With the recent launch of flights from Siem Reap, Sihanoukville is truly becoming an important tourism destination, but it is also establishing itself as a commercial and investment-friendly destination as well.
As the home of Cambodia’s international port since 1960, Sihanoukville has always had a commercial setting, but more recent developments look set to position it as a key player in Cambodia’s economic future. Commercial real estate services company CBRE Cambodia has recently increased its involvement in Sihanoukville and the surrounding coastal area, working alongside key developers and landowners. CBRE says it sees the south of the kingdom as both a strong tourism destination and as a lynch pin for the import and export of goods. The company now has a physical presence in the area, and says it expects to see this team expanding in time.
The port itself has seen both physical and economic expansion in recent years. The latest figures show an increase in revenue of 22 per cent in the first quarter of 2012, compared with the same period last year. In order to support and take advantage of this kind of growth, seven new Special Economic Zones (SEZ) have been given the go ahead in the area, offering a number of economic advantages to their occupants. The key concepts behind the SEZs are that they will encourage new industries in Cambodia, thus diversifying the types of commodities that are produced and exported and also accumulating new technologies through Foreign Direct Investment (FDI) in the Sihanoukville area.
Fiscal incentives such as tax holidays, full import duty exemption for raw materials, machinery and equipment, no export tax and 0 per cent VAT are enticing to investors. Reports have claimed that investment into these SEZs rose by 683 per cent in 2011, with the Council for the Development of Cambodia (CDC) approving 39 new projects worth a total of $715.25 milion and with Sihanoukville housing the largest of these, the signs are promising.
Sihanoukville, as well as Cambodia as a whole, also has the potential to benefit from recent issues that have affected investors in Vietnam, through aggravating operating issues. These have included the significant increase in the number of strikes in Vietnamese factories by workers demanding higher wages and also the increase in inflation in the country. While Cambodia’s level of FDI grew by 14 per cent in 2011, Vietnam has seen a fall in recent years from $19.9 billion in 2010 to $14.7 billion in 2011.
With Sihanoukville’s close proximity to Vietnam, a cheap labour force and economic incentives from the likes of the SEZs, investors do not have to look far for a new location.
A further future economic enhancement of the region will be the construction of Cambodia’s first oil refinery. With construction due to start this month and a completion date set for 2014, the site will see a proposed investment of $1.6 billion through a joint venture between Cambodian Petrochemical Company (CPC), China National Automation Control System Corporation and Sino March Company of China.
The Cambodian government hopes that the development will grant Cambodia fuel self-sufficiency and that it will play a strategic role in the industrialisation of Cambodia, while supplying up to 2,000 new jobs in the area.
It has also recently been announced that Ford will be opening a car manufacturing plant in Sihanoukville to produce their Everest SUV for the growing Cambodian market. Another longer-standing investor and major employer in the region is Carlsberg, who have invested heavily in the expansion of the Cambrew brewery in Sihanoukville. The presence of these multinationals in the area is a clear indication of the confidence that they hold the future of Sihanoukville as a commercial centre in Cambodia and in South East Asia.