Shoppers at Paragon Cambodia can kick off a shopping spree by sipping a $2 cappuccino on a red-velvety couch in the mall’s lobby.
Then, browse the $43 bottles of age-defying face lotion on their way upstairs to check out a variety of electronic massage chairs-now on sale for a trifling $1,500.
Catering to wealthy and middle-class Cambodians-a segment of the population that experts say is growing with considerable speed-Phnom Penh’s new Paragon shopping mall offers high-end, brand name products, along with the image attached to the luxury shopping centers of Bangkok, Hong Kong and Singapore.
But is Cambodia-where the World Bank says 35 percent of the population lives on less than $0.50 a day-ready for the kinds of malls that pepper Causeway Bay in Hong Kong or sprout up in Bangkok’s Siam Square?
Paragon’s General Manager Or Suthy isn’t sure yet whether the $6-million mall, located on Street 214, will be a success, but he said last month that he feels confident.
“There are lots of people in Cambodia who can afford to shop here…middle class people and also rich people,” Or Suthy said.
Since its grand opening on Feb 11, Paragon attracts an average of 2,000 visitors daily and rakes in an average of $7,000 to $10,000 each day.
The last three years have seen tremendous growth in Cambodia’s middle class, which is predominately concentrated in three main locations: Phnom Penh, Siem Reap town and Sihanoukville, said Tim Smyth, managing director of market research firm Indochina Research.
About 1.8 million people live in these three centers, he said.
Three years ago, Cambodia’s middle class, which is broadly defined as households that make more than $380 per month, made up only 8 percent of that 1.8 million population. But today in the three areas, that middle class has grown to 17 percent, Smyth said, while the wealthiest section of makes up 2 percent of that population.
In the next three to five years, the number of wealthy and middle class people in the three areas will likely double, he added.
“There is absolutely a growing middle class,” Smyth said. “They are buying more motorbikes, cars and houses. They are putting air-conditioners in their homes and refrigerators. They may be buying a lipstick for $1.50 but they are looking at one for $25.”
But such growth is not immediately translating into substantially fewer poor people, said Smyth-that’s something that will take more time.
There need to be enough members of the middle class putting their money back into the economy, buying a second house or expanding their small business and employing more Cambodians as they do, he said.
“We’ve seen it in Vietnam in these last three years,” said Smyth, “but they had 10 years of development before that.”
“In Cambodia, in the next three to five years, the critical mass will be large enough to make a real dent in poverty,” Smyth predicted.
Bretton Sciaroni, chairman of the International Business Club, said that in the current business climate, Paragon Cambodia appears to be a smart investment. Many wealthier Cambodians are becoming frustrated by the lack of shopping options at home, Sciaroni said.
“There is enough disposable income among a broad enough base of people to justify this kind of investment,” he said.
But it will still be some time before Cambodia sees the kind of boom going on in Vietnam, said Kang Chandararot, director of the Cambodian Institute for Development Study.
“There need to be major structural changes. We can’t have infrastructure clustered in certain locations…. Decentralization needs to happen faster and address the needs of the local people more accurately,” he said.
Long Try, branch manager of the sprawling K-four electronics store on Paragon’s third floor, said business has been comparatively slow since the mall’s grand opening on Feb 11.
Nonetheless, the store makes an average of $1,000 a day, offering products like a 55-inch high-definition plasma TV for just under $7,000.
Sun Sorya, 26, who owns the clothing store Just Love Me on the second floor, said she can make up to $1,000 on a good day but usually averages between $300 and $400.
“Sure, this is a modern day shopping center, but the standard of living in Cambodia is still low,” she said.
Te Soat Kesor, the 20-year-old daughter of a Culture Ministry official, said last month that she has been to Paragon a few times, mainly looking for clothes.
Toting a shopping bag stuffed with her most recent purchases-a cumulative $28-Te Soat Kesor stood near a kiosk with pamphlets explaining how you can combine plastic surgery with a fabulous vacation abroad.
“I don’t think I’m rich,” she said, “just middle class.”
(Additional reporting Chhay Channyda and Kim Chan)
