Vijian Paramasivam
In the aftermath of the COVID-19 pandemic, Sihanoukville, a province in southwest Cambodia, is embarking on an ambitious journey. Spearheaded by the provincial government, the region aims to reinvent itself as a thriving ASEAN port city, overcoming the long-term challenges posed by the pandemic. This strategic pivot was showcased during a key visit by the American Chamber of Commerce (AmCham) in Cambodia, where policymakers and key private sector players convened to outline the province’s renaissance plans.
Renowned as the “Rising Star” of Cambodia, Sihanoukville’s transformation is supported by major infrastructural projects, which include the development of a deep seaport, a special economic zone (SEZ), an expressway, an upgraded international airport, and compelling incentives for investors. These initiatives are not just about recovery post-COVID but are geared towards catapulting Sihanoukville onto the global stage, drawing inspiration from the developmental stories of global cities like Dubai, Singapore, and Shenzhen.
The focal points of this resurgence are the Sihanoukville Port Autonomous and the Sihanoukville Special Economic Zone. These drivers are crucial for the economic upliftment of nearly 300,000 residents, whose livelihoods are primarily rooted in manufacturing and aquaculture. The discussions and strategies unveiled during the AmCham Cambodia visit have shed light on the province’s determined efforts to transform its landscape and economy.
Revitalizing Sihanoukville’s Port: A Strategic Move
In the grand scheme of Sihanoukville’s redevelopment, the port plays a pivotal role. Aiming to boost both exports and imports while attracting international cruise ships, the port’s upgrade is essential for the province’s economic rebound. Addressing the limitations caused by shallow berths, Prime Minister Hun Manet has called for accelerated development to facilitate the docking of larger vessels.
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The completion of the port’s first phase, expected by 2026, involves the construction of a 350-meter terminal with a depth of 14.5 meters, demanding an investment of around $203 million. “Our vision is to transform this port into a hub capable of handling a throughput of one million TEUs by 2030,” remarked a senior port official during the AmCham delegation’s visit.
Future development phases aim to further extend and deepen the terminal, with phases 2 and 3 completing in 2028 and 2029, respectively. These enhancements will empower the port to manage larger container ships, significantly bolstering its capacity.
Devin Barta, President of AmCham Cambodia, commented on the port’s expansion: “This development is crucial for stimulating manufacturing growth and increasing export capacity. It represents a strategic shift in reducing time and costs for manufacturers and minimizing our reliance on transshipment.”
The port’s growing appeal as a tourist destination is evidenced by recent visits from luxury cruise liners like the Italian AIDA Bella and Norwegian Jewel.
Sihanoukville SEZ: A Hub of Employment and Global Investment
Parallel to the port’s development, the Sihanoukville Special Economic Zone in Prey Nob district has emerged as a vital employment and investment magnet. Currently hosting 175 manufacturing units, the SEZ employs nearly 30,000 Cambodians. With plans for further expansion, the SEZ aspires to accommodate up to 100,000 industrial workers across 300 enterprises.
In the first ten months of the year, the SEZ facilitated a substantial $2.76 billion in imports and exports. International firms, including Fine Flooring (Cambodia) Co Ltd, Horseware Products (Cambodia) Co, and Caffco International (Cambodia), have set up operations to capitalize on the zone’s strategic location and incentives.
Barta, who also serves as the Country Manager for AHF Products, highlighted the SSEZ’s significance: “Our five factories here play a pivotal role, employing 850 workers and focusing primarily on exports to the American market.”
The upcoming 187-km expressway linking Phnom Penh to Sihanoukville is expected to further streamline transportation and logistics. The provincial government’s vision extends beyond mere recovery. Long Dimanche, the Vice Governor of Preah Sihanouk Province, elaborated on their ambitious plans to transform Sihanoukville from a quaint coastal town into a mega city.
“Our goal is to harness our young, vibrant workforce, modern infrastructure, and strategic location to make Sihanoukville a key gateway to Cambodia and an important industrial and logistics center within ASEAN,” he shared with the AmCham delegates.
Addressing Legacy Issues: The Unfinished Building Projects
A critical aspect of Sihanoukville’s transformation involves tackling the issue of unfinished building projects, a legacy problem exacerbated by the pandemic. “We are actively seeking new investments to resolve the impasse caused by these unfinished projects. Our approach is to avoid demolitions or abandonments,” Dimanche explained.
The Deputy Governor also explained the steps being taken to address the issue of unfinished buildings in Sihanoukville. He said that around 400 unfinished buildings have been identified as of August 2023 as potential targets for investors with a host of incentives to finish them. The package for unfinished buildings, announced in March last, includes tax and non-tax incentives.
The tax incentives include exemption from registration tax for the transfer of ownership or possession of real estate between 2023 and 2025, exemption on withholding tax for property rental for three to five years, exemption on income tax for nine years and exemption on minimum tax for nine years. The main non-tax issues include unfinished buildings that do not have permits, major structural issues of buildings and most importantly the lack of demand in the market for any short-term use.
Sihanoukville’s ambitious plans, catalyzed by the provincial government and highlighted during the AmCham Cambodia visit, showcase a determined effort to transform the region into a prominent ASEAN port city. With its strategic developments, including an expanding port and a thriving SEZ, Sihanoukville is poised to turn post-COVID challenges into opportunities, signaling a new era of growth and prosperity.
