SIHANOUKVILLE: The Cambodian coastal city of Sihanoukville was once billed as the Macau of Southeast Asia and attracted hordes of developers rushing to build casinos, condominiums, hotels and shopping malls.
However, years later the city saw an abrupt end to its multibillion-dollar construction boom and it is now left with various developments still under construction and some stalled.
According to a Nikkei Asia report, the city's main selling point was the online gambling industry, which started there around 2017 and drew hundreds of thousands of workers and demand for space rose.
It was even seen as the promised land but has now turned into a nightmare of costly stalled projects and drawn-out legal disputes with landlords.
"There was a lot of greed," said Zhang Jiawei, head of a Chinese business association in Sihanoukville.
"Business people wanted to get money, even if they knew the prices of land or rent were too high. It was a bubble and people knew it would break, but you don't think anything bad will happen to you," he told Nikkei Asia.
However, things grinded to a halt when in August 2019, the Cambodian government banned online gambling and sparked a mass exodus of workers.
It is believed that the decision came due to pressure from Beijing to curb criminal activities and illicit money outflows from the sector.
The Covid-19 pandemic made it even worse and with many spaces vacated by online gambling companies, they were soon filled by criminal gangs running global web scams.
There have been many reports of people from various Southeast Asian countries being lured to work there with lucrative job offers, only to be stuck with the gangs.
They are forced to run the scams, mostly by phone, and those who want out often need to pay huge sums of money to be released from their so-called contracts.
The Nikkei Asia report said official figures show that the city now has 1,155 unfinished buildings.
It said the only major changes to the city's landscape since the boom abruptly ended are the new roads, footpaths and drainage systems the government was forced to build after the rapid development overwhelmed and destroyed much of the city's earlier infrastructure.
Seeking a solution to their woes, several Chinese developers met with provincial government officials in early July, with the hope the authorities will cut taxes and create a land-value index to help with lease negotiations.
They also want the government to help resolve disputes with landlords by persuading the latter to become stakeholders in the projects.
However, some doubt a solution will be found soon.
The Cambodian government has now commissioned the Urban Planning and Design Institute of Shenzhen to complete an ambitious masterplan to turn the city into a commercial, services and logistics hub.
However, there has been little discussion on how to deal with the hundreds of stalled projects and the uncertainty has led to some developers scaling back their plans.
To further compound the matter, Nikkei Asia said the slowing of the Chinese economy does not bode well for Cambodia's construction industry, which contributed more than a third of growth to the country's gross domestic product.
According to the World Bank's June economic update, approved foreign direct investment in Cambodia's property sector plummeted from US$1.7 billion in 2019 to just US$142 million in 2020.
It said the Cambodian construction industry has remained sluggish, although the pandemic situation has eased.
The economic update showed that in the first three months of this year, the value of approved construction permits dropped by 66 per cent and the approved construction permit area by almost 68 per cent. The volume of steel and cement imports have also decreased by 37.5 per cent.
The World Bank also warned that the slowdown could have broader consequences for the country's economy.
"High credit growth and concentration of domestic credit in the construction and real estate sector remain a key risk to Cambodia's financial stability," it wrote.
Still, some investors remain cautiously optimistic, with Zhang saying he had invested in more than US$15 million worth of hotel developments. Five of his projects have so far been seized by landlords amid disputes.
He believes Sihanoukville still has a "bright future" with lots of opportunity and if China opens the gate, more people will come to invest there.
"Even if some people have lost money, more people will come. Today is very hard, but you need to survive now and tomorrow will be good," he said.