Rights groups raise fresh concerns about transparency of Boeung Kak project

CHINESE companies have been closely involved in the controversial development of Phnom Penh’s Boeung Kak since its inception, according to news reports and local rights groups, who said they became aware of the companies’ role after a research group from China visited the site last week.

Pen Raingsey, manager of the land and livelihoods program at the NGO Forum, said the group, which included Chinese academics and journalists, revealed Chinese news reports confirming the deals.

“We weren’t aware that the investment in Boeung Kak was Chinese. We were surprised because our researchers tried to find the source of the funding, but weren’t aware of this,” he said.

It has long been unclear whether Shukaku Inc, the obscure local developer in charge of the 133-hectare commercial and housing project, has been backed by foreign investors.

But a series of Chinese-language news articles available online reveals a long history of Chinese involvement in the controversial project, following the signing of a US$79 million lease agreement between City Hall and Shukaku in February 2007.

In April of that year, the Kunming-based Yunnan International Economic and Technical Cooperation Corporation signed an agreement with CPP Senator Lao Meng Khin, the chairman of Shukaku, to develop Boeung Kak as a “multi-purpose living and recreation centre” called New East City, as well as a tourism “eco-garden” in Sihanoukville.

Present at the signing, according to state media, were Deputy Prime Minister Sok An and Qin Guangrong, the governor of China’s Yunnan province.

Additional Chinese news reports described the project as Yunnan’s “largest foreign investment”, putting the total cost of the project at around $1.5 billion. One said $680 million would be spent on the first construction phase, to run from 2007 to 2010, with the project to be completed in 2013.

The development at Boeung Kak – known in Chinese as wanguhu, or “10,000 Valley Lake” – has prompted continued controversy, with rights groups estimating that more than 4,000 families will be forced to make way for the project.

Housing rights activists say the 2007 lease agreement was illegal, and that many likely evictees have a legal claim to the land under the Kingdom’s 2001 Land Law.

In August 2008, Shukaku began filling the lake with sand, a process that has reclaimed large tracts of the lake’s surface, forcing some residents to move away from the site.

In January 2009, Chinese involvement in the Boeung Kak development hit a roadblock after Yunnan International’s parent company, Yunnan Copper Group, underwent restructuring and made an “orderly exit” from the project.

The Web site of the Shenzhen Jiajiahao company (left) shows Deputy Prime Minister Sok An and Phoeung Sophoan, a secretary of state in the Ministry of Land Management, meeting company officials to discuss the Boeung Kak lakeside development. The Web site of its parent company (right) shows a montage of lakeside photos and pictures of key officials.

As the filling continues, it is unclear whether other companies have moved in to fill the breach.

Qian Hai, spokesman for the Chinese Embassy, said he did not have “any information at all” about Chinese involvement in the Boeung Kak lake project and said reporters should contact Chinese news agencies.

There are strong indications, however, that Chinese companies are still interested in the project. On October 23 of last year, the Yunnan provincial government signed a funding agreement with China’s State Development Bank, securing funds for $2 billion worth of overseas investments.

According to a report in Chinese state media, the projects listed included the “integrated development projects” at

Boeung Kak, as well as tourism projects in Luang Prabang, Laos, and various venues for December’s Southeast Asian Games in Vientiane. The name of the developer was not given.

The Web site of Shenzhen Jiajiahao Investment Development Co Ltd, a Guangdong-based company, suggests that company stepped up following Yunnan International’s withdrawal from the project.

The site features photos of Chen Jiansheng, the company’s general manager, posing with Sok An, Nan Sy, Cambodia’s ambassador to Brunei, and Phoeung Sophoan, a secretary of state at the Ministry of Land Management, Urban Planning and Construction.

According to the site, which is dated August 2009, the photos were taken after company officials delivered a “preliminary report” on the Boeung Kak lake development and another referred to as the “‘Hun Sen Park’ project”. Yu Fengguang, chairman of the Guanxi provincial branch of the State Development Bank, was also present at the meetings.

The site also states that during the visit, company officials met with Foreign Minister Hor Namhong, who pledged “active support” from the Cambodian government for the projects.

When contacted on Thursday, Phoeung Sophoan confirmed that the photos were taken in 2008 or 2009, but did not know if Shenzhen Jiajiahao was still involved in the project. He said the Chinese company suspended the project as a result of “a problem” with its local partner – presumably Shukaku Inc. “If they continue to develop, it will be good for our Boeung Kak lake development,” he added.

Be Pharom, a Boeung Kak representative, said residents had not heard much about the development recently, adding that officials had told them that “the company is keeping quiet because of the economic crisis”.

The Shenzhen office of Shenzhen Jiajiahao could not be reached by phone on Thursday.

Secretive developers

The revelation of past and possible current Chinese involvement in the project comes after Prime Minister Hun Sen again praised Beijing for its generous economic aid.

“As always, the government and people of China have supported Cambodia in development of all fields, the move to push for economic and social development that will help reduce the poverty of the Cambodian people,” he said at the inauguration of National Road 62 on Wednesday.

Critics, however, said the potential involvement of Chinese firms will only weaken the flow of information surrounding the Boeung Kak project, which residents and housing rights advocates say has been carried out largely in secret.

“We feel a bit concerned about the Chinese investment … in this area,” said Pen Raingsey from the NGO Forum. “The access of information is a real concern.”

Sam Rainsy Party lawmaker Mu Sochua expressed concern that Chinese state firms had been given “carte blanche” by the Cambodian government.

“Everywhere China comes in with big projects, total support from the government and no room for the people to register their concerns. It shows what we fear most – that their rights to housing and development will not be on the agenda,” she said.

Youn Heng, deputy director of the Cambodia Investment Board’s Evaluation and Incentive Department, could not be reached on Thursday.

Boeung Kak LAKE: the main players

Shukaku Inc

The obscure local developer that signed a 99-year lease agreement with Phnom Penh Municipality in February 2007 to develop the Boeung Kak lakeside area. Little is known about the group, which is headed by Lao Meng Khin, a senator in the ruling Cambodian People’s Party. Shukaku has no known address, and repeated attempts to get in touch with the company have been unsuccessful. Rights groups have alleged the company is closely linked the Lao Meng Khin’s company Pheapimex. Local firm HSC has been handling the reclamation of the lake, which began in August 2008.

Yunnan International Economic and

Technical Cooperation Corporation

Based in Kunming, the capital of China’s Yunnan province, the state-owned Yunnan International is involved in a range of construction activities in Cambodia, Vietnam, Laos, Myanmar, Singapore, Malaysia and Hong Kong. The group signed an agreement to develop Boeung Kak in April 2007, but withdrew after its parent company, Yunnan Copper Group, dropped the project in January 2009. According to a report on the company’s Web site, Yunnan Copper also handed over its 52-percent stake in the Phnom Penh-Battambang power grid development to the China Datang Corporation.

Shenzhen Jiajiahao Investment

Development Co Ltd

The Shenzhen-based firm, a subsidiary of Guangdong New Golden Foundation Investment Development Co Ltd, appears most likely to have taken over the Boeung Kak development project from Yunnan International. The company’s general manager, Chen Jiansheng, held talks with Cambodian officials, including Deputy Prime Minister Sok An, in 2009, when the company presented its “preliminary report” on the Boeung Kak development. Cambodian officials said the outlook is unclear after the company suspended the project as a result of “a problem” with its local partner.