Tax exemptions for stalled projects in Preah Sihanouk extended until 2028

Tax exemptions for stalled projects in Preah Sihanouk extended until 2028

The Royal Government will continue to offer property tax exemptions for stalled construction projects in Preah Sihanouk province as part of the ‘Special Program to Promote Investment in Preah Sihanouk province 2024’, said the Ministry of Economy and Finance (MEF), on Wednesday.

This initiative applies to projects launched since 2016 and will remain in effect until the end of 2028.

In line with the government’s decision, the MEF announced that it will maintain additional incentives for developers whose building projects in Sihanoukville province have stalled. These include exemptions from property tax under the “Special Program to Promote Investment in Sihanoukville province 2024,” regardless of whether construction is completed by 2025.

The MEF clarified that the tax exemptions apply to all stalled construction projects in Preah Sihanouk province, even if they do not fall within the program’s designated scope.

Furthermore, for stalled projects that have not yet received any form of support—such as tax incentives under the program, project owners may apply to the Working Group to Promote Investment in Sihanoukville Province to request additional incentives, beyond the property tax exemption.

Speaking to Khmer Times, Lor Vichet, Vice President of the Cambodia Chinese Commerce Association (CCCA), voiced his support for the government’s move to provide further investment incentives, such as property tax exemptions. “Investors are typically more concerned with the profitability and income potential of their businesses than with tax breaks in the real estate sector,” he noted.

Vichet also highlighted that investors often consider critical risk factors before committing to Preah Sihanouk province, including expected returns, the timeframe to break even, and the likelihood of capital gains.

He explained that many investors were initially drawn to the province’s hospitality and entertainment sectors—such as hotels, karaoke venues, and casinos—largely due to the government’s earlier legalization of online gambling. “That policy gave investors a rare opportunity to recover their capital much faster than in other parts of the country,” he said.

However, he pointed out that the Covid-19 pandemic was a significant setback, discouraging investors from injecting more funds into incomplete developments. Uncertainty over returns and declining capital appreciation have further contributed to investor hesitancy.

To address these concerns, Vichet suggested the government could offer additional guarantees. “If the government ensured a return on investment within five years for incomplete buildings—perhaps with an annual premium of 6 to 8 percent—it could help attract more foreign capital to coastal cities,” he said.

He also recommended extending such benefits to local investors. “These incentives should also be available to Cambodian business leaders, encouraging them to expand their investments in Preah Sihanouk’s real estate sector. This aligns with the government’s broader vision to transform the area into a multi-functional special economic zone and regional export hub.”

Vichet recalled previous initiatives by Shenzhen authorities, who once aimed to turn Preah Sihanouk into a dynamic investment destination, akin to Shenzhen—China’s manufacturing powerhouse, supported by its international ports, much like those in Preah Sihanouk.

He said, “The Chinese government continues to support Cambodia’s development through the Belt and Road Initiative, which includes upgrading the Sihanoukville Special Economic Zone, expanding the international airport, and building the country’s only expressway.”

The government has approved incentives for 18 new investment projects in Sihanoukville, bringing the total number of approved projects in the first quarter of 2025 to 74, with a combined capital of $848 million.

The approval came during the 15th meeting of the Preah Sihanouk Province Investment Promotion Working Group earlier this April, chaired by Hean Sahib, Senior Advisor to the Prime Minister. The meeting focused on granting incentives, concessions, and streamlined procedures for investment projects under a special promotion program for Sihanoukville, which the government has extended through the end of the year.

The newly approved projects, totaling $205 million, include five stalled construction projects and 13 new ones. These investments are expected to create nearly 3,000 jobs in sectors like metal smelting, waste processing, paper production, and the development of office buildings, hotels, dormitories, and television stations. The Working Group has also previously approved 14 projects in February worth $79 million and 42 projects in January worth $564 million.

The program offers various support measures, including financial incentives, exemptions from public service fees, and streamlined procedures for licenses, permits, and certificates. Investors are encouraged to apply for these incentives and implement projects in Sihanoukville by the end of the year.

khmertimeskh