It has been more than four months since the Special Investment Promotion Program For Sihanoukville plans were announced to help transform the coastal province’s unfinished building issue and to help the region move on through its next cycle of development. So what new developments have there been and can the Preah Sihanoukville still fulfil its potential and serve as a beacon of investment and development for the Kingdom of Cambodia?
Special Investment Promotion Programme for Sihanoukville - Mid-2024 Updates
By June 2024, 41 projects in Sihanoukville have qualified for incentives under the investment program initiated by Cambodian Prime Minister Hun Manet at the start of the year.
The program was mainly tailored to solve the unfinished and abandoned constructions in the coastal city and the Sihanoukville Investment Promotion Working Group confirmed that 14 new approved projects from foreign and local investors were valued at approximately USD $737 million would benefit from the previously announced special incentives (in addition to the 27 projects already qualified for the package).
These projects include the establishment of a national agro-industrial park, a five-star hotel project, casinos, resort projects, condominiums and multi-functional offices, while seven of these are intended to revive stalled constructions.
In the near future, the status of an additional 23 projects will be reviewed by the working group. It is progress but considering that the government had identified 362 unfinished buildings in Sihanoukville at the start of the year, it is indicative of slow progress.
Will Targeted Tax Incentives Be Enough?
A CamEd Business Review published in June H1 2024 argued that the tax incentives in Sihanoukville as part of the investment program, which form part of the Pentagonal Strategy-Phase I to empower economic growth engines for the entire country, only provide a short-term solution but do not address the underlying needs of the investors.
The article argues that investors are looking for long-term tax certainty, but that Preah Sihanouk province is on the right track.
Investors will look for long-term benefits, and the current incentives may not provide the necessary reassurance for a long-term commitment, so the extent to which current tax incentives will encourage enough ongoing investment remains uncertain.
Preah Sihanouk Multi-Purpose SEZ Master Plan (MPSEZ)
Meanwhile, the work on a master plan to develop Preah Sihanouk province into a multi-purpose model Special Economic Zone (SEZ) is also nearing completion, suggested some media reports.
The planning of the Preah Sihanouk Multi-Purpose SEZ Master Plan has been underway for a long period of time, and the ambitious development plan aims to see the city’s population rise from the current 300,000 estimated to one million residents if the plans are approved and successfully implemented.
The masterplan is being developed with the support of China’s Urban Planning and Design Institute of Shenzhen (UPDIS) and the multi-purpose SEZ has bold ambitions to be a major economic zone in Southeast Asia empowered by smart technology and serve as an advanced industrial zone serving regional and global production chains.
The latter is intrinsically linked to the region’s aspirations in being an advanced hub with the Sihanoukville deep sea port upgrades and expansion, the newly announced Funan Techo Canal development, and other maritime routes being expanded on and developed.
Transforming Preah Sihanouk province into a Multi-Purpose Special Economic Zone also relies on the continual maintenance and enhancements of the Phnom Penh-SHV Expressway, more flights being introduced into the region's international airport, and the coastal assets being sustainability developed to become a beacon of investment and tourism.
The committee behind the master plan said online, “Our comprehensive master plan aims to leverage these unique advantages to create a thriving economic zone that supports sustainable growth, enhances living standards, and attracts global investments.”
This is not only an ambitious transformative journey for Preah Sihanouk province but it will require huge buy-in, belief, and financial investment for the area to be an important economic pole, which can promote economic growth as well as social development.
The long-term vision of the MPSEZ is for the area to be:
- An international gateway (land, sea and air)
- Serve as a national development pole
- Be transformed into an attractive ASEAN metropolis
On 17th June 2024, H.E. Tekreth Somrach, Permanent Secretary of State of the Ministry of the Land Management, Urban Planning and Construction, and with participation of the Ministry of Tourism, the Minister of Environment, and Special Investment Promotion Program of Preah Sihanouk 2024 updated and discussed the zone development and further action plans for development projects along the Otres and Ou Tracheak Chet area to promote tourism in line with the long term vision for the area to become a regional integrated hub.
On the same day, H.E. Chea Kok Hong, Secretariat Director of the Inter-ministerial Technical Working Group Coordinating the Development and Implement of the Master Plan to Develop Preah Sihanouk Province into a Model Multi-purpose SEZ joined the 5th Financial Center Technical Working Group (TWG) meeting led by H.E. Ros Seilava, Secretary of State and Chairman of the Financial Center TWG to discuss business proposals of the International Financial Center (IFC) establishment in Preah Sihanouk Province.
Making It Easier To Get To Sihanoukville (And Invest)
In June, Cambodian Prime Minister Hun Manet completed his first state visit to Singapore and requested his Singaporean counterpart to expand their flights to Cambodia by launching direct flights from the Lion City to Sihanoukville.
Cambodian Prime Minister Hun Manet stated during the Cambodia-Singapore Business Forum that the Special Program to Promote Investment in Preah Sihanouk Province 2024 offered unique benefits to investors beyond the Law on Investment.
He emphasised, “Our new Law on Investment offers enticing incentives including tax breaks of up to 15 years for numerous priority sectors, along with investment guarantee and protection with no discrimination between local and foreign investors and no restriction on remittance of profit and capital.”
Air Asia Cambodia also announced that three times per week from July 3 2024, they will be operating flights between Sihanoukville and Kuala Lumpur, Malaysia.
Developing Maritime Connectivity - "One Market, Three Destinations"
At the CVTEC-Trat Business Roadshow 2024 (also held in June), Thailand, Cambodia, and Vietnam discussed collaborating on the establishment of a maritime route linking the islands near Trat province with Cambodia’s Sihanoukville province and Vietnam’s Kiên Giang.
The maritime route would connect islands to try and promote investment, trade, tourism and MICE (meetings, incentives, conferences, and exhibitions) under a banner of "One Market, Three Destinations". The group said that the new initiative would not only serve as a modern economic route, but as an attractive tourist route to promote beautiful nature and culture.
The representatives of both the private and public sectors of the three countries signed a Memorandum of Understanding (MoU) to explore this further with an optimistic target to open this sea route during the peak tourist season from November 2024.
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