A deadly building collapse in Sihanoukville, Cambodia could call into question the recent influx of Chinese-backed development and also a flood of new casino licenses.
Prime Minister Hun Sen has ordered a review of foreign-backed construction projects in the coastal resort city, which could lead to “heightened” inspections and a “slower approval process” for casino projects in that community.
Andrew Klebanow, senior partner at Global Market Advisors told GGRAsia that more than 80 gaming permits have been granted in Sihanoukville in recent months, authorizing conventional casino operations and other types of gaming, including the live online streaming of games to overseas customers. Most of the schemes are said to involve Chinese money and are aimed at Chinese consumers.
Seven people, including five Chinese nationals, have been charged with manslaughter in the disaster, which killed 28 construction workers, many of whom were asleep on the property at the time.
“The immediate effect on the casino resorts that are currently under construction is a heightened level of inspections and a slower approval process,” Klebanow said. However, he added, “While completion dates will likely be postponed, those builders that have long adhered to high safety standards should not be materially affected. Those builders that have a lesser regard for safety may find their projects delayed even longer. Hopefully, this event will lead to better adherence to safety regulations.”
In the aftermath of the collapse, Nhim Vanda, deputy director of the National Committee on Disaster Management was fired and Yun Min, governor of Preah Sihanouk Province, tendered his resignation.
The Phnom Penh Post reported that the authorities repeatedly tried to stop the building’s construction, but its owner, described as a Chinese national, did not comply.
Such tragedies “can occur anywhere when safety is compromised to build quickly in order to meet market demand,” said Klebanow. “I do not believe that this event will slow down the issuance of licenses. Market forces will probably dictate the process as developers evaluate projected future demand for gaming in the region.”
GMA partner Brendan Bussmann told GGRAsia that Cambodia remains “a very robust market that will continue to see growth,” though the collapse “puts a greater eye on the construction of facilities as the market expands. This also heightens some of the culture divide that continues to grow as outsider developers look to enter into the market.”
As many as 90 percent of businesses in Sihanoukville are owned by Chinese nationals, according to provincial authorities. Of 156 hotels and guest houses in the region, 150 are Chinese-owned, and 48 of 62 casinos are backed by Chinese investors.
Pacific Asia Travel Association President Thourn Sinan told the Post that the disproportion is cause for concern. “I believe it is good if investments are multinational (but) investors from one country should not exceed 50 percent investment in (another) market. Investors from one country taking control of such large investments will have more negative effects than positive.”
In related news, the Cambodian government has announced that it will crack down on money laundering in the nation. “The police’s measures have not been effective. We are going to strengthen our enforcement, and not only at border crossings,” police spokesman Chhay Kim Khoeun said.
In June, Cambodia’s Ministry of Interior Central Security Department Director and Deputy National Police Chief Dy Vichea told the newspaper that money laundering has increased. About $4 million in cash has been seized at Phnom Penh International Airport so far this year, and some $10 million in questionable transactions have been detected being processed through local banks.
