Several high-profile meetings and investment presentations were delivered in December 2024 targeting the ongoing attempts to revitalise Sihanoukville with the property sector as a key focus as well as ongoing economic incentives. What is this vision for the southern coast of Cambodia presented as ‘Cambodia’s Rising Star’ and what is the messaging being put out to investors?
Sihanoukville - Untapped Potential
The Preak Sihanoukville province has a population of approximately 310,000 in 2024 and spans 32 islands, five reefs, a coastline of 175.81 kilometres, national parks, mangroves, waterfalls and a rich biodiversity. These suggest it has the fundamentals to be a prime tourism destination - and the islands already are such.
Economically, in 2023 the province achieved a total economic output of $1.61 billion, a per capita GDP of $4,602, and an economic growth rate of 4%, while the poverty rate is reported to have been reduced to 1.22 per cent.
Preah Sihanouk provincial governor Mang Sineth in his dual role as Chairman of the Preah Sihanouk Province Investment Promotion Working Group said this month, “The province is already home to a deep-water port, an international airport and national roads that connect it directly to Cambodia’s capital, Phnom Penh’.
He added that there are currently 1,232 small, medium, and craft enterprises with a combined investment of $30.3 million and a workforce of 6,172. The 16 special economic zones, of which only five are operational now, have onsite 270 factories with a total investment of $2.65 billion and a workforce of 94,662.
Location-wise, within one and a half hours, the province is accessible to key markets such as Thailand, Indonesia, and Singapore, and within three hours the entire ASEAN region. Flights under 5 hours bring the majority of China, Japan, and the Republic of Korea within reach - suggesting the province and the Kingdom do have the potential to be a central player in regional trade and commerce.
Special Program To Promote Investment In Preah Sihanouk Province 2024
In January 2024, the Cambodian authorities introduced a “Special Program to Promote Investment in Preah Sihanouk Province 2024.”
The program applies to:
- Project-related buildings that are stalled;
- New projects;
- Expansion of existing investment projects, responding to the Royal Government’s strategies and policies, in particular, the implementation of the master plan to transform Preah Sihanouk Province into a multipurpose model special economic zone.
The program provides exemption from income taxes, VAT, withholding taxes, and property taxes, among others. As a result, there has been a significant renewed interest in the area but there remains a long way to go.
What Is The Latest On The Special Program to Promote Investment in Preah Sihanouk Province 2024
By June 2024, 41 projects in Sihanoukville had qualified for incentives under the investment program, and by the end of November 2024, the Investment Promotion Working Group in Preah Sihanouk province had approved and facilitated 213 projects with an investment capital of US $6 billion. The working group said that just over USD $6 billion in investment capital has been approved which surpassed the original US $1 billion target.
Among these approved projects, 103 (48 per cent) are related to stalled or unfinished buildings (valued at US $2,51 billion) while 86 are unrelated to stalled building projects and considered new projects (valued at US $2.7 billion). 17 projects are expansion projects (valued at US $768 million) and 7 are existing investment/business projects valued at US $30 million.
Of the 165 projects receiving special incentives, 28 have completed construction or improvements, while 69 are currently under construction and 35% of the incentivised projects have yet to commence.
World Bank Report - Cambodia Economic Update December 2024
The latest World Bank Cambodia Economic Update: From Recovery to Resilience: Harnessing Tourism and Trade as Drivers of Growth, was also released on December 12, 2024
In the background information for the coastal Cambodian province, the reports claim there was a strong correlation between the value of fixed-asset investment in the property sector in China and Chinese Foreign Direct Investment inflows into Cambodia during 2013–20 with financing mainly in the construction and real estate sectors. “Chinese investments notably transformed Cambodia’s construction, accommodation, and real estate markets, particularly in Sihanoukville and Phnom Penh,” states the report.
The detailed and interesting report said of Sihanoukville, “Despite the overall downbeat investment, there has been a notable interest in investing in Sihanoukville, a seaside town that experienced a rapid construction boom during the pre-pandemic period. Of the total approved permit value, approved property development permits for projects in Sihanoukville accounted for US $875.5 million, marking a 132.4 per cent y/y increase.
Investment Summit Preah Sihanouk Province - December 2024
From being touted as the new Singapore, the next Shenzhen and now dubbed the ‘Rising Star of the Southwest” at the recently held Investment Summit Preah Sihanouk Province, which was led by the Ministry of Economy and Finance and held in the Cambodian capital - the optics on the province and what exactly it meant to be has been chameleon-like.
The summit outlined the government’s commitment to accelerating regional development, attracting investment, and positioning Preah Sihanouk province as a key economic engine for Cambodia and the broader ASEAN region.
The summit and the messaging from the Cambodian government (for some time) has been that the province will become a national economic centre and a global tourism destination - with much of this hinged on the long-term vision to develop Sihanoukville into a pilot smart city and crucial port for trade in Southeast Asia.
The population predictions under the plan project that by 2038, the resident population of Preah Sihanouk province will account for 5% of the national total, or nearly 1 million residents.
Hean Sahib, Advisor to the Prime Minister and Secretary of State at the Ministry of Economy and Finance said the goals to transform the province “into a dynamic centre for investment, driven by strategic investments in infrastructure, trade, tourism, and industrialisation are underway.”
Are the outlined goals realistic?
- Turn Preah Sihanouk Province into an ASEAN metropolis.
- Convert Sihanoukville into a model green, sustainable and smart city.
- Predictions of 5.4 million annual tourist arrivals.
- Projected to reach a gross domestic product that will account for 10% of the whole country.
Model Multi-purpose Special Economic Zone (SEZ)
In 2021, the Cambodian Ministry of Economy and Finance entered a contract with the Urban Planning and Design Institute of Shenzhen to lead Sihanoukville province’s transformation into a multi-purpose special economic zone.
The master plan is intended to recognise the province’s strategic potential, trade agreements and confidence in attracting international investors in logistics and tourism.
Sineth said over the next 15 years, the plan aims to position Preah Sihanouk as a leading logistics and tourism hub within ASEAN. Four industrial clusters are recommended for it to be a successful Multi-purpose Special Economic Zone.
- Tourism - Including the sightseeing, resorts and hotel industry, commercial gambling, MICE industries, pension industries and healthcare tourism. Developments to connect routes with Thailand, Vietnam and domestic destinations in Cambodia.
- Agro-industry - Primed to facilitate the modernisation of agriculture, animal husbandry and fishing in the surrounding region.
- Advanced manufacturing - Intended to upgrade the existing garment and textile industry and develop advanced manufacturing in electronics, automobile, equipment and machinery sectors by establishing a series of modern industrial parks for high-tech manufacturing.
- Modern service industries -These include special finance, cross-border trade, and digital economy.
The key goals of the master plan include doubling GDP growth to reach twice the national average by 2040, attracting at least $20 billion in private investment and drawing over a million domestic and international tourists annually.
In mid-2024 we also provided a detailed update on whether Sihanoukville’s developments were on track to attract investors - how do you feel progress has been?
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