Former Communists Embrace the Market Economy in Malai District

Banteay meanchey province – As one of the last living monuments of the Khmer Rouge, the market in Malai district town is more muddy than victorious. The slightest rain transforms the dirt lanes that wind between stalls into a slalom of slick mud. The merchandise-curving metal knives, rice, coiled rope-is as hard as the town itself. Around dusk, bottle rocket fireworks start popping off, and soon enough the streets are empty. The market was founded-and is still dominated-by some of the leading minds of the Khmer Rouge, men who oversaw the most virulent anti-capitalist revolution in history, abolishing even money itself.

Today, they are shareholders, and the market, once a collective, resembles a corporation.

The Malai market is just one example of how former Khmer Rouge members have accommodated themselves, with mixed success, to the demands of what they call the “new regime”: Capitalism.

Their changing fortunes reflect changes in communism, which with the collapse of the Soviet bloc and the rise of China, has diminished as an ideology. But the social and economic ties now being forged in former Khmer Rouge strongholds are also a quiet reminder that more than a decade after integration, the Khmer Rouge maintain loose but potent-and potentially political-networks.

The market in Malai is one of few remaining vestiges of Democratic National United Movement, or DNUM, the near-defunct organization founded by former Khmer Rouge foreign minister Ieng Sary on the eve of his 1996 defection to the Cambodian government.

Like DNUM itself, the Malai market has fallen on hard times, but for many former Khmer Rouge in the area, it remains a potent symbol of their revolution. “We should keep it for posterity,” said Long Norin, who worked at the Khmer Rouge’s Foreign Affairs Ministry under Ieng Sary and is now the secretary general of DNUM. “We struggled for a long time. People lost legs and arms. We should keep this market as a symbol.”

Historians say Ieng Sary’s defection effectively broke the back of the Khmer Rouge resistance. DNUM did its best to ease the transition.

“We tried to explain that now we have a new regime,” Long Norin recalled. “We tried to teach them to support themselves.”

He said they parceled out land to the landless and advised farmers on how to better their crop yields. From 1996 to 2001, DNUM printed a quarterly magazine called Pka Rich, or Flower Blossoming, filling it with agricultural advice and profiles of successful farmers, Long Norin said.

The group also held annual congresses in Pailin municipality or Malai, which were attended by some 200 local DNUM representatives from across the country. “In meetings, leaders instructed them to keep stability and peace,” Long Norin said. “We told them how to make a living, how to support their families. It’s not like before. We have a new regime. In the old regime, everything came from Angkar, from the organization. In the new regime, we must support ourselves, and if you try harder you get more. This was the instruction in the congress.”

At first, to the government’s distress, the group also sought an overt political role, naming governors, deputy governors, and district officials in Malai and Pailin, as well as Kamrieng and Sampov Loun districts in Battambang province, Long Norin said.

“The government was not happy,” he said. “They accused us of wanting to make autonomous zones. We explained that we didn’t want to make autonomous zones. We wanted to appoint the right cadres,” he said.

In the end, the government overruled DNUM and appointed its own roster of local officials.

“The structure was destroyed,” Long Norin said. “The government doesn’t know who the right people are,” he added.

DNUM, however, continued holding annual congresses until 2003, when it ran out of money, according to Long Norin. “There’s no activity because there are no funds,” he said.

But there is another story to explain the demise of DNUM.

According to one man who was present at the group’s final congress who spoke on condition of anonymity, it was an unexpected and explosive speech that hastened the group’s collapse.

Mey Makk, who is now the deputy governor of Pailin and a CPP member, stood up and said that former Khmer Rouge head of state Khieu Samphan, Brother Number Two Nuon Chea and Ieng Sary be tried, he said.

“Everyone was very surprised,” the source recalled in an interview late last month. “We didn’t know why he wanted to cause a problem and end this movement.”

Ieng Sary presided over that last meeting, which was held in Pailin and attended by about 200 former Khmer Rouge members, according to the source. “Ieng Sary’s wife [Ieng Thirith] got up and called other people to make him stop talking,” he said. The meeting was cut short after 30 minutes, he said. “It damaged Ieng Sary’s reputation,” he added.

