The rise and rise of a Cambodian capitalist

By Shawn W Crispin

PHNOM PENH – Kith Meng's is the bold new face of Cambodian capitalism. Widely considered the country's richest entrepreneur, the Sino-Khmer businessman presides over a sprawling business empire held under his Royal Group of Companies which has leveraged into and helped drive Cambodia's recent economic boom.

With impeccable political connections - including not least his role as a personal advisor to Prime Minister Hun Sen - Kith Meng, 37, has secured a growing trove of lucrative government
concessions, licenses and land deals that his Royal Group has in sometimes controversial fashion translated into big business profits.

Those include his controlling stakes in CTN television, mobile telecom leader Mobitel, the Camlot lottery company and a 45% stake in a commercial banking joint venture with Australia's ANZ Bank, where he serves as board chairman and reportedly drives strategic decision-making.
Last year he purchased the swanky Cambodiana Hotel, newly established the Infinity Insurance company and accumulated extensive property holdings and development concessions in the capital Phnom Penh, in what his critics contend are often opaque deals brokered with various line ministries. (Kith Meng could not be reached through his Royal Group for comment.)

His growing service sector empire has drawn both favorable and unfavorable comparisons to neighboring Thailand's telecom tycoon-cum-prime minister Thaksin Shinawatra's commercial and political ascent. He reportedly will seek a seat on the national senate at upcoming elections and some Phnom Penh-based analysts see him one day as a potential successor to the 55-year-old Hun Sen, who they note rose to political prominence through his military prowess rather than business acumen.

A former refugee from political violence, Kith Meng's is one of Cambodia's most compelling rags to riches stories. His father, Kith Peng Ike, a Sino-Khmer businessman and landlord, was singled out as a "class enemy" during the Khmer Rouge's genocidal purges and he reportedly died from starvation in one of the radical Maoist group's labor camps.

Kith Meng and his family fled the country for Australia, where he was raised and educated. He returned to his war-torn homeland in the early 1990s to help his elder brother, Sophan Kith, to develop the resurrected family business, which upon reestablishment was first known as the Royal Cambodia Company. The enterprise started modestly, supplying furniture, food and office equipment to the United Nations authority that ushered Cambodia's rocky transition from civil war to parliamentary democracy.

In 1991 the Royal Group won the rights to distribute exclusively Canon copiers throughout the country and it quickly spun those monopoly revenues into a joint venture in 1993 with Motorola to establish one of Cambodia's first wireless communication networks. It later did a deal with Luxembourg's Millicom International Cellular, which over the years has grown into the country's leading mobile telecom outfit, Mobitel.

In 1994 Sophan Kith died under mysterious circumstances and, peculiar to cultural norms of seniority as the youngest sibling, Kith Meng took control over the family business. He now serves as both the company's chairman and chief executive officer and his cut-throat approach to business expansion has rapidly transformed the Royal Group into Cambodia's leading service sector conglomerate.

Young gun
As a Western-educated, 37-year-old entrepreneur, Kith Meng's resume stands out among the older generation of ethnic Chinese businessmen who dominate Cambodia's traditional economy. Cambodian politicians have long relied on Sino-Khmer businessmen to run crucial sectors of the national economy, similar to the ethnic-based government-business nexuses seen in Thailand and Indonesia.

In Cambodia that privilege comes with a royal title known as Okhna, which is bestowed on those who make sizable financial contributions to the royal family. Kith Meng is believed to be one of the youngest businessmen to ever receive the honorific and his meteoric commercial rise includes his recent selection as the head the Cambodian Chamber of Commerce.

As Cambodia becomes more integrated into the global economy, Kith Meng has emerged as the government's de facto spokesman for selling the country to potential foreign investors as a profitable and desirable place to do business. He is regularly seen on local television wining and dining foreign business delegations. On the Royal Group's website is a pitch to potential foreign investors to help build its proposed Royal Caesar Casino, which it's billing as "the largest and most dazzling gaming facility in the Cambodia hemisphere".

