Thai Business Returns to Cambodia, but Riots Are Not Forgotten

A phone call placed to the Thai employees of Modern Plastic and Packaging on National Road 2 in the early evening of Jan 29 last year relayed an urgent message: The Thai Embassy is in flames and an angry mob of youths is headed to destroy your business. Get out.

The Thai employees escaped through a back door, about 10 minutes before the gang showed up waving sticks and throwing rocks. Leab Sannang, 26, a Cambodian security guard at MPP on duty that night, said he and the other guards could do nothing to stop the destruction.

“When they first came, I didn’t believe they would actually burn the building,” he said. “But within one hour, the crowd grew very large and everything was burning.”

The mob unlocked the door and smashed the building’s windows with rocks. They asked Leab Sannang and others, “Are you Thai or Khmer?” Their answers spared them.

About 100 meters or so from MPP, a mob also overwhelmed the gates of the Thai-owned Cementhai SCT Cambodia. Security guards shed their uniforms as youths stormed the complex, shouting “Siam!” and looting the offices and warehouse.

As the mob moved to destroy all the property on site, Youn Poch, a Cambodian Cementhai employee, did all he could to protect the factory’s heavy machinery.

Recalling the incident earlier this month, he said, “I stood by the cars and machinery and shouted, ‘This belongs to Cambodia. Don’t steal it. Don’t burn it. It is Khmer.’ Everyone was running around, making so much noise. They were so happy, so proud. I was so scared, but I tried hard to protect the machinery.”

The machinery went unscathed, but throughout the wild night, looters enlisted motorbikes and cyclos to carry bags of cement from the warehouse. When firetrucks drove up to extinguish the burning office building, youths threw rocks at the trucks. They promptly drove away.

A few policemen showed up, firing shots into the air. Beyond that, however, they took no action. Lawlessness had taken over.

“Usually the authorities can do whatever they want,” Leab Sannang said. “That night, it seemed like the police just closed their eyes.”

As daylight broke, and planes arrived at Phnom Penh International Airport to evacuate Thai citizens, the extent of the damage inflicted by thousands of rioters became clear. The Thai Embassy lay in ruins and fires smoldered at some of the 33 Thai-owned businesses across the city damaged in the night of mayhem. Thai Prime Minister Thaksin Shinawatra declared that relations with Cambodia had reached their “worst-ever level.”

Now, a year later, relations between the two countries are normalized and the Thai Embassy has been rebuilt.

Damaged businesses, such as the Juliana Hotel, Samart and Bangkok Airways, have refurbished or new buildings. Others, however, including Cementhai and MPP, as well as the Royal Phnom Penh Hotel, remain visible reminders of just how quickly an unchecked rumor can spark a flurry of frenzied nationalism, conjured up by ancient conflicts that symbolize the frustrations of modern times.

The rumor, which had circulated in northwest provinces for weeks before the riots, reached the capital when an unidentified woman walked into the office of Rasmei Angkor (Light of Angkor) newspaper last year and told the editor that she heard Suvanant Kongying, a 24-year-old Thai actress, say on television: “I hate Cambodia for stealing my Angkor Wat.”

Though the woman could present no other evidence to back up the claim, the newspaper ran the story based entirely on her account. Other newspapers picked up the story, and soon irate listeners were lambasting the actress on radio talk shows.

Prime Minister Hun Sen legitimized the rumor by criticizing the actress for her alleged remarks—which she flatly denies making—two days before the riot. By the time a student demonstration gathered in front of the Thai Embassy on Jan 29 to protest the actress’ alleged remarks, another rumor was making the rounds: Cambodians were being killed in Thailand.

The rest is history.

Thai business owners in Phnom Penh these days are on edge. Most were scared of giving their names or businesses for this article, fearful of lighting the spark that could ignite another round of explosive nationalism. They were visibly nervous while talking to reporters, careful to characterize the riots as a minor dispute, like any that would occur in a close family, instead of sheer racism.

“Only write positive things—no negative,” one Thai businessman who has worked in Phnom Penh for nearly 10 years told reporters. He and others described the riots as an “accident,” a “bad dream” or a case of “broken communication.” One, who refused to talk about the incident, said: “To keep silent is better.”

Underlying the silence is the fear that another riot against Thai interests could happen. Though Thai businesses have largely remained in the country and business people say they are comfortable doing business here, they know it was only a year ago that they feared for their lives, and that the sentiments that stirred the riots cannot be eradicated in a year. Furthermore, things can get ugly quickly, and unexpectedly, in what they labeled a “rumor society.”

“You still have a lot of rumors in this country,” said a prominent Thai businessman who manages one of the damaged businesses. “It’s like people protesting the death of Chea Vichea. A lot of rumors are going around as to who killed him. But action needs to be taken on concrete information, not rumors. Otherwise, we’d be crazy.”

Though no exact figures are available on which of or how much the damaged businesses have been compensated, Thai and government officials said that just under half of the businesses have been compensated. Most of the compensation is in the form of tax refunds, they say, and is contingent upon future investment in the country.

“There have been some [companies] that have been compensated and there are some that are still in negotiations,” said Thai Ambassador Piyawat Niyomrerks in an interview, adding that he has received informal complaints about the lengthy duration of negotiations. “They are still presenting documents according to the procedure of the Cambodian government. This process is still under way. We are happy with the negotiations.”

