Chinese resort developer in Cambodia hit with US sanctions
17 Sep 2020

The U.S. Treasury on Tuesday imposed sanctions on China’s Union Development Group, the company behind the controversial Dara Sakor tourism development on Cambodia’s coast.

The Treasury’s stated reason was that UDG intimidated and evicted families from their homes on the company’s 45,000 hectare concession to make way for the development in the western province of Koh Kong.

However, multiple land disputes linked to the project have occurred over the past decade, starting in the years after the Cambodian government granted UDG its 99-year lease within a national park in 2008. The decision to penalize the company at this stage appears linked to growing tensions between the U.S and China.

In a statement, Treasury Secretary Steven Mnuchin accused the company of “corrupt” and “predatory” practices that “undermined the rule of law and exploited the resources of other countries.”

The Treasury identified UDG as a “state-owned entity” that was “acting for or on behalf” of an official of the People’s Republic of China.

According to reports, the ultimate parent of UDG is Tianjin Wanlong Group, a private Chinese property developer owned by family members of Tianjin developer Li Zhiqiang. UDG’s chairman and owner listed in Cambodian business records is Li Tao, a family relative.

Online financial data does not reveal any ownership links between UDG and Chinese state-owned enterprises, and the U.S. provided no further information or ownership documents proving links to the state.

Beijing’s closest ally in Southeast Asia, Cambodia has become a potential flashpoint in the geopolitical rivalry, with reports of plans by China to use the country to host military assets.

While recent attention has focused on a reported secret deal to allow China to use Cambodia’s Ream Naval Base, UDG has drawn speculation that its facilities could be used by the Chinese military. Such suggestions are often linked to the project’s soon-to-be completed 3 km runway — the largest airstrip in Cambodia — and plans for a deep-sea port, but lack any conclusive evidence.

Comprising about 20% of Cambodia’s coastline, the UDG development was billed as a luxury resort that would cost up to $3.8 billion. But after the initial construction of a hotel, surrounding golf courses and roads, the project has largely remained stalled, with the exception of its airport.

The company’s grand vision of a casino city attracting millions of Chinese tourists is yet to materialize. Nor has there been progress on broader plans at the site for what has been called the “Cambodia-China Comprehensive Investment and Development Pilot Zone,” which is to feature industrial parks, container terminals and the port.

By Shaun Turton and Kong Meta, Nikkei Asian Review, 15 September 2020

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