Chinese Casino Investment Causing Tension in Cambodia

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Saturday, June 23rd, 2018 | Written by Shane Larson

The city of Sihanoukville has traditionally been one of Cambodia’s premier seaside resort, and each year attracts thousands of tourists looking to enjoy its beautiful beaches, well priced restaurants, and diverse recreational and leisure activities. In recent years, the city has also experienced a huge increase in investment from the Chinese mainland, much of which has been used to build factories, infrastructure, as well as dozens of casinos throughout the city.

While these developments have naturally provided a huge boost to the local economy, Sihanoukville residents, on the other hand, are not at all pleased with the way their city’s appearance and culture is being transformed. Over the past two years, for instance, more than 30 casinos have sprung up in the city of just 160,000 people, leading to an upsurge in drunken behavior, violence, and organized crime.

The thousands of Chinese workers and developers who have since settled in Sihanoukville have also caused a great deal of resentment amongst locals, while a corresponding escalation in property prices has further resulted in Cambodians being displaced or evicted from their homes and businesses. Summing up the present situation in Sihanoukville, a Bloomberg post pointed out that instead of jobs and prosperity, so far locals “have won increased crime, higher housing costs and more than a little ethnic tension.”

Cambodia’s Casino Industry

Cambodia is one the world’s poorest countries, with its small $20 billion economy dominated by subsistence farmers and garment-makers, who on average earn just $128 per month. Recently the country has also started embracing tourism as a valuable source of alternate income, with the industry benefiting from the country sharing borders with other popular destinations such as Vietnam, Laos, Thailand and Myanmar.

All of these countries, however, have gambling bans in place, and hoping to take advantage of the situation, Cambodia has been building foreigner only casinos on its borders since the 1990s. Furthermore, it has even set up “casino strips” between border checkpoints enabling foreign visitors to gamble and return home without having officially crossed the Cambodian checkpoint.

Belt and Road initiative of 2013

In 2013, Chinese President Xi Jinping launched his ‘Belt and Road‘ initiative that aimed to invest $1 trillion in infrastructure projects across Asia and Africa, including building pipelines, ports, and bridges. The main focus of the initiative was on parts of Asia and Africa, with its intention being to create a modern Silk Road that China hopes will usher in “a new era of globalization”.

One of the locations that qualified for funding was Cambodia’s port city of Sihanoukville, and in 2016 Beijing pumped $1.1 billion into the city, representing a sizeable investment for such a poor country. Before long, tax-free economic zones were introduced to entice Chinese investments, leading to the present situation in which hundreds of Chinese-owned factories and three dozen casinos have been built, together employing hundreds of thousands of workers from the Chinese Mainland.

Social Upheaval and Crime

As factories and casinos spring up across Sihanoukville, locals have complained that their city has now changed beyond all recognition, and is beginning to resemble just another province of China. The air is increasingly saturated with smog and dust, while most of the visitors to the city’s casinos and restaurants are Chinese, meaning the majority of signs around these establishments are now written in Mandarin.

Crime has also soared over the past couple of years as casinos and their unregulated online proxies do not have sufficient anti-money laundering measures and checks in place. According to a report released last year by the Asia/Pacific Group on Money Laundering, this had led to the Cambodian economy being at medium-high risk from financial crimes and money laundering. Meanwhile, incidences of drunkenness and violent crimes are on the increase, while a dramatic demographic shift has led to more opportunities for Chinese mafia to circumvent lax local security and commit serious crimes, including kidnapping Chinese investors. As Governor Yun Min commented in the Bloomberg article:

“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.”

Despite the social upheaval, however, Cambodia Prime Minister Hun Sen has called upon local residents to be patient, explaining that Sihanoukville will see most of its projects completed by 2020, after which it should be transformed into a thriving economic and tourist megalopolis. That’s the plan, at least!