Having made his fortune in the petroleum business, Sokimex Group founder Sok Kong has since diversified into the tourism industry, garment factories, housing developments and even a helicopter company. This month, the 60-year-old Prey Veng province native announced hugely ambitious development plans for Sihanoukville, Bokor Mountain and Phnom Penh. If successful, they would consolidate his position as one of the country’s premier businessman.
In an interview with The Cambodia Daily’s Yun Samean and Fergal Quinn, Sok Kong reflected on his success so far and his plans for the future.
Q: What has been your business model?
A: I do it my own way. It is hard to follow examples set in developed countries, as the business climate is so different. They have human resources and other things that we don’t. They can get big loans all the time. Here it is more difficult. Here we must develop step by step, hiring experts from the outside all the time.
Q: How did you start out, and where did you get your business education?
A: No one taught me; I learned by myself as I went along. I began my business around 1980, just a small rubber business producing motorbike and plastic tires. My initial capital was 1 chi [of gold—around $100 today]. At that time with the sanctions imposed on Cambodia, there were a lot of difficulties. But we grew and by the time we got to the 1990s we had built up our capital to $100,000.
We started selling gasoline to the government, and later we sold to Untac. We made a profit from the Untac time and increased our capital. I extended my business interests to opening a garment factory in 1994 and I have seen the garment industry rise. We had two factories, but now we have only one in Tuol Kok [district, Phnom Penh]. The businesses are going well at the moment. We have reached a point where we can say that we have succeeded.
Q: Why have you limited your involvement in the garment sector?
A: It was too much work to focus on the hotel business and the garment factory business at the same time, so we focused on the tourism sector. The garment sector is a good business but primarily the two aspects to my business now are Sokimex and the Sokha Hotel Group.
Q: What makes the tourism sector so attractive?
A: We have decided that our investment priority now is in tourism and hotels. This was not a blind decision. We prepared for it well in advance. We calculate that in the future tourist numbers will continue to increase.
Q: Your plans for Bokor have generated a lot of curiosity.
A: We plan to provide a basic infrastructure and initial facilities that will attract more investors. Eventually it will become a city.
Q: Some say it will be impossible to make a profit from such a venture, given how big an investment the Bokor project will require.
A: It is true that some anticipate that. But I believe that if you don’t lose to begin with, you will never make a profit. This is the first stage, which will open the way for other investors. We decided we must do it. Our investment will help provide employment and improve the living standards of people in that area. Already, we see an effect. The land price in the area that had been $10 per square meter has now gone up to $60. Our decision is the correct one. Even if we do lose out the people will still benefit from what we are doing.
Q: Do you get loans to finance your projects?
A: Yes. The project in Bokor for example, we had to get some bank loans to help finance this. As we make profits, we extend. Sokha Hotel Group and Sokimex are making a profit.
Q: Projects like Bokor represent a risk then?
A: It is the biggest risk, the most ambitious plan we have undertaken.
Q: Does that worry you?
A: No. I know we must lose first to make the benefits. We won’t lose with Bokor. What we have planned will be of the highest quality.
Q: Is it true that to do business in Cambodia, the main thing required are the right political connections?
A: That is not correct. As a businessman, it is important to get to know government officials but at the same time we must have the money to invest. I must build up the connections, but I need money to do the business. Without money you are no good.
Q: There have been suggestions that your company has enjoyed unfair advantages.
A: It is confusing for me that people would say this. The fact is we go to try and develop places that no one else dared to because they are afraid of losing money. But we go in there and we make a success of it and people say we got an unfair advantage.
In 1996, the government sold off the gasoline storage stations. We offered more money than other companies for them because we saw the potential. On O’Chheuteal [Beach in Sihanoukville], another company owned the concession for a long time and did nothing. But we will turn our plans into action…. When [National Road 3] is finished the price of land at Bokor will go up and everyone will see how. They may say that I am corrupt. But it was I who took the risk.
Q: Have you ever paid bribes?
A: My company has never bribed anyone. We only sponsor some schools, hospitals and donate to the Red Cross. We legally and correctly pay all the required taxes to the government. I don’t know how to pay a bribe to a government official. We work with computer technology and all the correct auditing and inspection procedures are followed. I don’t know about how it works for smaller companies.
Q: In what way does political stability help the business climate in Cambodia?
A: Without the degree of stability we have now, we could not consider projects like this. Stability attracts more investors. But ultimately, it’s all about economics and infrastructure. Under this government the economy has improved.
Q: What more could be done to help commerce thrive in Cambodia?
A: In a developing country like Cambodia there are obviously weak points. There are issues that if sorted out would help business a great deal-for example, the establishment of a commercial court. When there is a business dispute we should be able to complain to the commercial court. If we had this, it would help to attract more investors to Cambodia.
Q: How successful has the first Sokha beach resort in Sihanoukville been?
A: We lost money for three years, and last year we made a small profit. Next year we hope to get a bigger benefit. Of course, I am pleased with the project. If I weren’t, I would not extend my interests in Sihanoukville the way I am planning.
Q: There have been fears that the development at O’Chheuteal will mean the public will have to pay to use the beach there.
A: There has been some wrong information published on this issue. The beach will continue to be free for use by the public. All the people can enjoy it, but if they use our services, such as towels, loungers, etc, then of course they will have to pay.
Q: When will the new Sihanoukville project start and how much will it cost?
A: It is due to begin in June of this year, with the Chroy Changva project in Phnom Penh [starting] around that time also. In terms of the cost of these two projects, we do not know yet. We shall have a full budget breakdown next month.
Q: Is Sihanoukville in general progressing in a healthy manner?
A: A water system is a big concern. There is not enough fresh water. We have good beaches and a good airport but a good water system must be provided for the public, and for our investors.
Q: Is over-development and pollution a risk in places like Sihanoukville and Bokor?
A: It is true when development takes place, for example in Phuket and Pattaya in Thailand, some pollution and destruction of the environment can take place. This is why I have asked the Ministry of Environment to ensure that new investors in Sihanoukville and Bokor comply with the correct environmental procedures.
We have a good record in this regard. My company has taken all possible precautions to protect the environment at Sokha [beach]. We must look to the future. If we pollute these places, we lose our tourists. To pollute these places from an investor’s point of view would be the equivalent of burning your own house down.
Q: What are your plans for the future? Will Sokha/Sokimex expand into foreign markets?
A: For now we must focus on local investment and continue to make sure the company grows within Cambodia. When the security market is launched in 2009 and the government issues bonds, it could generate more capital for us, and perhaps make foreign expansion possible. If we make enough money, we will keep expanding.
Q: Will you ever get involved in politics?
A: I just want to do business…. I have no political ambitions.
Q: What do want to leave as your legacy?
A: I like development, building, etc. I want the next generation to say, “Sok Kong built this and that building.” It’s not about making money for me. You can’t take money with you when you die. I want to pass on a good reputation to my children.