Plans moving forward for Japanese SEZ
CAMBODIA is actively working to establish the Cambodia-Japan Special Economic Zone (SEZ) to attract more Japanese investment, given its current status as a key trade and investment partner, according to a press release from the Council for the Development of Cambodia (CDC).
CDC first vice-president Sun Chanthol met with Shigeo Fukuda, general manager of Sumitomo Corporation’s Overseas Industrial Park Department for Asia and Oceania, on February 20, as coordinated by the Japanese embassy in Phnom Penh.
“The meeting was organised to discuss the concept note and to hear the perspectives of investors specialising in industrial park development. The aim is to establish the Cambodia-Japan SEZ, in line with the initiative set forth by the prime ministers of Cambodia and Japan in December 2023. The objective is to ensure that this new SEZ attracts more Japanese investors to Cambodia,” said the CDC in a press release.
According to the council, Sumitomo operates in over 65 countries and employs approximately 79,000 people. The corporation’s investment interests span a range of sectors including steel products, transportation systems, construction, media, digital infrastructure, real estate, mineral resources, energy, chemicals and electronics.
Global Real Estate Association president Sam Soknoeun, who is
collaborating with Japanese financers on a feasibility study for the zone, told The Post on February 21 that they are currently exploring various potential sites.
He emphasised the importance of selecting a location conducive to transportation, such as the area near the Funan Techo Canal project.
He said legal considerations for establishing factories or enterprises within SEZs are progressing.
Soknoeun noted that countries
with a higher number of SEZs tend to experience increased job opportunities, which positively impacts both individual incomes and the national economy.
“I am confident that in the near future, Cambodia will have a number of new SEZs, including the Cambodia-Japan [zone]. More SEZs will help attract more foreign investors,” he stated.
He added that following Prime Minister Hun Manet’s visit to Japan in late 2023, there has been a notable
upswing in interest from the Japanese in direct investments.
Soknoeun believes that increased finance and export activity is vitally important for the country to realise its ambition of becoming an uppermiddle-income country by 2030 and a high-income nation by 2050.
“The Cambodia-Japan SEZ will play a crucial role in attracting more Japanese companies to invest directly in Cambodia,” he said.
According to the National Bank of Cambodia (NBC), as of the first quarter of 2023, Japan ranked as the fourth-largest direct investor in Cambodia, with a total backing of 11.3 trillion riel ($2.776 billion).
This marked an 11.6% increase compared to the same period in 2022, placing Japan after China, South Korea and Singapore. Japanese investment in Cambodia is predominantly in the financial, construction, hotel and real estate sectors, as per the NBC.
Chea Chandara, president of the Logistics and Supply Chain Business Association in Cambodia (LOSCBA), commented that political stability, economic growth and improved transport infrastructure have been instrumental in attracting more local and foreign direct investment (FDI).
He emphasised the important role of SEZs in job creation and boosting the country’s exports to international markets.
He noted that most Japanese investors are realistic, and thus, the establishment of a dedicated zone would likely attract more financers.
“More SEZs will help strengthen Cambodia’s production chain, while also improving the transportation system to international markets,” he added.
According to the General Department of Customs and Excise (GDCE), trade between Cambodia and Japan amounted to $1.8 billion in 2023, a 7.2% decrease from $1.94 billion in 2022. Cambodian exports to Japan were valued at $1.17 billion, showing a marginal increase of 0.2%, while imports from Japan totalled $623.6 million, a decline of 18.5%.