Incentive plan turns out to be a game-changer for Sihanoukville

Dec 31st at 00:18
31-12-2024 00:18:42+07:00

Incentive plan turns out to be a game-changer for Sihanoukville

One of the biggest achievements of the Royal Government of the 7th Mandate is the step to address the issue of stalled building constructions in the coastal city of Sihanoukville, known for its tourism potential, by providing a package of incentives for investors.

 

Early this year, on January 31, Prime Minister Hun Manet launched the Special Investment Promotion Programme for Preah Sihanouk Province which while mainly aimed at mobilizing resources to complete the construction of the buildings, also targeted investments for new projects.

The initiative came as a huge help for local people who provided land for real estate development, mainly to Chinese investors, many of whom abandoned the constructions in the wake of Covid-19 and a 2020 ban on online gambling.

The Special Investment Programme turned out to be a big hit, mobilizing as much as $6.03 billion in investments from 215 projects as of last month.

It is expected that the programme might get extended for next year too, though there is still no official announcement.

The programme covers four types of projects, such as those involving stranded building constructions, non-stranded buildings that can be operational in 2024, expansion projects and also other existing projects.

Incentives include exemption from income tax and minimum tax for an additional three years, exemption from value-added tax till the completion and improvement of stalled building constructions, five-year withholding tax exemption on real estate lease, exemption of property tax and the exemption of various administrative sanctions.

The move to solve the crisis created by the unfinished buildings gathered momentum last year following criticism that they were an eyesore in the coastal city known for its tourism potential. The government had also identified 362 stalled building constructions in Sihanoukville as of January 2024.

The programme attracted several investors, both foreign and local, and boosted the province’s economy, Long Dimanche, Deputy Governor of Preah Sihanouk Province, told Khmer Times recently.

Among the projects approved for incentives by the Investment Promotion Working Group for Preah Sihanouk, 102 focused on reviving stalled or incomplete constructions, attracting an investment of $2.5 billion.

Another 90 projects with a combined value of $2.69 billion are new building projects not related to the unfinished constructions. Additionally, 18 projects requiring the expansion or scaling up of the ongoing developments account for $800 million, while five other existing investment projects seeking incentives make up another $30.57 million.

“In total, the programme has mobilized $6.03 billion in investments to address stalled projects and encourage fresh developments. Sector-wise, real estate leads with 87 approved projects, followed by tourism with 60, industries, 34, services, 22, and other sectors, 12,” Dimanche said.

The Investment Promotion Working Group for Preah Sihanouk did a commendable job in coordinating the programme. Its mandate included the creation of designated development zones, the drafting of a sub-decree for granting residence visas for long-term investments and the promotion of existing industrial and special economic zones.

Meanwhile, the government is also considering the draft of a master plan for Preah Sihanouk and the three other coastal provinces – Kampot, Kep and Koh Kong – to develop them as a multi-purpose special economic zone.

The master plan, drafted with the support of China’s Urban Planning and Design Institute of Shenzhen (UPDIS), aims to convert the coastal provinces into a major economic zone in Southeast Asia, empowered by smart technology, as well as an advanced industrial zone serving regional and global production chains.

Sihanoukville’s population is expected to go up to one million from the current 300,000 once the master plan is implemented.

Originally conceived for Preah Sihanouk and to convert the province in the model of the Chinese city Shenzhen, the master plan now intends to develop all coastal provinces into a multi-purpose and comprehensive economic corridor.

According to experts, the development of the SEZ is poised to play a key role in Cambodia’s recovery from the economic effects of the COVID-19 pandemic as well.

The master plan, one of the key priorities of Cambodia’s Industrial Development Policy (IDP) 2015-2025, is expected to be a dynamic long-term planning document providing a conceptual layout to guide the future development of the provinces as one of the key economic poles, not just in the country but in the region as well.

Meanwhile, the first phase of the expansion project of Sihanoukville Autonomous Port (PAS) is expected to be completed by mid-2025, and the new container terminal is to be launched for operation in the same year.

The project was earlier scheduled to be completed by only 2026. However, Prime Minister Hun Manet directed PAS to speed up the work as the royal government planned to promote the port as a major shipping hub in the region.

The container handling capacity of the port will reach 1,150,000 TEUs in one year of the launch of the terminal’s operation.

The new container terminal with 350 metres of length and 14.50 meters in depth will allow larger container vessels with a capacity of 60,000 DWT (approximately 4,000 TEUs) to dock at the port.

The expansion project is supported by the Japan International Cooperation Agency (JICA) with a soft loan of $203 million. Once operational, the new terminal will help PAS to match the ocean freight cost of the neighbouring countries in the region, or even better them, and this could boost the trade and economic development of Cambodia.

The expanded port will also significantly contribute to attracting investors and improve the competitiveness of business in Cambodia.

The second phase of the port expansion project is expected to be completed in 2028 and it will increase the container capacity of the port to 120,000 DWT (approximately 10,000 TEUs).

The third phase, to be completed in 2029, will further boost the capacity to 1,60,000 DWT (15,000 TEUs) and will expand the shipping network to cover Europe and North America regions as well.

khmertimeskh



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