Cambodia Economic Zones

Cambodian Economic Zones to Fulfill Potential

The Phnom Penh Special Economic Zone (PPSEZ) was established in 2006 and is located near the Phnom Penh airport and in close proximity to the largest population cluster of the country. Further, it is strategically located between Bangkok and Saigon at the center of the East-West Economic Corridor that links Vietnam, Cambodia, Thailand and Myanmar. It currently has over 77 companies and over 15,000 employees working for companies located in the PPSEZ. The site is currently nearly 360 Ha and was developed in three stages. The PPSEZ was created to encourage light, medium and labor intensive industries to establish operations in Cambodia, such as:

Mechanical and electrical products destined both for export and the local market
Garment, shoe and fashion industries
Food processing and agricultural industries for regional and local markets
Consumer products (pharma, packaging etc.)
Assembly of pre-produced parts to final product for international, regional and local markets
Logistics companies

Some of the key incentives to investors are:

Preferential access to regional & world markets for products made for export
Investment protection agreements with the worlds leading markets
A low corporate tax of 20%
Full import and export duty exemption
No requirement for local participation
No price control on any products or services
No foreign exchange control
No restriction on capital repatriation for profits, interests, royalties, investment capital etc.

According to the PPSEZ CEO Hiroshi Uematsu in an article in The Nation Newspaper and to the PPSEZ Mission statement the PPSEZ seeks to be the top special economic zone and the top industrial estate in Cambodia. Uematsu further in the Nation article says he wants to seek the zone to be a leading industrial zone in the (Greater Mekong) region. From viewing the site and talking with some of the companies located there, it is evident that the PPSEZ is serious about helping Cambodia to shift its industry to more sophisticated light manufacturing and away from low-end piece work apparel production. Companies already located at the PPSEZ include major brands like Toyota, Yamaha, Tiffany and Coca Cola.

Recently the zone has seen the entry of four Chinese companies into the PPSEZ. One of the bigger of these is Sichuan New Hope Agribusiness (Cambodia) which is a subsidiary of China’s largest privately held agricultural company which aims to do more than compete with Thailand’s CP Company as an animal-feed producer. Sichuan New Hope Agribusiness (Cambodia) also has targeted banking, financial services and other sectors as part of its long term growth mission in Cambodia.

Nearly a four hour drive (210 kilos) away on Highway 4 and very close to Sihanoukville (about 12 kilos) , the county's major international port, and only 3 kilos from the Sihanoukville airport sits the Sihanoukville Special Economic Zone (SSEZ). The Sihanoukville Special Economic Zone (SSEZ), is an overseas economic and trade cooperation zone between China and Cambodia, co-operated by Jiangsu Taihu Cambodia International Economic Cooperation Investment Co., Ltd and Cambodia International Investment Development Group Co., Ltd. The cooperation project was agreed to in 2010 and work was commenced on the site in 2012. The zone has a total planned area of 11.13 square kilometers and the plan of 5.28 square kilometers initial area. Focus of the zone is on textile & clothing, machinery &electronics and light industry products as the leading industries.

Currently the zone has more than twenty enterprises, including garment, footwear, bags, steel structure, electronic equipment, etc. As would be expected in a Chinese government supported zone, Chinese companies predominate in the zone. Among the 20 plus companies there are 16 Chinese-invested enterprises, 7 third-country enterprises, and 1 Sino-Cambodia joint enterprise.

In viewing both zones, I was struck that both zones although having slightly different models are professionally managed, have quality infrastructure and occupy highly advantageous locations for companies wanting to expand their business in Cambodia. I would advise any business looking to open or expand operations in Cambodia to start with visits to these two parks. Although the option of location outside a Special Economic Zone is something that always should be evaluated, each of these zones provides the services that help manufacturers and distributors focus on the key operations they know best.

A note on this article, this article was greatly assisted by Mr. John Muller, Managing Director of Global Security Systems, Cambodia’s top professional security company and any international companies first stop if they are considering business in Cambodia.

In late November, 2016 I was in Cambodia to look at developments and to assist with several projects. While there I had the opportunity to view both the Phnom Penh Special Economic Zone (PPSEZ) and the Sihanoukville Economic Zone (SSEZ). These two large industrial sites are located at the two ends of the main road that leads between Sihanoukville (the major port for Cambodia) and Phnom Penh, the country’s capital.

About the Author:

Christopher W. Runckel, a former senior US diplomat who served in many counties in Asia, is a graduate of the University of Oregon and Lewis and Clark Law School. He served as Deputy General Counsel of President Gerald Ford’s Presidential Clemency Board. Mr. Runckel is the principal and founder of Runckel & Associates, a Portland, Oregon based consulting company that assists businesses expand business opportunities in Asia. (www.business-in-asia.com)

Until April of 1999, Mr. Runckel was Minister-Counselor of the US Embassy in Beijing, China. Mr. Runckel lived and worked in Thailand for over six years. He was the first permanently assigned U.S. diplomat to return to Vietnam after the Vietnam War. In 1997, he was awarded the U.S. Department of States highest award for service, the Distinguished Honor Award, for his contribution to improving U.S.-Vietnam relations.

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