Foreign casinos have been a disaster for Cambodia – The Diplomat
On June 27, hundreds of Cambodian security agents violently dispersed a group of striking NagaWorld casino employees, beating up the mostly female crowd and injuring 10 people. Since December 2021, Phnom Penh casino staff have engaged in organized strikes against layoffs at NagaWorld, which is Cambodia’s largest casino and one of the capital’s largest employers. The strike and the demonstrations that accompanied it led to the arrest of hundreds protesters and angered government officials and state-run newspapers, who falsely claimed the workers’ strike was at the instigation of foreign officers. However, NagaWorld itself is not a native project: it is owned by a Chinese-Malaysian businessman Chen Lip Keong and is publicly listed on the Hong Kong Stock Exchange. NagaWorld is just one of many foreign casinos that have created a host of new social challenges in recent years.
Foreign-backed gambling and casinos are not new to Cambodia’s history. Foreign travelers have come across Chinese-owned casinos in Phnom Penh like from the 16th century. However, the gambling industry in Cambodia exploded in 2017when Chinese-funded casinos took over the once sleepy seaside town of Sihanoukville and initiated the influx of Chinese tourists looking to gamble overseas, which is illegal in china outside of Macau. Sihanoukville has been transformed by the influx of Chinese casinos and hotels, restaurants and karaoke clubs, and Chinese nationals have taken over ownership 90 percent shops in town.
Increased Chinese Interest in Cambodian Gambling increased profits of NagaWorld, which since 2000 has enjoyed monopoly on the game in a 120 mile radius from Phnom Penh. Although casinos only exist to serve foreigners, gambling is illegal for Cambodian citizens – Prime Minister Hun Sen backed increased Chinese investment associated with the gambling industry, arguing that Cambodians would “gain benefits” from the $1 billion in foreign direct investment which was transported to Sihanoukville. While some local industries have benefited from the expansion of foreign casinos, two recent developments have decimated any gains Cambodians could have made: Hun Sen’s surprise ban on online gambling and the impact of COVID-19 pandemic.
In August 2019as brand new casinos opened their doors, Hun Sen announced the ban on online gambling, which had engaged much of the industry’s foreign players and was behind A quarter of the tax that Cambodia levied on casinos. The move was described as political, through which Hun Sen was able to address concerns about crime associated with online gambling. This surprise policy change, however, had an outsized impact. In just four months, the market collapsed: half of the casinos in Sihanoukville closed, 7,700 local Cambodian workers were fired, and 450,000 Chinese nationals Left the country. Then the pandemic hit and foreign tourism – the source of virtually all casino customers – dropped 80%. Since the implementation of the ban on online gambling and the advent of the pandemic, the domestic revenue of the gambling industry has decreased by 90 percent.
Industry revenue losses due to COVID-19 and the gambling ban have exacerbated already egregious working conditions. Foreign-owned casinos have been blamed for numerous labor issues, including insufficient wages for Cambodian workers, poor working conditions, child labor and attacks on union members, the latter having been intensified by the Cambodian government and media. Although much of the workforce that supports Chinese casinos is brought in from China, a tactic used by Chinese developers in many Belt and Road Initiative projectsmany Cambodians were hired as construction workers and casino employees.
Chinese casino companies have adopted a system of “labour dualism”, in which artificial wage and benefit barriers are created between Chinese and Cambodian workers, resulting in radically different treatment. According to labor researcher Ivan Franceschini, Chinese casino workers on average earn 4.5 times more than their Cambodian colleagues for the same work. Low wages are exacerbated by the rising cost of living in Sihanoukville and Phnom Penh, making it difficult for residents to make ends meet.
Investigative reports have shown that working conditions for casino workers are extreme and riddled with criminal enterprises. Cambodian authorities exercised little control over new casinos; a recent World Bank report describes the construction process as “build first, enable later.” In August 2019, a hotel jointly developed with new casinos in Sihanoukville collapsed due to faulty construction and killed 28 Cambodians. The unregulated industry has also seen an influx of child workers in casinosas well as an increased number of sex trafficking cases regarding new development and inflows of foreign workers. While these violations in Sihanoukville have diminished due to the blocking of casino development and the decrease in Chinese tourist arrivals due to the ban on online gambling and the pandemic, signs of forced labor in the casinos remain. In October, allegations surfaced about a Chinese-owned casino confine 400 employees in his building and forcing them to work during a COVID-19 outbreak.
NagaWorld is one of the few casinos in Cambodia where workers have union representation. However, workers participating in the protests against NagaWorld allege that the company and Cambodian authorities have specifically targeted union members. According to Chhim Sithar, President of the NagaWorld Khmer Employees Labor Rights Supported Union (LRSU), NagaWorld’s April 2021 plan to lay off 1,300 of their 8,000 total employees was “a clear attack” on unionized workers: of the 1,300 workers selected to be fired, 1,100 were union members. Sithar and Vice President, Secretary and Treasurer of LRSU have all been warned of termination. Today, many of those protesting the layoffs have been arrested by Cambodian authorities for “undermining social security”. Police stopped President Chhim Sithar alongside 30 others in early January on charges of incitement, and in March carried out a mass arrest of more than 200 strikers. Attacks on strikers continued, as the June 27 crackdown showed. In addition to demonstrating the shortcomings in the protection of workers in foreign casinos, such arrests are a worrying sign of the weakening of Cambodian civil society.
Beyond the poor working conditions that the Cambodian government has allowed to fester, the expansion of the casino industry in Cambodia has had a negative impact on the environment and surrounding communities. Casino operations in Sihanoukville and nearby Koh Rong Island have sewage leaks into surrounding waters and contributed to a massive increase in the rubbish and building materials that litter the beach. Once a popular travel destination, locals and foreigners alike refused to stay in the town now described as a ruined “ghost town” by constant construction and pollution. Despite the dropout of active casino goers, more casinos are being built across the country in 2022. Many of these new venues are expanding into heavily forested areas, driving deforestation and displacing local communities. Such development occurs in Botum Sakor National Park, where the Chinese company Tianjin Union Development Group (UDG) is building casinos and ancillary apartment buildings on 36,000 hectares of forest land. In 2018, more than 1,400 families were forced to move due to construction work, and in 2020 the United States Treasury Department sanctioned UDG for its “seizure and demolition of land from local Cambodians for the construction of the Dara Sakor development project”.
While the Cambodian government has touted Chinese investment as being generally positive for the country, casinos have for the most part brought little benefit to Cambodian citizens, especially now that the pandemic and ban on online gambling have undermined profits in the sector. The newly developed casinos in Sihanoukville remain empty eyesores on the coast. Meanwhile, established conglomerate NagaWorld is punishing union members and, more worryingly, is doing so with the strong backing of the Cambodian government.