The poor pay for a property boom

Cambodia's disappearing capital

Jan 29th 2009

PHNOM PENH
From The Economist print edition

ReutersBe it ever so humble

THE fading colonial charm of the French-built Renakse Hotel in Phnom Penh has faded for good. The last guests have been pushed out and the windows boarded up. A property boom in the Cambodian capital has brought a whirl of demolition of old buildings, plans for new high-rise developments, and speculative investment in satellite towns.

The victims of this have been Phnom Penh’s poor. Last week police and private security guards roughly evicted 120 families from Dey Krahorm, a slum in the centre of the city, on the orders of Phnom Penh’s governor. The firm developing the area, 7NG, is linked to the ruling Cambodian People’s Party, the CPP, led by Hun Sen, the prime minister. The company plans to turn the site into an upmarket retail park. Nearby, a famous park area known as the Boeung Kak lake is also to be developed, bringing the eviction of 4,500 residents. Many had been living around the lake for 20 years. They have been offered only paltry compensation, and have been relocated to the city’s outskirts with no amenities or obvious way of making a living.

The controversial plans involve filling in 90% of the lake. The CPP has ditched past commitments to conservation and environmental protection, as the boom has driven prime-land prices in Phnom Penh up tenfold in two years, to $5,000 per square metre. The municipal government has granted a 99-year lease on 133 hectares (330 acres) of the Boeung Kak site to a CPP senator, Lao Meng Khin, who is also a director of a company called Shukaku, for a mere $79m—a fraction of its estimated true market value. In April 2008 Mr Khin signed a deal with a Chinese company to turn the lake area into a posh residential and recreation development, to be dubbed the “New City of the East”. A Korean company is building a similar city, known as CamKo, on Phnom Penh’s outskirts.

Critics say the Boeung Kak deal is illegal. Cambodia’s 2001 land law declares all lakes public property that cannot be leased for more than 15 years. The authorities say the deal was legalised by a 2008 decree from Mr Hun Sen’s cabinet, reclassifying “state-public land” as “state-private land”.

Mok Mareth, the environment minister, initially raised concerns that filling in the lake would do serious damage to Phnom Penh’s drainage system. This, he argued, would violate a 1996 law ordaining that Cambodia’s natural resources should be conserved, developed, managed and used in a rational and sustainable manner.

Indeed, since August 2008 when developers started filling the lake in, some houses have already started sinking. An independent report released earlier this month by an Australian assessment team gave a strong warning against the project. It concluded it would lead to an increase in flooding, and would endanger water quality and public health.

Two decades ago, children paddled boats on the lake, families enjoyed picnics, and Mr Hun Sen used to entertain foreign visitors at a modest but picturesque bamboo restaurant. But today, as the bulldozers are poised to raze old Phnom Penh and plug its favourite lake, the urban poor are starting to feel nostalgic for a time when a park really was a park and not a so-called “state-private development zone”.