Interviews

The Foreign Correspondents Club of Cambodia is perhaps the most well known restaurant in the country. It has been a prominent feature on Phnom Penh’s waterfront for nearly a decade now and as testament both to its own success and to the stability of Cambodia and its burgeoning tourism industry, a second FCC restaurant recently opened in Siem Reap, just minutes from Angkor Wat.

Anthony Alderson, Operations Director for Indochina Assets Realty, the company which owns the FCC, has been running the restaurant since its early days. Here he discusses the FCC’s past, present, and future, his experiences doing business in Cambodia, and finally he offers some opinions on Cambodia's tourism industry.

Interview October 27, 2002 at FCC Angkor, Siem Reap, Cambodia

Q: How did you become involved with the FCC?

A: I got to Cambodia in May 1992 as the United Nations peace keeping force was on the way. I came from Vietnam to specifically open a restaurant and I was amazed to find that Phnom Penh only had one foreign restaurant with 22,000 peace keepers arriving, so that was the initial impetus to stay. I opened the first pizzeria in Phnom Penh in October 1992. The FCC was another group who’d come to Cambodia to set up, originally, the Gecko Bar and they went on to do the FCC. And at that time I had another fine, I wouldn’t say fine, but good dining restaurant that was very popular with the expat community. At that time the FCC food was absolutely terrible, I have to say. I approached the people who set it up and told them that I thought that there could be a lot of money made with the right food and the right people to put it together. We came to an agreement and I shut my restaurant down and transferred the clientele, who actually were the same clientele, but could now eat and drink at the same place.

Q: How did the FCC grow?

A: My wife and I took over the FCC in December of 1995. The month before is one of the busiest months of the year with the Water Festival. The FCC site in Phnom Penh is in a prime location, it looks over the river. In one month we doubled the income. We turned a loss into a $12,500 profit in one month, the first month. So from that moment on, we could look at the direction of the company very differently. They’d initially started as wanting to buy property and just rent it and so they didn’t need all the people on the ground or anything like that. The fact that we proved the operations could make a lot more money than the rentals suddenly brought a whole change to the way the company looked at the way it does business.

The FCC has since developed from five apartments to eleven apartments in one block which the company has purchased over the years. And with all this purchasing we looked at slightly different concepts. Rooms have been put in, a bookshop, a handicraft shop, a delicatessen, and we did have an internet café before. We did this with the idea that the tourist can come in and have one stop shopping. You can drink your coffee, read a newspaper, have your travel arrangements sorted for you, and so on. That was the initial idea, the initial concept of the FCC when I took it over, outside of straight journalists.

As with any developing country the journalists turn into tourists. Thus the clientele changed. In 1992 there were a lot of journalists in Cambodia, but now I’m glad to say it’s the increasing tourist market that is filling the seats. These times are good for the country, there’s no doubt, hospitality is going the right way. The FCC was really journalists in the beginning but a very very good brand name. And because of the long history of Cambodia, it’s amazing how many people thought the FCC had been there since the 60s or the 70s. I think if you’re looking at the last ten years it’s probably one of the most well known places there is in Cambodia. It seems to work, hence that’s why we wanted to keep the same name.

Q: What brought the business to Siem Reap?

As a hospitality property developer we wanted to go further so we had to come to Siem Reap. This is where the real market is developing now with Angkor. We’d been looking for a building for some time and it turned out that one of our regular customers in Phnom Penh owned what we thought was the perfect spot to do an FCC. We only started negotiating the lease in September of last year, so we’ve gone from finding the building, to negotiating the lease, to the design, to the fit out, to the training, in only thirteen months which I think is a pretty good effort and that comes down to having a good team and not just having one person do it.

And in moving forward with this Siem Reap site we’ve got 22 rooms planned to be built on the neighboring land. I got all the drawings today from the architect. That’s the next step, we’d like to try to get that open at this time next year in time for high season 2003, Visit Cambodia year.

But outside of just the FCC business we’ve also invested in a joint venture import company, a food import company. All the beef Raffles buy, they buy it from us. As an actual group we are trying to develop all their needs in hospitality and cover as many bases as possible because we see this as a growing market in Cambodia.

The import company is the first company to have cold storage in both Phnom Penh and Siem Reap. No one else has that yet. So we’d like to think there are some good opportunities there. And then further afield, we’d like to keep this kind of investment moving. We think people like it, it works, so what next? Maybe Vietnam. Maybe Laos. If Burma opened we’d definitely want to go look at Bagan. Tour operators are sending the same people around to the same sites, the new old heritage sites, being Siem Reap, Luang Prabang, Hue, Bagan. So for us that’s also a target market to follow, because if you get the same clients eating in your restaurants in the same areas it makes life a lot easier.

Q: Who owns the FCC?

