Travel Notes: Cambodia’s Southern Seaboard

By Douglas Clayton | June 2009

One of Cambodia’s future growth drivers will be the development of its 440 km virgin coastline. We recently visited Sihanoukville to get an update on the opportunities there; here are our travel notes.

After the three hour afternoon drive from Phnom Penh we head directly to our favorite local restaurant to watch the sun set over the water while feasting on Kampot pepper crabs and listening to the mesmerizing waves. Tiny fishing craft float in to unload their catches; one boat heads directly to our restaurant for just-in-time delivery service. Offshore two big ships are visible, the semi-retired cruise ship “Jupiter” which reportedly will one day ferry tourists to Vietnam’s nearby Phu Quoc Island, and a massive sand carrier anchored on the horizon. Sand dredging has become Cambodia’s latest extraction bonanza, encouraged by unlimited-quantity buy orders from affluent Singapore which can only expand its island territory by filling in the sea.

After dinner we check in to our $25 room at a nice new boutique hotel on Victory Hill. It seems we’re the only guests; this is low season is a slow year.

Next morning our Cambodian friend leads us down unpaved roads to a river where a “long-tail” boat awaits. Cambodian VIPs such as our host bring a small military escort when they travel upcountry; joining us are two soldiers bearing AK-47s, one wearing a canvas sling with 3 spare banana clips of ammo. Over the past two years we have never felt the least bit threatened in Cambodia, but have learned to appreciate soldiers’ dual role as umbrella bearers; Cambodia’s mid-day sun can get scorching.

Our boat glides through a vast, pristine brackish water ecosystem, with both riverbanks densely barricaded with mangrove trees with gnarly root systems spilling into the water. The only sign of human habitation we pass are a handful of patched-together shacks on stilts, with a couple rickety fishing boats tied alongside. Cheerful smiles and waves from the moms and kids to our armed vessel.

Our host shares his ideas to develop an eco-resort within this natural paradise (which a previous owner had brazenly earmarked for industrial use). Then we climb back into our vehicle convoy to explore his hundreds of hectares of land behind the mangroves. The tour concludes with a visit to the hut of the local family serving as the land’s watchmen; they report it’s pretty lonely living out there and request a second caretaker family, which our host promises to arrange. On the way out, our vehicle’s driver misjudges a washed out river crossing and suddenly we are mired in the mud, four wheels spinning helplessly. The soldiers pull out their cellphones – which thankfully work even in this remote area, and within a half hour we have a dozen men standing around, hands on hips but with no useful equipment. Finally a villager appears on a motorbike carrying a flimsy clothesline “tow rope”, and we decide to take a stroll rather than witness the debacle we sense will unfold. However when we return a bit later we find they have somehow rigged up the thin rope via a long board to another truck and have managed to extract the stranded vehicle from the mud. Score one for local knowledge.

We drive through kilometers of agricultural land and observe that the most flourishing crop there is acacia, a fast growing tree chipped for pulp or biomass power. The trees are planted close together and can quickly convert denuded land into a thick mono-crop forest. We travel along the new roads being built along the coast which essentially link Sihanoukville Port to the private Mong Reththy pier further north; some portions sport utility poles bearing a single internet cable but not power lines.

Another local business group, Attwood, gives us an interesting tour of their ambitious $380 million deep sea port project located in Steung Hov a fishing village close to Sihanoukville. We watch the backhoe operators gently nestle boulders into the foundation matrix of the Phase 1 general cargo pier. The rocks are being blasted out of a nearby hill that Attwood has decided to simply relocate into the sea. The managers explain their plans to reclaim a huge amount of industrial estate land and create Cambodia’s deepest seaport, which would allow larger sized ships to berth and lower the cost of freight transport. Securing funding for a project of this magnitude seems daunting, but Attwood is forging ahead with Phase 1 and hopes to berth the first cargo barges within a year. There is also talk of a sizable coal-fired power plant on the back corner of the project site; the coal would be imported through the new port.

We pass an oil refinery north of Sihanoukville which seems to have suddenly appeared without much fanfare. There were reports a while back that China National Chemical Engineering Group would build a $400 million, 40,000 barrels per day refinery in Sihanoukville; presumably this is its incarnation. But the nearly complete project now looks oddly abandoned, the driveway is chained and the guard is dozing. Three different sources give us three different explanations: (1) they are now waiting for crude oil to be extracted in Cambodia, which has been delayed, or (2) it’s a second-hand plant that was banned in China and dumped in Cambodia but now banned here as well, or (3) after building it they realized the water offshore isn’t deep enough to bring in a tanker, even with a long pier, oops. We remain puzzled.

We head back to Sihanoukville’s downtown. Sihanoukville is a 1960s creation and lacks the crumbling French Colonial mansions and towering trees that make many Cambodian towns so appealing. Still, there are a few modernist 1960s icons like the Independence Hotel or the derelict train station, which we discovered to be partially flooded. Most of the town is of more recent vintage, with building designs ranging from functional to tasteless. But Sihanoukville remains the commercial center of the Cambodia coastline with over 10 banks, 3 casinos, two 4-star hotels, dozens of guest houses and restaurants, and even a few traffic lights to bottle up the light traffic.

The once booming real estate market has taken slumped here, like everywhere. The big garish Japan-funded Emario Shohan Hotel & Resort overwhelming Hawaii Beach seems about 75% complete but the finish-up construction crew looks sparse. Nearby, an even smaller squad of workers toils on the 900 meter bridge project to link nearby Snake Island to the mainland; the first few piles are in and easy to spot as they tower 32 meters above the water. The $25 million bridge is part of a planned $300 million development of Snake Island; no one seems quite sure who is really behind the project which was conceived by Russians and has a Chinese contractor. The local Sokimex Group’s mammoth 54 hectare Occheuteal beach development project (where a golf course, casino, and several 16 story towers are planned) remains a fenced bare lot, as does the future $33 million Japan-sponsored Sihanoukville Special Economic Zone near the Port. The only project freshly launched is the Australian-owned Brocon Group’s Song Saa Island resort; 5 over-the-water villas are offered for sale at $450,000 each and the designs look nice. Further out, Club Med says they plan to launch a resort somewhere around Sihanoukville in 3 years.

But more significant than real estate, a major upgrade to Sihanoukville’s infrastructure is getting underway. Sihanoukville Port now has new, faster Japanese cranes handling its container traffic and further investment is planned. We were happy to see crews upgrading the rough mountain pass section of the Phnom Penh-Sihanoukville highway. Sihanoukville’s dormant airport and railroad line now each have credible plans for reactivation, and either of those projects could have a major impact on the coastal economy.

We finish our trip with memorable hikes through several large privately-owned beachfront areas which are currently difficult to access and blissfully tourist-free. These sites are very scenic and would certainly make spectacular resort locations, if someone could deliver enough people there. Today we still see more stray cows than humans on most of Cambodia’s white sand beaches; this reminds us of Phuket, Thailand when we first visited it before it blossomed into Southeast Asia’s swankiest beach destination. Here in Sihanoukville, we can sense the change is inevitable, only the timing is uncertain. As always, the investor’s task is to get the timing right.

Sihanoukville's Sokha Beach

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