Phnom Penh SEZ
How important is the role of Special Economic Zones in promoting Cambodia’s export processing industry?
Special Economic Zones can play a vital role in accommodating higher value-added manufacturers, as long as the developer manages the zone properly.
How many companies are currently operating in the Phnom Penh SEZ and what is the total investment cost so far?
Among 108 registered companies, 88 are in operation, 14 are in preparation, while six stopped operations. Total investments have amounted to $667 million.
What kind of industries are located in the SEZ in terms of countries of origin as well as types of industries?
Automobile parts, electronics, plastics, food & beverage, animal feed, garment & footwear, printing & packaging, paint, sanitary goods, diamond polishing etc. from 14 countries such as Japan, China, USA, Thailand, Malaysia, Singapore, and so on.
How many jobs have been created in the zone?
As of May this year, 21,000 workers are working in PPSEZ.
How many new factories are applying for leasing in the zone and how much space is left?
Two new factories are currently under registration for new projects. Since less than 10ha land is currently available, we are expanding the land size.
What is the export value of goods generated from PPSEZ? What is the year-on-year growth rate? What are the export destinations?
The export value is $518 million in 2019, which marks a 15.9 percent growth compared with 2018. Approximately 68 percent of export products go to Japan, Thailand, China and Vietnam.
What is your return on investments year-on-year?
Our return on equity (ROE) after listing in CSX is as follows:
2016 3.99 percent
2017 4.42 percent
2018 5.82 percent
2019 25.50 percent
What are the challenges you are facing?
Everybody is facing challenges caused by COVID-19 now. This is the biggest one since ever.
What do you think are the impacts of the EBA withdrawal and the current outbreak of COVID-19 to your zone?
We have barely seen negative impact of EBA withdrawal, since most of our investors don’t export to EU. As for COVID-19, we might not have new investors until the virus is contained worldwide. On the other hand, some existing companies are gearing up or preparing for the expansion of their production.
Where do you want to see PPSEZ in the next five years?
We want to upgrade PPSEZ to more environment-human friendly zone by introducing solid waste management, recycling system, rooftop solar power and affordable housing, etc.
How effective has the SEZ’s one-stop agency of the CDC been in promoting the efficacy of the SEZ?
We believe that our One- Stop Service is providing one of the most efficient and transparent services in the country.
PPSEZ in the Stock Market
As of 2020, what do you see the change of PPSP business in the CSX?
With the new listing of Acleda Bank, it appears that the listing has given some life to the CSX. Other counters, as well as PPSP, have also been on the radar of some of these investors but it is still too early to say. Hopefully, their interests in the CSX can be sustained.
What is the trading volume each day for only PPSP? What do you think about the share price so far and EPS-Earning Per Share?
For the past month, the daily trading volume has been encouraging with an exceptionally high volume recorded after the listing of Acleda Bank. In terms of our EPS, this has been steadily increasing over the past few years. The company has good fundamentals but in terms of our share price we feel that our share price is grossly under-valued.
What is your plan for your company in the stock market?
Due to the illiquidity of our shares on the CSX, we hope we can attract and get better exposure with a secondary listing, and it is envisaged that with the secondary listing this will also in turn give us a better exposure to our investors in the CSX.
Could you update us on the Poi Pet Special Economic Zone?
We are developing 65.7 hectares of land in Poipet PPSEZ.
How many factories are there now? What is the total investment cost? When do you see the ROI of Poipet SEZ?
There is one factory, Sumitronics Manufacturing (Cambodia) Co. Ltd., that is producing printed circuit boards and wire harnesses. So far, we invested over $10 million to develop the Poipet PPSEZ. We have to wait until COVID-19 is contained to make it profitable.
What businesses are you focusing on? How do PPSEZ and Poipet SEZ differ?
Poipet PPSEZ targets only investors who have already been operating in Thailand for years. We call it, “Thai +1” strategy. On the other hand, Phnom Penh SEZ accommodates investors from various countries and of both export and domestic market-oriented industries.
What kind of investors are you looking for in Poipet SEZ?
Our target investors are manufacturers who produces higher value-added products, particularly electronics, mechanical and automobile parts. They can find merit if they will bring labour-intensive products to Poipet.
What are the facilities in Poipet SEZ that support businesses or factories?
We prepared international standard facilities such as electricity supply (Joint Venture with B. Grimm Power from Thailand), water purification plant, waste water treatment plant and 24-hour security service.
What are the challenges you are facing?
Due to COVID-19, we cannot expect any new investors at this moment.
What is your request to the government?
We ask that they request to open Stung Bot border gate as soon as possible.
How will you evaluate the Cambodia-Japan relationship?
Both countries have good relationship for long years. In modern history, in fact, Cambodia helped Japan by giving up war compensation to the country after World War II. After the Pol Pot regime, as we know, Japan played a vital role to reconstruct Cambodia. Since the early 2010s, Japanese companies started to increase in this country.
How do you benefit from this cooperation and relationship?
I appreciate that Cambodians have respect to Japanese. Personally, I feel it easy to communicate with my staff and government officials because many of them are willing to support what we intend to do. I believe that many Japanese share the same feeling with me. In return, we must work responsibly to meet Cambodians’ expectations of us.
What are the criteria that Japanese investors look for before deciding to invest in Cambodia?
In general, I think that Japanese investors want, market potentiality, social and political stability, business-friendly laws and regulations, transparency and consistency of laws and regulations’ implementation. For manufacturers, abundant young trainable labour force and low cost of production are critical factors.
Do you foresee both of your SEZ attracting more heavy industries to Cambodia, especially from Japan?
We don’t really target heavy industry like steel, petro-chemical, etc. I think that Cambodia is too small to attract heavy industry especially from Japan because Japanese heavy industry goes to bigger countries with natural resources, he added.