Cambodia's Ethnic Chinese Thrive as Market Rebounds

NOT far from where the Khmer Rouge once blew up Cambodia's central bank, the country's new monetary masterminds are at work.

Sitting behind stalls in the ocher-colored central market building, ethnic Chinese shopkeepers deal daily in gold and dollars and, in the process, move the throttle of the country's roller-coaster economy.

Since a peace accord was signed in late October, Cambodia has plunged willy-nilly into extremist free-market economics. Virtually no official controls remain, say Western economic observers, as Phnom Penh, the capital, booms after 20 years of political turmoil. No one knows the country's gross national product. No one thinks there's even an official budget.

Instead, in a country where the Khmer Rouge once abolished money, the wildly fluctuating riel is determined by ethnic Chinese shop owners and street-market traders, Western observers say. Several weeks ago, the riel's value to the United States dollar plummeted by 50 percent in one day on political news and a glut of dollars from the flood of new foreigners. The next day, the currency was steadily rebounding.

Everything, including many government properties, is up for sale to the highest bidder. Smuggling, which has jammed Phnom Penh's once ghostlike streets with new motorcycles and second-hand or stolen cars, is Cambodia's main business activity.

"Everyone has a chance to get rich," says an ethnic Chinese businessman who recalled that a few years ago, when China was supporting Khmer Rouge guerrillas, he avoided his native language. "Now, I'm not afraid about speaking Chinese."

Peace is drawing new investors to Cambodia. Thais, Japanese, Australians, and French are all investing in hotels, property, sawmills, and textile and tire plants.

But no one is thriving more than ethnic Chinese traders who dominated the economy before the tumult started two decades ago, then fled or died under the Khmer Rouge.

Since the guerrillas were ousted by the invading Vietnamese in late 1978, the Chinese have been steadily returning from Hong Kong, Thailand, Taiwan, and Singapore to invest.

Yet the doubling of land prices and other speculation are making Phnom Penh a boom town surrounded by a suffering countryside. In this largely agricultural country, productivity is extremely low, farms animals are in short supply, debt is deepening in many areas, and drinking water is lacking.

In the capital, a serious food shortage, caused by drought and floods in recent years, has sharply boosted food prices. But still, poor people stream into the city. And malnutrition, resulting from high food costs, is affecting 10 percent of Phnom Penh's 800,000 people, according to the United Nations World Food Program.

Foreign observers worry that the Khmer Rouge will gain political mileage out of the contrast between rich and poor. "The people with money in Phnom Penh are not prepared to invest in any national development," says a Soviet diplomat.