with backpackers (Western, low-budget travelers) in exchange for food and shelter rather than hire locals. Korhan even had some of his employees learn Mandarin in order to interact with their new customers.

But after the Chinese arrived, Korhan’s tune changed: “We realized these people are invading the country and not even employing Khmer staff or buying construction material from this country.” While Cambodians could earn low-paying jobs at the casinos or construction sites, the Chinese brought over their own materials and workers. Other enterprising Chinese businessmen opened up their own restaurants, grocery stores, and taxi companies. While Chinese money has reached the hands of Sihanoukville landowners, laborers can no longer afford to live in the city.

The nonstop construction has also cost Korhan, as workers are building a giant hotel on a plot of land next to the guesthouse he owns. Day and night, construction workers dig into the ground with jackhammers, cracking the walls of his guesthouse. He’s recently filed a petition for the construction to stop since he’s no longer able to rent out the rooms due to the racket next door.

“The problem here is there’s no infrastructure, no control over the construction,” Korhan said. “They just come and do as they wish. They think money can buy everything.”

As Chinese swoop in with suitcases full of cash, rent has skyrocketed: In the past, Olive & Olive staff could rent an apartment to share between two or three people for $50 a month. Today, the same apartment costs $800. The high rent has forced thousands to move and shut down hundreds of Cambodian-owned businesses. Bars, nightclubs, and restaurants once lined the beachfront, but most have been forced to close as backpackers—their main clientele—have stopped coming. One- and two-star reviews fill the TripAdvisor page for Ochheuteal Beach, with tourists complaining about broken glass, trash, and even dead rats found in the sand.

The crime rate also has increased as the casino business naturally attracts other vices: money laundering, prostitution, kidnappings, drunk driving, and fights. Police are easily swayed by bribes, so many of the perpetrators are not caught. Last July, a Chinese gangster shot four men from a rival gang in the legs during a drunken brawl at a Chinese restaurant. Shortly afterward, five Chinese tourists kidnapped another five tourists and held them for ransom to cover gambling losses.

The tensions between local Cambodians and the influx of Chinese prompted provincial Gov. Yun Min to write in a report to the Ministry of the Interior in January 2018 that the large number of foreigners in the city “gives opportunity to the Chinese mafia to commit crimes and kidnap Chinese investors due to increased insecurity in the province.” He added that “some foreigners do not respect the traffic laws; they drink alcohol, get drunk, yell, have arguments, and are fighting each other at restaurants and in public places.”

Prime Minister Hun Sen, who has forged close ties with China, reassured Sihanoukville residents that the rough-edged Chinese workers were only in the country temporarily because of the shortage of skilled Cambodians. Once all the construction is finished, he suggested, a different sort of Chinese tourist would be coming to the country. China promises to send 2 million visitors a year by 2020.

Only a few Chinese families came to the Sihanoukville beach during the Chinese New Year holiday in February. Even at Jin Bei Casino, just a few tables were occupied. Korhan noted that this was because the casinos in Sihanoukville make most of their money from live-dealing online gaming. This means the casino has a separate pit or room where dealers pass out cards with a high-definition camera pointed at the table. Players can place bets and make moves from the comfort of their own homes. These online gambling sites share the gaming license of the brick-and-mortar casino. Because Cambodia does not yet have strict gaming rules in place, it’s easy for gamblers to launder money or skirt currency controls, especially through online gaming. Money-laundering watchdog Financial Action Task Force announced in February that it had placed Cambodia back on its gray list of “jurisdictions with strategic deficiencies” as the country had never prosecuted a money-laundering case and its judicial system had “high levels of corruption.”

OLIVE & OLIVE is considered lucky: While business has dropped by 30 percent, Korhan’s preparation for the influx of Chinese nationals and the fact that he’s locked into a nine-year lease on the building means that he may be the last non-Chinese restaurant to remain standing. In order to attract more customers, he asks his Chinese customers to rate and review his restaurant on Chinese social media platforms.

Across the street from Olive & Olive, Western tourists wait outside the Koh Rong Dive Center for a bus to take them to a ferry that will speed them away from Sihanoukville construction to the tranquil islands off the Cambodian coast. Inside the dive shop, Katerina Zelenova sits behind a table reminiscing about what life in Sihanoukville was like when she arrived from Russia in 2013: “It was a sleepy, slow, and very friendly town.” Now the town is polluted, the old expat haunts are gone, and she feels like a stranger in her own home.

She remembers when finding a place to live was as easy as biking around and looking for “room for rent” signs, but now it’s impossible to find any available rooms. The landlord of the dive shop is also tripling the shop’s rent, and she believes it’s only a matter of time before they have to move. “I love the company I work for and I make good money, but if I got a chance to leave, I would take it,” Zelenova said.

Further from town, Otres Beach has managed to stay relatively clean and quiet. Only a few Chinese-backed hotels are under construction there, but the beachfront restaurants say that business is bad because the Chinese influx has scared away their usual Western clientele. At the Ren Hotel’s restaurant, Cambodian manager Reach Heng noted that since the Chinese came, the price of seafood has increased while the number of customers has decreased.

He complains that Westerners have stopped coming to Sihanoukville because the Chinese tourists are loud, they smoke, and they get into drunken fights. Locals like him are vexed because the Chinese seem to look down on Cambodians.

“They don’t want to learn about our culture,” Reach Heng said. “They only want to come here to look rich.”

Quid pro quos

Beijing’s model of giving out loans with a promise of nonintervention has been a boon to Cambodia’s strongman, Prime Minister Hun Sen, who has remained in power for the past 34 years. While the West had always given funds on the condition Cambodia move toward democracy, Beijing writes blank checks regardless of Hun Sen’s crackdowns on political opponents. In exchange, Hun Sen has supported China’s South China Sea territorial claims and has banned Taiwan’s flag from Cambodia, treating the island as a province of China.

Yet Chinese loans have higher interest rates than those of other countries and typically require countries to hire state-owned Chinese companies to build the infrastructure. Cambodia also owes half of its $6 billion in public foreign debt to China, with $3.5 billion more in the Belt and Road Initiative lending pipeline. It’s one of 23 countries at high risk of debt distress due to Belt and Road loans, according to a report by the Center for Global Development. But Hun Sen is upbeat, announcing after a recent meeting with China’s President Xi Jinping, “The President said the relationship between China and Cambodia is very special, compared to other countries.”

Chinese tourists are now Cambodia’s largest source of foreign visitors, making up 32 percent of international arrivals. More than 1.27 million Chinese tourists visited Cambodia during the first eight months of 2018, up 72 percent from the same period in 2017. At the popular tourist destination of Angkor Wat, a temple complex built in the 12th century, Chinese tour groups swarm the grounds. Chinese women in flowing dresses and heels snap selfies in front of intricate carvings on the sandstone walls. One woman spent 10 minutes throwing her willowy scarf into the air again and again, hoping her friend could capture the moment in a perfect portrait. —A.L.F.