In an interview this month, Mey Makk confirmed that he had said at the congress that Ieng Sary, Khieu Samphan, and Nuon Chea should be tried. “I was confused in the meeting,” he said, adding that he had been trying to spark a debate over then-ongoing negotiations with the UN over a tribunal to try top Khmer Rouge Leaders.

“They were disappointed in me,” he said of the leaders whose prosecution he called for. “They withdrew their confidence from me.”

Whatever the reasons, today DNUM is a head without a body. According to Long Norin, he is still secretary-general; Ieng Sary remains its president; Suong Sikoeun, who worked in Ieng Sary’s foreign ministry, is spokesman; Y Chhien, the former Khmer Rouge division commander of Pailin and current Pailin governor, and Sok Pheap, the former Khmer Rouge division commander of Malai, are deputy presidents. But the group no longer holds meetings and there is no emerging generation of leaders.

“There was no structure for a new generation,” Long Norin said. “The CPP has a structure for the new generation. When the old die, a new generation will come and take their place.”

DNUM as an organization may be dead, but its members are not, and they have fanned out across the country to start new associations, which deliver agricultural, economic and political advice. Some even function as de facto banks, making loans and taking deposits.

Today, former DNUM members have founded associations in Pailin, Kamrieng and Veal Veng district in Pursat province.

“The members of DNUM created associations to help people,” Long Norin said. “Former Khmer Rouge sometimes meet to discuss village and commune leadership, whether they are good or not, whether they should be changed.”

He also said that he and his old DNUM friends knew before the 2002 commune elections who would be elected as commune chiefs.

“Former Khmer Rouge people always talk,” he said. “If we conclude someone is not a good candidate, we instruct the people to please be careful before voting.”

The trend of association-building began with Tep Khunnal, a former Khmer Rouge diplomat at the UN who married Pol Pot’s widow in 1998 and is now the governor of Malai. In 2001, he banded together with 11 other former Khmer Rouge members and formed the Association for Helping the Farmer, said Som Yen, the group’s executive director. (Som Yen is also the managing director of Malay Trading, an import-export company Tep Khunnal helped found.)

With $10,000 in seed capital, the group began making loans to local farmers, selling them seeds from a Thai agricultural company and buying their crops. The experiment was so successful that they decided to ramp up the operation. Today, thanks in part to an influx of capital from the Rural Development Bank, the association has $1.38 million at its disposal and last year made $650,000 worth of loans in seven districts, Som Yen said.

Both he and Long Norin declined to name the other founding members, who share the association’s profits. The association, which has 12 employees, makes small loans-most are around $500-and charges 2.75 percent in monthly interest, officials said. Som Yen said 6 percent of interest revenue is donated to local communes to build roads and schools and that over 600 families have borrowed money so far.

By way of comparison, Acleda Bank, which began as a donor-funded microfinance institution, charges 3 percent interest a month on loans of $1,500 or less, Acleda President In Channy said.

The farmer association also accepts cash deposits, on which it pays 5 percent in interest a year.

In short, the association operates very much like a bank. But don’t go to Malai and call it a bank.

“Our association is different from a bank,” Som Yen said. “The bank doesn’t care. If you can’t pay, they confiscate your property. We have a duty to help people. We are not like a bank.”

The farmer association accepts land titles and farm equipment as collateral, but Som Yen said the group had never seized land because of default. However, he said that some people had voluntarily sold their land to pay back the debt.

The association allows farmers to repay their loans at harvest time, instead of every month. If their crop fails, they don’t have to pay until the next year.

“Our investment is difficult, it’s like investing with the sky,” Som Yen said. “If it rains, we get money. If not, we can’t make money. A bank says every month, you must pay. We have forgiveness.”

These days, Som Yen also has a salary, something he never aspired to as a young Khmer Rouge soldier. “Before we never had money,” he said. “We just worked on spirit, on the idea,” he said. “The ideal made us dare to die.”

