Cambodia’s Airport Dreams Stall as Chinese Money Dries Up

Courtesy of Nikkei Asia, an update on Cambodia’s Chinese-funded airport dreams:

For years, an airport has been slated for construction in Cambodia’s Mondulkiri province, but all that exists are concrete fence posts across the razed farmlands of an indigenous community, cleared for a runway that may never get built.

Remote Mondulkiri was an odd choice for a multimillion-dollar new airport, observers say. Bordering Vietnam, the region is one of Cambodia’s most sparsely populated, with a provincial capital of just over 13,000 residents, and few tourist draws. Making matters worse, a key Chinese funder has pulled out of the project, first announced in 2019.

The unfinished site is just one of several Cambodian airports in various stages of halting development and with questionable economic viability, especially after Chinese investors walked away in recent years and tourism has struggled to return to pre-pandemic levels. As these projects inch forward, local communities say they have been pushed off their land to make way for construction.

“I don’t see any other economic foundations behind it,” Ou Virak, founder of the Cambodian think tank Future Forum, said of the Mondulkiri project. “I don’t see any hope for domestic demand, for tourists to suddenly fly in.”

With Beijing’s investment in its Belt and Road Initiative (BRI) slowing down, Cambodia’s new Prime Minister Hun Manet this month appealed for Chinese companies to invest in other major infrastructure projects in the country.

Political interests have often outweighed economic ones in advancing costly Chinese-funded infrastructure in Cambodia, analysts said. The Southeast Asian nation has received billions of dollars in BRI infrastructure.

“Someone has to wonder whether politics and security plays a bigger role than economic returns, in which case the cooling-off [of Chinese investment] might be all of the above: The money is drying up, the political and security considerations cannot alone drive the decision-making,” said Sophal Ear, a political science professor at Arizona State University.

The ultimate payoff for potential investors is far from clear. Even the newly opened BRI-funded $1.1 billion airport in Siem Reap, triple the size of the old airport and constructed by Chinese companies on a build-operate-transfer financing model, has not yet catalyzed a return to the 2019 tourism level despite the area being home to the Angkor Wat temple complex.

The global economic database CEIC reported 1.65 million visitors arriving at the old Siem Reap airport in 2019. The rate of domestic and international flights has increased compared to last year, but it is still lagging — there were just 1.86 million foreign tourist arrivals in 2023 across all three of the country’s main airports, including in the capital, Phnom Penh, and coastal Sihanoukville.

If top tourist destination Siem Reap is struggling, there is little reason to be optimistic for airports servicing more far-flung locations like Mondulkiri unless the government can make good on plans to transform it into a special economic zone with a casino hub.

By 2022, Power China had withdrawn from an $80 million deal to develop the Mondulkiri airport. Cambodian authorities have said they are looking for new funding partners, and the government signed a deal in January with a consortium of investors to conduct a feasibility study.

A new airport for Phnom Penh also lost Chinese funding in 2021, after a state-owned company bailed on bankrolling most of the $1.5 billion price tag, leaving Cambodian partner Overseas Cambodia Investment Corp. (OCIC) to issue bonds and invest its own money to secure less than half that amount in funding, according to the company’s website. Civil Aviation spokesperson Sin Chanserivutha told Nikkei Asia that the airport has since gained additional funding and is more than halfway complete.

While the projects were billed as a way to boost local development, these unfinished airports have instead prompted land conflicts and speculation.

Cambodia’s master tourism plan for Mondulkiri heralds the promotion of ethnic minority culture, yet indigenous Bunong residents living around the site said they have been excluded from obtaining ownership of their traditional lands.

“The airport project affects many families whose land overlaps with it,” said Srey Vong, a resident of a Bunong village near the site.

Like dozens of his neighbors, Vong said he was pressured into selling most of his farmland in the past few years for construction of the 300-hectare airport.

In Phnom Penh, local media have reported that communities have faced violence, arrests and evictions. Residents near the construction site told Nikkei they are on the verge of being kicked out of their homes without receiving fair compensation. The airport’s funder, OCIC, did not respond to requests for comment.

“The authorities pledged to give us new land, but in fact until now nothing has happened,” said one resident, Som Chanthy.

The Civil Aviation spokesperson said authorities were working to resolve the problems of Chanthy and his neighbors.

These same social issues have emerged at a proposed airport on the island beach destination of Koh Rong. Cambodian tycoon Kith Meng’s conglomerate, Royal Group, and the Chinese-owned company Cambodian Lan Cang Jiang Engineering reached a deal in January with the government to move forward on a long-delayed $300 million airport and resort development project covering one-fifth of the 78-square-kilometer island. The airport’s capacity is slated for more than a quarter of a million passengers annually, with an emphasis on high-end tourism.

“It’s up to the investors’ feelings,” Civil Aviation spokesperson Chanserivutha said of the airport’s viability. “We just accommodate the private investor, what they want.”

Nearby Sihanoukville already has its own airport, which received just 6,200 passengers in January. Tourism to Cambodia’s coast has plummeted, in part due to fears of organized crime targeting Chinese nationals. Royal Group’s Meng himself has allegedly been linked to at least one scam compound in Sihanoukville, according to a watchdog on human trafficking, Cyber Scam Monitor. Royal Group did not respond to questions from Nikkei.

Cambodian officials have favorably likened the Koh Rong airport to the BRI-funded Dara Sakor airport and development project in a massive concession granted to a Chinese-owned company in 2008 across the bay from Sihanoukville. But, more than 15 years later, Dara Sakor’s airport remains unfinished despite prompting mass evictions.

Koh Rong villagers say Royal Group is forcing them off their land, a claim denied by the Civil Aviation spokesperson, who said they lacked legal ownership.

“Every night I cannot sleep,” one Koh Rong resident said. “They told me that they can dismantle my house and fill in the land at any time.”



This entry was posted on Friday, February 23rd, 2024 at 12:57 am and is filed under Cambodia, China, New Silk Road.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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