Cambodian commodities kingpin Mong Reththy is poised to expand his business empire into port development with the construction of a $13 million port in Koh Kong province, a venture aimed at replicating Cambodia’s hugely successful “open skies” policy on the high seas.
In December, Minister of Commerce Cham Prasidh announced a government plan to nurture an “open seas” policy similar to the government’s 1998 “open skies” policy, which allows foreign airlines to fly directly into the popular tourist hub of Siem Reap, as well as other provincial airports, without first landing in Phnom Penh.
Around a dozen major airlines swooped on the opportunity to ferry foreign tourists to the home of the Angkor Wat temples, and Siem Reap has since become Cambodia’s largest tourist destination—a magnet for foreign investment and a hub for soaking up the disposable income of foreign visitors.
Government planners now say that opening more ports on Cambodia’s modestly sized coastline will lead to a boom in shipping and the import-export business.
The boom could include Cambodian commodities such as rice, rubber, tapioca, palm oil, cassava powder and livestock—sectors that business tycoon Mong Reththy, head of the Mong Reththy Group, has come to dominate in the past decade.
A license to build the $13 million port on a 200-hectare site in the Sre Ambel district of Koh Kong province was granted by the Council of Development for Cambodia and is planned for opening in mid-2004, Mong Reththy said.
“The finances come from my company and I will pay the construction costs step by step,” Mong Reththy said.
“Okhna Mong Port” will be placed under the management of government authorities and will be run and operated in the same manner as the deep seaport in nearby Sihanoukville, Mong Reththy said.
“All kind of taxes will be paid to the government. Without government management we would not build this port,” he said.
Unlike nearby Sihanoukville, though, Okhna Mong Port will cater to smaller vessels rather than the international cargo liners that dock at Sihanoukville.
Up to four vessels at a time will be able to dock at the 3- to 3.4-meter high pier and two large storage warehouses will also be constructed to house the mainly agro-produce, such as the livestock, fertilizer, agricultural equipment and construction materials that are expected to frequent the port, he said.
And Mong Reththy believes he’s got a jump on a growing market.
In the last two months, Mong Reththy said he has exported 2,000 cows and water buffaloes to countries in the region.
Adding a port to his formidable commodities trading empire, Mong Reththy believes his $13 million investment is a wise one.
He intends to export more commodities, and will also take a share of the storage and unloading fees for other customers who use the port.
As the country’s leading tycoon, Mong Reththy controls the lion’s share of commodities production and export, but being a businessman in often-turbulent Cambodia, Mong Reththy has not been immune from controversy.
In early 1997, Interior Ministry police discovered seven tons of marijuana stashed inside two shipping containers of rubber in Sihanoukville port. The marijuana, bound for Sri Lanka, was being smuggled on a forged export permit issued to the Mong Reththy Import-Export and Construction Co Ltd.
Mong Reththy was then an aide to then second-prime minister Hun Sen, and the accusation of his involvement in smuggling came at a time of serious political confrontations between Hun Sen and then first prime minister Prince Norodom Ranariddh.
Both Hun Sen and National Police Director-General Hok Lundy said efforts to link Mong Reththy to drug smuggling were politically motivated and export permits were falsified.
Mong Reththy was cleared of any involvement.
The economic benefits of increased sea trade are obvious in cash-strapped Cambodia. But port developments, and the future increase in cargo entering and leaving Cambodia, must be coupled with proper law enforcement to head-off a possible increase in cross-border smuggling, officials said.
Cambodia is considered a significant transit-point for regional and international drug shipments, while the widespread smuggling of retail goods has long been fingered as an impediment to foreign investment in Cambodia.
Foreign investors say they cannot compete with cut-price smuggled goods that enter the country free from the levies of official government taxation.
“[The new port initiative] won’t be a worry provided the government makes for adequate law enforcement safe guards,” said Graham Shaw of the UN Drugs and Crime office in Phnom Penh.
“If the government makes provisions for customs, immigration and police, it should not be a problem,” Shaw said.
However, Shaw warned that a surge in new ports could overwhelm existing law enforcement capabilities, which are “getting better” but still lack experience and specialized training to deal with sophisticated smuggling networks
Unveiling the open seas initiative in December, Cham Prasidh said he wanted to promote international sea and river links with Cambodia and encourage domestic port construction in Kampot and Koh Kong provinces.
Cham Prasidh also said that the government will be running the customs, taxation and management of Okhna Mong Port. Mong Reththy was just the investor, Cham Prasidh said.
Sa Sambo, Administration Department director at the CDC, said the council has contacted the Ministry of Public Works and Transportation, Koh Kong provincial authorities, the Ministry of Environment and others to assess the new port’s policy.
The aim is to develop a subdecree governing the development of domestic ports, which will fall under the jurisdiction of the Council of Minister, Sa Sambo said.
Officials at Sihanoukville, the country’s only deep-sea port, said they would reserve judgment on the benefits of increased competition in the port business, a niche market they currently monopolize.
Lou Kim Chhun, director general of Sihanoukville port, said he knew nothing of the Okhna Mong Port development project.
“I do not know what kind of port is will be: agricultural goods or petroleum? So it is hard to decide if it will be good or bad for economic development,” Lou Kim Chhun said.
Repeating a quote from Prime Minister Hun Sen, Lou Kim Chhun reiterated that, “Sihanoukville is the dragon head” for Cambodian development.
But Koh Kong Governor Yuth Phouthang was already adding up the new port’s future benefits to his province.
“I think the port will give jobs to people,” Yuth Phouthang said.
And sharing in the services offered by the Sihanoukville international port will increase trade in his undeveloped province, he said.
(Additional reporting by Kevin Doyle)