The American Chamber of Commerce in Cambodia (AmCham) organised a delegation visit to Sihanoukville on November 17, 2023, focused on evaluating the coastal province’s potential for business and investment.
The full-day trip to Sihanoukville was structured to cover the province’s main industries and sectors that offer the most opportunities for investment. Speaking with B2B Cambodia about the motivation behind organising this business delegation tour, Devin Barta, AmCham President and Director of Operations for AHF Products in Cambodia, explained that most of the chamber’s members operate their businesses out of Phnom Penh, so Sihanoukville still remains a bit of a blind spot despite increasing investment opportunities and demonstrated growth in the province.
“Given that lack of visibility, it seemed like a good idea to at least make the offer to bring interested parties here [to visit Sihanoukville], those who want to get information on what's here in the real estate market, or what's here in terms of the economic zone and from a manufacturing standpoint,” said Barta.
“The main idea was to create better awareness of what's available here in Sihanoukville, because we tend to be so Phnom Penh-centric.”
“We thought it would be a great idea for a little bit of a different event to your typical networking event, to bring a delegation of businesses in Phnom Penh, or from outside of Cambodia, to Sihanoukville,” added Tom O’Sullivan, AmCham Board Member and head of the chamber’s real estate committee responsible for organising this trip. “We wanted to offer something different to our members and expose Sihanoukville in a bit of a different light.”
Sihanoukville’s Trade Infrastructure And Logistical Capacity
The visit commenced with a presentation and site tour of the Sihanoukville Autonomous Port. The delegation got to briefly tour the bonded area and also view a large foreign cruise ship that had recently docked, highlighting the port’s crucial role in both tourism and trade. Following the port visit, the delegation travelled to the Bay of Lights coastal development project where the Vice-Governor of Sihanoukville, Long Dimanche, gave a special presentation highlighting the province’s investment prospects.
The coastal development project is expected to be fully-completed by 2038. During his remarks, Dimanche described the Sihanoukville Autonomous Port as the province's “gem” and its most important gateway to, and from, the world. “It is the main deep sea port of Cambodia with an area of 125 hectares, and the Port Authority is strategically located to be connected easily to all of the busiest ports in the region and in the world,” said Dimanche. “It is expected that by 2025, the port's new deep sea container terminal worth more than USD $200 million, will be able to welcome larger container vessels adding to the existing capacity of the port.” The Vice-Governor also highlighted the Sihanoukville International Airport, which has a 3,300 metre runway that can accommodate ‘Code E’ aircrafts and up to 1 million passengers per year, and the brand new Phnom Penh-Sihanoukville Expressway, which became fully operational earlier in 2023. Dimanche noted that the expressway, which the delegation took to reach Sihanoukville, effectively cuts down the travel time between the capital city and coastal town to roughly three hours, helping to improve local tourism and overall logistics.
Sihanoukville Special Economic Zone (SSEZ)
The tour continued with a visit to the Sihanoukville Special Economic Zone (SSEZ), where the delegation toured manufacturing facilities, including a factory producing automobile parts, and the AHF Products-owned ‘Fine Flooring (Cambodia)’ factory that produces hardwood flooring for a primarily American market. Barta, who oversees the main operations of Fine Flooring, explained that AHF Products bought the factory from a Chinese flooring manufacturer in 2019 and has since expanded its operations after closing down its other overseas facilities in Shanghai. “We made investment here predominantly because there's good raw material and resource availability, somewhat, in the region, and we bought it because it was a well-run and operating factory that we could grow and get more up to our standards of product safety and operations,” shared Barta. “It made sense for us, and specifically to establish in this Special Economic Zone, because we're so close to a port.”
“The Special Economic Zone is the main attraction for investment of potential industries within the province, especially as it utilises the benefits of Cambodia’s trade preference statutes, such as the EU’s EBA (Everything But Arms), the US’ GSP (Generalised System of Preferences), the UK's DCTS (Developing Countries Trading Scheme) and other Free Trade Agreements (FTAs) with Korea, China and more,” highlighted the Sihanoukville Vice-Governor.
Dimanche explained that there are actually six SEZs in operation in Sihanoukville province, and the delegation visited the one in Prey Nob district, which “hosted as many as 174 factories, as of 2020, employed around 30,000 people and served as Cambodia's largest export base.”
Why Invest In Sihanoukville?
“I would say that there are a million reasons why you must come to Sihanoukville and start your business and make investment,” asserted Dimanche, ultimately choosing to highlight four main points of consideration:
- Geographic Location: The Vice-Governor said he believes Sihanoukville offers a strategic location with high potential, well-connected with the capital city and close enough to other countries in the region, such as through the Greater Mekong Subregion economic corridor connecting Vietnam, Cambodia, Thailand, Laos and Myanmar;
- Tourism Potential: The government is implementing the Preah Sihanouk Tourism Development Plan (2021-2025) which expects to lead to a strong wave of national and international tourists through the establishment of better infrastructure and the improvement and promotion of higher quality tourism services;
- Prioritisation of FDI: Dimache said the Cambodian government has made utmost efforts to encourage the flow of the FDI into Cambodia, such as through the new Law on Investment promulgated in 2020, which provides favourable investment facilitation and is very incentive driven;
- A Future Technological and Financial Hub: The Vice-Governor emphasised that Sihanoukville is anticipated to transform into a multi-purpose Special Economic Zone, which will essentially transform the province into a technological and financial hub, "synonymous to China’s Shenzhen City".
Dimanche further stated that in order to encourage more national and international investment, the government can offer certain tax exemptions and incentives, such as:
- Exemption on registration tax for transfer of ownership or possession of real estate between 2022 and 2025;
- Property tax can be borne by the government from 2022 to 2025;
- Exemption on withholding tax for property rental for three to five years;
- Exemption on income tax for seven to nine years, depending on the size and the capital of investment;
- Exemption of the minimum tax for seven to nine years;
- Exemption for prepayment on income.
He added that the government may also provide other non tax-related incentives and assistance, such as facilitating the issuance of reconstruction permits, licences, long term visas and permanent residence.
While these prospects are positive, there are still a number of issues the province continues to grapple with and will need to complete addressing in order to reach its full potential. “There are some problems that the government is still dealing with, such as the issue of the 400 unfinished buildings, and so on,” O’Sullivan mentioned. Dimanche also touched upon this issue in his presentation explaining that the government is prioritising three As – addressing the stalemate, attracting new investors and capital to take on existing projects, and avoiding demolition – through a special “package of measures” released in March 2023 to tackle the problem of unfinished buildings.
Overall, Barta expressed a positive assessment of the joint-efforts being made by the public and private sectors to spotlight Sihanoukville’s investment potential. “The interaction that’s started to take place between the public and private sector is very promising, the ideas we have to make things better are actually taken into consideration and may have a positive impact,” said Barta. “From a manufacturing and industrial perspective, there's room for that here [in Sihanoukville], and I think [the business environment is] quite welcome, I think the country welcomes it,” he added. “From a tourism perspective, we know there's opportunity here, there are plenty of natural resources but we have to ensure that we take advantage of those natural resources in a responsible manner.” “I hope this positive trend continues… as long as we remain on this trajectory, I think that we can continue to attract investors and help develop the Cambodian economy," Barta concluded.
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