Japan has signed a 3.65-billion-yen ($35.92-million) loan agreement with the Cambodian government for the design and development of a new 70-hectare special economic zone (SEZ) at Sihanoukville Port.
The agreement, signed in Phnom Penh on March 31 between the government and the Japan Bank for International Cooperation (JBIC), a Japanese government financing institution, will help fund new roads, sewage facilities and water supply for the SEZ, which will be Cambodia’s 19th such investment park.
“[SEZs] definitely attract more foreign investors,” said Carie Phou, marketing manager of Phnom Penh Special Economic Zone Ltd, adding that the zone in the capital had already lured firms from Japan, South Korea, Taiwan, Singapore and Malaysia with its tax concessions and streamlined permit application process.
“It’s a friendly investment environment,” she said.
Hiroshi Suzuki, JBIC advisory economist to Senior Minister of Economy and Finance Keat Chhon, said he believes the new SEZ will attract more foreign investors.
We think that this new agreement could contribute to attracting Japanese investment to this country.
“The first benefit is infrastructure. In Cambodia, power and water and such kinds of infrastructure are not sufficient. But within the SEZ, foreign investors will enjoy good conditions,” he said.
Like Cambodia’s pre-existing SEZs, the Sihanoukville SEZ Development Project will also offer investors financial benefits including simplified customs control, low service charges, exemptions from profit tax and import-export duties, and protection against labor unrest.
Suzuki said he is expecting the new SEZ to increase Japanese foreign direct investment (FDI) in Cambodia.
“Of course, the first option in the agreement is to assist the development of Cambodia,” he said. “However, at the same time, one important challenge is how to attract FDI… and we think that this new agreement could contribute to attracting Japanese investment to this country.”
According to the Council for the Development of Cambodia, Japan’s FDI between 1994 and 2007 amounted to $135 million, just a fraction of the amount invested over the same period by China ($1,761 million) and South Korea ($1,509 million).
“The necessary infrastructure and facilities will … create a better investment climate for potential Japanese investors,” a Japanese Embassy spokesman said by email.
The spokesman added that the Embassy expects the SEZ to create an estimated 15,000 jobs for Cambodians upon its completion.