Beyond the diplomacy and hype, there is much more at play to Kith Meng's growing prominence than mere spin-doctoring. Some political analysts contend that Hun Sen has played an instrumental role in cultivating and mobilizing the young entrepreneur's modern business image in a vigorous public relations effort to shirk his and his government's notorious reputation as the "Mafia on the Mekong".

Cambodia emerged from nearly three decades of civil war only to become known as a regional hub for illicit business, including rampant money laundering, drug smuggling, human trafficking and illegal logging. Hun Sen and his Cambodia People's Party's (CPP) have been directly linked to shadowy figures reputedly involved in illicit businesses, including his established ties to businessman Theng Bunma, who has contributed millions of dollars to the premier's past election campaigns and also implicated by US authorities for alleged drug trafficking.

As Cambodia's aboveground economy booms, state concessions are no doubt providing rich new sources of legitimate revenues for Hun Sen's government. It is unknown whether Kith Meng contributes funds directly to his CPP, but his concession payments to line ministries are no doubt bolstering state coffers. One Phnom Penh-based Western businessman who spoke on condition of anonymity and claims to have personally conducted the due diligence research on the Royal Group's recent joint venture with Australia's ANZ Bank says that his in-depth investigations failed to turn up any "dirty laundry" in Kith Meng's past or present business dealings.

Reborn landed gentry
That's not to say his business practices lack for controversy. Kith Meng's style has reportedly ruffled feathers among the more established Okhna represented in the Cambodia Chamber of Commerce, whereby the older generation of Sino-Khmer businessmen have bristled at his perceived patronizing lectures about globalization and at what some of them reportedly view as his overly direct Western-style of interaction.

Whether those complaints stem from genuine pique or instead heartfelt fear of Kith Meng's expanding reach into other Okhna's once monopolized markets is unclear. One Western aid agency representative, who spoke with Asia Times Online on condition of anonymity, says that soon after launching last year’s joint venture with ANZ Bank, Kith Meng pushed to expand the bank's local branch network much faster than ANZ first planned. That aggressive strategy, it turns, has paid off handsomely through a fast growing market share of deposits and the lion's share of loans in the nascent home mortgage market.

Other times, critics say, Kith Meng's Royal Group pushes too hard. In June 2006 police armed with batons, tear gas and AK47 assault rifles evicted at least 20 families from a contested land plot worth several million dollars next to Phnom Penh's Preah Monivong Hospital which the government had controversially awarded to the Royal Group for development. The resident families were reportedly given US$500-$1,500 in compensation and trucked to a relocation site 30 kilometers outside the capital which lacked electricity and water.

Similar complaints have arisen from his plans for the landmark Bassac Theater. In 2005, the culture ministry granted the concession, which called on the Royal Group to rehabilitate the damaged structure in exchange for the rights to outfit the theater's surrounding land with new offices and a conference center. The company has since decided to demolish the historic building and evict the scores of artists who after the Khmer Rouge's "class enemy" purges took refuge in the old theater.

Those same artists have resurrected the traditional Khmer art forms that the Maoist movement aimed to destroy and after squatting at the historic site for over a decade, each has received $300 to abandon an area where land prices now top $1,000 per square meter. The irony of such deals is not lost on Kith Meng's critics, who contend that the Royal Group is capitalizing on the legal vacuum for adjudicating land ownership rights created by the Khmer Rouge's destruction of the national land registries.

On the Royal Group's website, Kith Meng says in a statement that the company's origins trace "back to the early days of the Khmer Rouge occupation" – meaning, presumably, the property and businesses his father maintained before the radical Maoist movement killed him and drove his family, including a young Kith Meng, into exile. In Cambodia's latest capitalist incarnation, government connections often trump historical claims and reassert old social class divisions, of which Kith Meng's and the Royal Group's fast expanding commercial domain is living proof.

Shawn W Crispin is Asia Times Online's Southeast Asia Editor.