Brash, ambitious, some say ruthless, Kith Meng is building an empire in the newest tiger economy.
A towel around his neck, the slight Cambodian in a sweaty Nike (nyse:
NKE -
news -
people ) sports shirt shouts instructions into a cell phone. He's stomping across the spacious lawn of the Cambodiana Hotel with an arrogant swagger, like he owns the place. Which, in fact, he does.
He's Kith Meng, and that same swagger is on display practically everywhere you look these days in Cambodia. From hotels to telecoms and television, banking, insurance, even education, Kith's Royal Group has a finger in nearly every pot simmering in Asia's newest tiger economy.
Long derided as a backwater that utterly missed the Asian economic boom, Cambodia has been racing to make up for lost time. News that the economy surged by more than 13% in 2005 caught everyone's attention. But growth has averaged 9% annually since 1998, says Stephane Guimbert, senior country economist at the World Bank. That's the second fastest in Asia, after China. Last year growth may have hit 10%.
Granted, it's from a very low base, and exports are mainly textiles. But investment has picked up in the expectation that oilfields off the southern coast will be developed. Real estate is skyrocketing, faster than anywhere in Asia outside of China. And the country drew more than 2 million visitors last year for the first time. Plans call for a stock exchange to open in 2009.
Susan Schwab, who in November became the first U.S. Trade Representative to visit Cambodia, praises its liberal investment laws and a commitment to cleaning up rampant corruption. "This is a wonderful story, for any country, more so one so scarred by its past," she says. "If the buzz factor hasn't already hit, it's definitely developing." Her visit coincided with a landmark Phnom Penh investment conference. "We expected 300 people, but there were over 500," says Christopher Bruton in Bangkok, one of the organizers and a researcher and consultant in Cambodia for decades. "We have never seen such interest in Cambodia."
Kith happily notes: "Before, people used to think of this as a place of war and instability. But now we are part of the global economy, and everyone is coming."
When they arrive, many have no choice but to court Kith, who, more than any of the country's other tycoons, stands as the rugged role model for wheelers and dealers in this anything-goes, frontier economy. "He's a real rags to riches story," says Dean Cleland, chief executive of ANZ Royal, which is planting ATMs and the bank's vivid blue logo everywhere around Phnom Penh. Australian banking powerhouse ANZ holds 55% in the joint venture, with Kith holding the rest, but nobody would consider him a meek minority shareholder. "We have strong and rigorous board meetings," Cleland says.
The word around town is that the two sides battle constantly, with ANZ struggling to distance itself from a meddlesome Kith. "Who said that?" Kith snorts, temper flaring at any inkling of criticism. Yet he quickly calms down, chuckling as he concedes: "My role in the partnership is to push. And push. I'm like the driver."
It's clearly a role he relishes. And, whatever confrontations ensue behind closed doors, the combustive mix has propelled the venture into a lead role in a banking market that may be growing at 30% a year, fueled by the bubbling real estate market. Of course, Kith also claims plenty of prime Phnom Penh plots.
New high-rises are rapidly reshaping a city skyline still dominated by a 15-story Intercontinental Hotel. But 40-story office, commercial and residential towers are on the rise. Just to trump them, Kith vows to build one 45 floors high. Then came the announcement last month that the 52-story International Finance Tower had gotten approval. Kith will surely adjust his sights higher.
Many of Phnom Penh's streets are still unpaved, and there isn't a single Golden Arches or Starbucks (nasdaq:
SBUX -
news -
people ) yet. Hence, at the opening late last year of a Swensen's, a U.S. chain of ice cream parlors, none other than the U.S. ambassador and the commerce minister cut the ribbon. The hunger for fast food will be satisfied this year by the first Kentucky Fried Chicken outlets opened by--who else? Kith, who also has the Pizza Hut concession.
"He's not an entrepreneur in the traditional sense of creating new businesses," notes one close friend. "What he does is go out and get the business that Cambodia needs. He brought in mobile phones, television, banking, insurance. He's the right guy at the right time."
Take ATMs. When ANZ opened in late 2005, there were hardly any in Cambodia. "We wanted to bring in 25," Cleland recalls. Kith wanted 100. "We ended the year with 52, which seemed a fair compromise," Cleland says. The number quickly topped 90 and will surpass Kith's goal any day.
Not that Kith is satisfied. Now he's barking about credit cards. No Cambodian bank issues plastic, not surprising considering the country's rather recent financial turmoil. Money finally returned to circulation after the Khmer Rouge outlawed currency, blew up the banks and turned clocks--and this war-torn nation--back to Year Zero.
Cleland says there may be 6,000 credit cards issued by overseas banks in the country. He reckons that cards rarely make financial sense until the number reaches 100,000. But Kith is guided by intuition, not market studies. "In his words, you cannot be the number one bank without credit cards," Cleland says. And guess what? "We're rolling them out in April," he notes.
The bank boss may not be very excited about the $1.5 million likely to be spent on the rollout, but he's quite satisfied with a profit of $541,000 for 2007--years before any profit was projected. All the more impressive, it comes as the bank plows cash into expansion. "This has been a good partnership, for both sides," Cleland says. "[ANZ] tends to be more cautious, but that definitely isn't his style. He's very aggressive, very bullish."
ANZ almost took a pass on Cambodia. "If not for Kith Meng, I don't think we'd be here," says Cleland. "A lot of people ask why ANZ is in Cambodia. The answer is that he went to Australia looking for a bank for the country. He made the rounds and came back and told us that of all the banks, we were the one that had said 'No' the most politely." Cleland says ANZ had previously assessed Cambodia: "It came up as a market that was too small, and it was too soon." Kith pressured ANZ to reconsider, suggesting that it fly people in for a new look. If they didn't like what they saw, he would pay for the trip. What ANZ saw was a huge cash economy bigger than what bank deposits indicated. "We caught the wave at exactly the right time," Cleland says.
ANZ may know banking, but Kith has the Midas touch in Cambodia. And he clearly stands apart from both the old money--made mainly in mining, logging and smuggling in the 1980s and 1990s--and the new entrepreneurs starting restaurants and tourism businesses. The older tycoons tend to be reclusive and tied by blood or marriage to the political leaders. In contrast the brash Kith is only 39, unmarried and linked to nothing but the pursuit of profit. Many call him the new face of Cambodian capitalism.
Chinese population are preparing for the New Year Celebration.