A: The FCC is owned by about forty people. There are four directors, I’m the Operations Director, man on the ground as it were. I’ve got a significant amount of shares within the company. And you got the lawyer, you got an accountant, you got the corporate structure guy.

The company is actually called Indochina Assets Realty which is the holding company for the FCCs – Siem Reap/Angkor, Phnom Penh, 50^th Street, all the investments are under IAR.

Q: You are independently owned of the FCC Hong Kong, FCC Bangkok, correct? You’re not part of the same ownership?

A: We’re a separate business, the others aren’t really a business, they are private clubs. For years there was no way you could have a private club and survive in this place so ultimately we spoke to journalists and got them together and said, “look, we want to build this place, put your name on it, is that okay? And you got a great place to hang out in” and then they set up a committee and wrote to the other FCCs, the private clubs, to get some form of reciprocal agreements. So if you are a member in Hong Kong or Bangkok you’ll get a 20% discount off all food and beverage when you come to us.

Q: What about the restaurant in Myanmar?

A: The one in Myanmar is not actually called the FCC because you can’t. They are not so keen on journalists over there. So that’s another investment, a restaurant/bar that we opened in 1997. And we purchased the property. We don’t just rent properties. In Phnom Penh we own the property. We also own some land in Koh Samui, we have a bit of land in Ho Chi Minh City.

Q: What’s the name of the restaurant in Myanmar?

A: It’s the 50^th Street Bar and Grill. The reason we called it that, is that Rangoon is a very big city and the bar and grill is set on 50^th street. Hence the name.

Q: What was your background before you came to Cambodia?

A: I left England in 1987. I used to be a commodities broker. I was a trader on the London Metals Exchange floor. As soon as I left England I traveled out here to Thailand, traveled overland to Bali, then to Australia. And what was meant to be a one-year trip and a job back on the metal exchange floor turned into fifteen years and I’m still not back. I go back very regularly but from the moment I left England I started working in restaurants and bars. So that was really where the love affair of this kind of business started.

Q: So this wasn’t your background in England? You made it for yourself when you got to Asia?

A: Absolutely, well, more in Australia. I wasn’t working in Asia to start with, I was traveling, whereas I was working in Australia and New Zealand for nearly two years in restaurants and bars. But from my history of commodity brokering I knew city boys as it were, I knew the finance. I knew how to speak to them. The fact that I could understand figures, talk to investors, and still turn a pan in the kitchen made it quite easy to combine the whole lot. So we got the finances going and convinced people that things like this could work.

Q: What are some of the problems you have doing business in Cambodia?

A: I think the biggest problems, or the hardest thing to achieve, has been tax compliance. I don’t think there’s any other restaurant in the whole of the country that pays their tax properly. Not one. I know they don’t. We have international shareholders, we have to be tax compliant. We are audited by PWC at the end of the year. It’s taken us a couple of years to become 100% tax complaint. I think that’s a great achievement.

Staffing issues are another problem, abiding by the labor laws. And making sure that we are a real company from something that started with saying “that would be nice to have a restaurant up there wouldn’t it?” when accounts were really sorted on the back of a cigarette packet. They have been the hardest issues. There hasn’t been anyone coming to hassle us for money. It doesn’t happen.

I think logistically when you put a place like this together you’re looking at an investment of $650,000. When you got a variable of pizza ovens that cost you $15,000 and toothpicks that don’t really cost you one riel, it’s quite a big spread of what you have to deal with. All of the stainless steel equipment, the fridges and so forth are coming from Thailand. They were stuck in a paddy field for five days thirty kilometers outside of the city! (shaking his head) It’s the main road for trade.

So really, the main issues have been staffing issues, developing middle management so you can actually step away from the business. That’s taken a lot of time. We’ve had machetes in the kitchen, knives against throats, all kinds of things. I’ve personally been cooking when a guy has held a knife up to me and I’ve jumped in the middle of someone trying to stab someone else. Early mistakes have been made, for example having Vietnamese and Khmers in the same kitchen, which we would never do, obviously, again.

Q: You are well past that now?

A: Yeah. You don’t really want it when you have an open kitchen like we have here, either.

Q: What sort of advice would you offer to somebody thinking of coming to Cambodia to open a business, specifically a restaurant?

A: Get here quickly. I think it’s quite straightforward now. It depends on what level we’re talking here. If you’re going to be an individual opening a small little shop front you probably don’t want to pay any taxes. So I’ve got no advice for you at all. If you want to do something properly I’d be quite happy to give someone advice. The laws are in place to do things properly from the beginning now. They weren’t before. In 1992 there were no laws available to us about how we could run things, so you just did it. Today, the laws are very clearly in place to show what you can expense and what you can’t expense, how VAT works, how your profit tax works, what your staff should be on, it’s all there, so in that respect if you are coming to open a restaurant it can be done properly from day one.

