The intense heat burns your eyes and the fine red dust sticks to the sweat pouring out of your pores, creating a thick paste. “Maybe it’ll protect me from sunburn..?” The sun lotion I generously applied sure as Hell won’t be doing any good, having disappeared in a river of sweat ending in my socks. At a balmy 39 celsius, everything melts!

This is the slow season in Siem Reap, Cambodia, and it’s stinking hot! Yet people are still flocking here to see the 7th ancient wonder of the world, the temples of Angkor.

“You came to see the crumblies?” asked another fellow traveler. “Yes and no”, I said.

My last attempt to see Angkor’s temples, roughly 11 years ago, ended in failure…a failure caused by a combination of severe flooding, contracting a tropical eye disease which scared the life out of me (I thought I was going blind), and river pirates on the Mekong (they took only our money – thankfully). This time I took no chances and flew in directly from Phnom Penh after our Meet Up.

So yes, I came to see the “crumblies”, but more importantly I came to see those creatures streaming up and down the walkways. In economic terminology they’re called “consumers”. Up here in Siem Reap they, and their well-padded wallets, are transforming the landscape. 5-star hotels now litter the streets around the old town extending north, south, east and west. What I came to see was the potential for tourism up here, and to get an idea of where we may be at in the growth phase.

Tourism is the second largest industry in the country after textiles, and the numbers have been growing steadily every year since the conflict ended in 1993, with the country being reunited under the monarchy.

Tourists who come to Cambodia come to Siem Reap. It’s that simple.

It’s not hard to see why. To say that the temples of the Angkor group, most notably the temple of Angkor Wat, which is but 1 of over 1,000 temples built in the area is impressive, is like saying that world war II was a little “dust-up”.

Built in the first half of the 12th century, it is impossible to capture the size and scale in photographs. This was the largest pre-industrial city in the world and is a true architectural masterpiece. If these guys had seen the empire state building, or the Buj Khalifa they would have looked at each other and thought….”pfft, children!”

2010 saw 2.5M tourists visit Cambodia, 2.9M visited in 2011, 3.5M in 2012 and that number is absolutely going to be surpassed this year with estimates exceeding 4M. In other words, tourism numbers are growing anywhere from 15-20% annually.

What is evident in Cambodia in general, and is increasingly the case throughout SE Asia and Asia-Pacific, is the prevalence of Asian tourists over gweilo’s, farangs, or if you have no idea what I’m referring to – pale faces.

I can tell you from my own experiences in SE Asia over the last decade, and this is backed up by my many friends who have been here far longer, that this was not the case until fairly recently. The days of poor Asians desperate to get westerners to come and spend their money are fast vanishing. Now it’s as much a case of Asians in poor countries such as Myanmar, Cambodia and Laos seeking to attract Chinese, Thais, Malaysians, Indians, South Koreans, Japanese and Singaporeans as it is in seeking to attract pale faces. The cultural differences are more easily dealt with, these countries are all closer, growing wealthier and enjoying relatively freer markets. The trend is firmly in place and the single economic community of ASEAN will only further benefit Cambodia and the entire region.

FDI is pouring into Cambodia and the wealth is evident. Range Rovers and Mercedes now share the roads with tuk-tuks, Chinese scooters and hand carts. The ratio is rising in favour of the SUV’s. Just today I was admiring a Porsche Cayenne when a Rolls Royce drove past. My tuk-tuk driver fondly noted, “we not have happy dancing road anymore”. Locals tell me that the infrastructure is markedly better each year, though it’s still under pressure to keep up.

I was curious to understand how much of the wealth was filtering through the economy and in what fashion. I sat down with the management at a recently built 5-star hotel I am staying at here. They tell me they’re running 80% occupancy now! Remember, this is the slowest season of the entire year. Their IRR are over 30% based on free cash flow. Take THAT to the bank! A non-chalant comment from myself was, “you could flip this for a double in 12 months.” Without missing a beat. The response was, “Oh certainly more than that.” This will likely end the same way these things always end, in over supply, speculation, and a crash, but we’re not there yet. The capacity constraints and occupancy rates seem to be telling us that much at least.

Side note on culture and a tale of two watches…

This may be simply anecdotal, but I have found Cambodians to be extremely generous and honest. After spending the day viewing the temples via a mountain bike, I went for a massage. I then hopped in a tuk-tuk and went into town to get some gifts for my kids at the night market. While browsing through the market my tuk-tuk driver ran up to me after having obviously been hunting me down… “Mr. Chris, Mr. Chris, you leave watch.” He told me I’d left my watch at the health spa. Now the logistics of this are impressive. Firstly, the watch was found, not stolen by someone who likely earns $50 per month! Then the tuk-tuk driver who carried me there had to be located, goodness knows how, but he was rung on his mobile and sent to hunt me down. Amazing! Nothing was asked nor expected of me, yet in return I generously tipped all involved, and deservedly so!

Shortly thereafter I received a message from a friend and attendee at our Meet Up. Below is his story in his own words:

“The Cambodians are extremely friendly so far. In addition, I found integrity in places where it can not necessarily be expected. After the Kingdom brewery evening I had another beer or two in the Air Force bar where my watch went missing from my wrist and could not be found anywhere. Ok, no big deal. Why do I wear a watch in these places anyway!? I mentioned the incident at a party the next day, and by coincidence the lady who runs the bar was present. She called me back the following day with my watch ready for collection, stating the cleaning lady had found it, and adding emphatically that “nobody ever steals things in my bar!’ I was impresse,d as such an outcome seems rather unlikely in many places, including Germany or the UK.”

As I’ve said before, put this place on your radar, good things will be heard from Cambodia over the coming decades.

– Chris

“The potential for investors in Cambodia is excellent.The listing of publicly traded stocks will drive up interest and demand. If a country can list its state-owned enterprises and list enough stocks so that foreign investors can get involved, then it can be very, very good.” – Marc Mobius