Negotiations have slowed because a government has yet to form since July’s national elections and because of discrepancies between the figures claimed by the damaged Thai businesses and the government, said a government source close to the negotiations.

Another catch is that the government is refusing to pay for business opportunity costs, money the damaged businesses would have made during the time they were closed for renovations.

“We don’t work on the estimated number, we work on the real number,” the source said.

Nonetheless, negotiations are proceeding, and the government and business owners remain confident that deals will be worked out to compensate all the businesses. No deadlines for resolving the compensation issue have been set. Of greater concern to the government has been repairing bilateral ties with Thailand, and based on interviews with government officials and the Thai ambassador, progress has been made in the past year.

Several factors blunted the potentially devastating impact on Cambodia’s economy, the most important being the relatively quick reopening of the border between the two countries, according to Kang Chandararot, an economist at the Cambodia Development Resource Institute.

“If they could not open the border so quickly, so many people would have lost their jobs, especially the more than 10,000 garment workers near Poipet,” Kang Chandararot said. “The magnitude of the riot is not significant in assessing the riot’s effect on the economy. You need to refer to the duration of the closure of the border. And it was short.”

Thailand allowed Cambodia to continue exporting goods but would not allow its nationals back into Cambodia until it received compensation for the heavily damaged Thai Embassy.

Government officials continue to deny reports that appeared in both the Bangkok Post and the Far Eastern Economic Review alleging that two Cambodian casino moguls in Poipet—Kok Ahn and Pad Supapa—contributed to the $5.92 million paid to Thailand so the border would be reopened and Thais would flock across the border to their casinos.

Minister of Finance Keat Chhon said earlier this month that the compensation money came from the government’s budget. One year later, the riot’s effect on the economy has faded, he added.

“My sense is that, like [severe acute respiratory syndrome], the riots are already gone psychologically and both countries have normalized relations and are looking to go further,” he said.

The riots proved to be a precursor to a series of economic blows last year: The Iraq war, SARS and the post-election deadlock have hurt business owners of all nationalities. SARS hurt the country’s tourism industry much more than the riots, said a Thai businessman involved in tourism, mostly because the riots flew under the radar of the global media.

“CNN and the BBC were more focused on the Iraq situation, so the riots didn’t get much global coverage,” the businessman said.

Major Thai investments in the country stopped after the 1997 factional fighting, said an official at the Council for the Development of Cambodia, which approves all of the country’s investments. Thai businesses still open up, but mostly without going through the CDC.

Last year did see the owners of MPP reinvest in the country under the name Cambodia Development Co to build another drinking water factory, the CDC official said. The company was the only 100 percent Thai investment listed in 2003.

“The Thai businesses that are here, like Shinawatra and Samart, do not look at trouble, but at profits,” the CDC official said. “It could be any political atmosphere, they don’t care. They just think of profits first.”

Though the Thai businesses that are here seem intent on staying, business observers said future Thai investors may think twice about Cambodia. Chieanchuang Kalayanamitr, a prominent Thai investor who owns a hotel in Siem Reap, expressed those sentiments when he told a reporter late last year that foreign investors felt the government would not protect their investments.

“The Thai people do not approve” of how the government handled the riots, he said. “They view Cambodia as an unlawful country.”

He would not invest in Phnom Penh and was looking to sell his hotel in Siem Reap. But, he said, he would invest in Koh Kong province because it receives its energy from Thailand and is home to many Thais.

In an effort to increase border trade and lower the nearly $100 million trade deficit Cambodia has with Thailand, Minister of Commerce Cham Prasidh said Tuesday that the government is looking to create export processing zones in Koh Kong, Pailin and Poipet.

“We have tried to restore normal relations with Thailand but, of course, the riots from last year are still hanging over the minds of some people,” Cham Prasidh said at a signing ceremony Tuesday in which a Thai and a Cambodian company pledged to start a joint venture company to build a state-of-the-art cement factory in Cambodia.

“What is important is to try and forget the past and forge better relations with our neighbors,” the minister added.

That is happening, albeit slowly. The riots have left a bitter taste in the mouths of not only Thai business owners, but also the likes of Youn Poch at Cementhai and Leab Sannang at MPP, both of whom saw many of their Cambodian friends lose their jobs because of the riots.

Kriengkrai Khuasai, the resident manager of the Juliana Hotel since it opened in 1993, said he has considered leaving the country since the riots. When a mob stormed the hotel on the night of the riots, he spent most of the night on the hotel’s roof. He watched helplessly as the raging youths brought gasoline onto the property and threatened to torch the building.

“They tried to light the fire, but the neighbors wouldn’t allow it,” he said in the hotel’s refurbished lobby earlier this week. “They said, ‘If you burn the Juliana, you will destroy our houses, the school and the hospital too.’ We are lucky they didn’t allow that.”

The Juliana is still waiting to hear from the government about compensation. The hotel’s profits have yet to hit pre-riot levels. And for Kriengkrai Khuasai and other Thai business owners in town, the memory of the riots still lingers.

“Thai people are alert,” he said. “In my mind, we will never forget.”

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