But he sees how the world is changing. Now, he says, “We need money to exchange. We cannot just use ideas like before. Now, it’s globalization. We need money for this.”

Change came to the Malai market in 1992, when DNUM first offered shares in the market, according to Chin Neth, the secretary general of the Malai Market and Trade Office Co.

“After the 1991 Paris Peace Agreements, we wanted to show the world we had an open free market,” he explained.

After integration, in 1996, the market needed even more capital to upgrade and expand, and additional shares were floated. Today, Chin Neth said, there are 30,273 shares outstanding, which are owned by 167 shareholders. Ieng Sary is the largest shareholder, with 3,440 shares, according to Chin Neth. Long Norin, who owns 1,200 shares, is another top shareholder, Chin Neth said.

In many ways the market resembles a corporation. Decisions are taken by shareholder vote, and shares, which cost $1.50 each, pay dividends of $0.09 to 15 cents each quarter. On that basis alone the market is a preposterously good investment, yielding 24 to 40 percent a year, non-compounded.

The secondary market for shares is thin. Just 10 people have sold shares over the years, mostly because they moved out of the area or needed extra money, and the share price remains fixed, Chin Neth said. Ownership is restricted to former members of DNUM.

Ou Soeu, 50, came to Malai in 1999 to sell gold and now runs a small jewelry stall in the market. “I want to have a share in the market too but I can’t. All the former Khmer Rouge have shares. I’m not former Khmer Rouge so I can’t get a share. If they open it again to other people I will do it because I can make some money,” he said.

In recent years, the market has fallen into decline, depressed by drought, poor infrastructure and competition from a market that opened just over the Thai border in 2001, locals say.

“The road is no good,” said Malai vendor Say Chhum. “How can people come to visit here?”

Market officials also said that DNUM did not have titles to the land, a situation they said they were working to rectify.

Also problematic is the fact that most of the goods sold at the market are imported from Thailand, which makes it hard for Cambodian vendors to compete on price.

“At least 2,000 people go to Thailand every Tuesday morning,” said Chin Neth. Counting the 14 cents border crossing fee and the money they spend on merchandise, he estimates capital outflows of $14,285 every week.

Searching for a way to keep that money in Malai, Chin Neth embarked on an ambitious program of market research, visiting markets in Pailin and Banteay Meanchey’s Poipet commune in search of solutions. Finally he landed on one: Close the border.

He asked local officials to close the border crossing to Thailand from 7 to 8am each Tuesday. “I want to stop the people from 7 to 8 so they will come to the market here,” he said.

His request was denied. “They said it’s a free market,” Chin Neth said.

Now, he says, he’s out of ideas.

Say Chhum, the vendor, sees no way for the market to thrive without government intervention. “I see no way to develop this market unless the government helps us build this road,” he said. “If the government helps us, our market will go ahead. If not, our market will stagnate,” he added.

The march of globalization into this far corner of Cambodia has been hard on men like Say Chhum and Chin Neth, for whom the switch from the paternalism of Angkar to the brutal freedom of markets is still incomplete.

From 1976 to 1979, Chin Neth worked at Ieng Sary’s foreign ministry as the manager of the room service and food preparation staff at Hotel Le Royal in Phnom Penh, which was known as House Number Two during the regime.

He said that Long Norin and Suong Sikoeun-both members of Ieng Sary’s foreign ministry who had lived overseas-used to stop by the kitchen and advise the staff on food presentation and the proper uses of butter.

“They know what foreigners eat,” said Chin Neth. Most of the guests, he added, were tourists from North Korea, China, Yugoslavia, Romania, Albania, Vietnam and Laos.

The price of a room? Free.

“Everything was free,” he said. “I never knew money.”

In 2001, he went back to Le Royal. “Everything had changed,” he said. “I almost could not remember.” The small houses that had flanked the hotel were gone; the paint was new.

“I dared not go inside,” he said. “I was worried I’d be arrested.” He kept on driving, never even getting out of his car.

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