Q: Are you comfortable with the laws as they are now?

A: Yeah, pretty comfortable. They’re not specific to each industry and that’s changing all the time. A very good example is we invite the GM of Raffles for dinner. There’s no doubt that’s a business dinner. Within the industry of food we still can’t put that through as an expense.

Q: Why is that?

A: Because the entertainment as a specific law hasn’t been made. There’s no specific law for every single expense as there is, maybe in garment factories, but in restaurants, no. So you have to be quite creative still in your accounting.

Q: Are you satisfied with the quality of labor available in Cambodia?

A: Very much so. Ten years ago there was only one foreign restaurant. No one knew what spaghetti was. A freezer was just a very good fridge. Now with Angkor here and hospitality, this is a real developing industry and you can now get staff that was trained at the Intercontinental nearly ten years ago and maybe worked there and at the Grand Hotel and the Sofitel. Again, it’s middle management we are trying to create, as there are people who have proven that they are good in the industry, no doubt. As far as waiters and waitresses go we prefer to take people who have had no experience on that level so in theory it is easier to train them the way you want them to be. Everyone tries to serve you the best way they can, it’s a matter of understanding relaxed and efficient service.

All in all we interviewed 733 people for this building, this staff of 60. A lot of those were gardeners. More gardeners arrived than duty managers.

So yes, I think the pool is quite good out there but Siem Reap has some issues coming its way. As a town it’s not big enough to service the demand and a lot of people seem to be moving up here from Phnom Penh.

In the days I used to do all the cooking, all the accounts, the whole lot. It’s quite a nice position to be in today. When you have got a team around you, specialized chef, specialized operations manager, life is getting a lot easier, right from the top to the bottom. The industry has developed enough to the point where you could afford to employ more experts in certain areas to make sure standards are kept.

Q: What else do you see as a challenge to Siem Reap as the tourism industry expands?

A: They have no master plan. Right from preservation to road systems to drainage, there is no master plan that I know of in Siem Reap. No one really knows on a long term scale what this will look like. No one has the slightest idea how the finished product will be.

So again, I think things like this come very much down to individual investors and the way they put things together, taking this into account. We don’t pump our water into the river like most people do. We have systems to make sure we’re not endangering the environment.

Other issues, obviously in this high season, decent hotel rooms. There are not enough quality hotel rooms. It seems like there’s building everywhere, no doubt, but when you break down the actual tourist numbers, you see a lot of this is being built for the Chinese market. According to reports by the government, it’s going to be ten years, every high season there will not be enough rooms. Even this year from talking to tour operators, particularly the European-line flights, they’re fully booked already, Europe to Bangkok. And that’s restricting getting to the gateway. There are not enough seats on the planes coming here. Logistically, there aren’t the roads.

What’s being offered is a five-star destination, there’s no doubt about it, there’s nothing like Angkor on this planet. It deserves to have a large number of people but no one is really working on the right issues.

Q: Are you confident that Cambodia will be able to catch up with the infrastructure needed to handle the anticipated tourist arrivals in Siem Reap?

A: Not so confident. No.

Q: Does Cambodia still suffer from an image problem?

A: Cambodia does suffer from image problems there is no doubt of this. Its modern history is still very apparent in most people’s minds. I think most people coming here know of those times. Although a lot of people, not having read anything, aren’t quite sure when the Pol Pot era was or how long it lasted for. I think a lot of people really believe they are like an Al-Qaida network out there that they are this organized bunch of guerillas that can cause devastation at any moment. It’s not the case. They’re not here anymore. There’s no ideology behind it. Hasn’t been for years. Pailin, it was some gems and logs.

Q: What does Cambodia need to do to get over this image problem?

A: Time, obviously, will help. More people have to visit. Cambodia, they aren’t known for their great marketing skills. So I think a PR company would be quite useful for the government. They tried it pre-1997 but not very seriously. Ultimately things should be getting out a little bit more.

Another problem for Cambodia as well is they are never going to have direct flights coming in from Europe.

Q: They say they will. When I interviewed the Secretary of State for the Ministry of Tourism in March 2000, he was adamant that they’re going to get an airport in Siem Reap by the end of this decade that’s going to accommodate long haul flights.

A: By the end of the decade? Well you know, that’s seven years away. Well, there’s a possibility then. But not tomorrow? For the next couple of years there’s only going to be short haul flights. And you’re looking at only a two and a half day holiday. Ultimately, if you really want to get the money out of the tourist you want them to stay for ten days to two weeks. Still, there’s no master plan. So outside of Angkor, they really need to be making sure, developing the beach areas so they are catering to all markets and not just the middle-aged China market. Not everybody likes shiny tiles and Formica.

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