Friday, June 27, 2008
In the Zone
A muddy stretch of land alongside the newly resurfaced National Highway 4, the Phnom Penh Special Economic Zone (PPSEZ) is at present distinctly underwhelming. Soon, however, this area will play a pivotal role in Cambodia’s booming economy.
Only re-started in the mid -1990s, manufacturing and heavy industry are now the fastest growing sectors of the Cambodian economy. In 1996, there were less than 10 factories with combined export value of $6 million USD. A year later there were 283 factories with an export value of $2.1 billion USD and employing 325,000 workers. Ray Chew, Business Development Consultant for PPSEZ, said in the rush to get the economy back on its feet, some factories were not built properly.
"Poor planning and construction creates environmental issues, such as traffic jams," he said. "You have to pay attention in the development process. I think that special economic zones are the key to attracting investors. "Centralising industries in a dedicated area like the PPSEZ, helps with the zoning of Phnom Penh, which in turn will improve the quality of life for people living in the city, and make it a good place to live and work."
The land for the PPSEZ belongs to Attwood Group, and the development is a joint venture with a Japanese developer, Zephyr.
Lim Chhiv Ho, Chairman of the PPSEZ, said at the signing ceremony Zephyr will provide 49% of the investment capital, and PPSEZ will have
a 51% controlling stake. Together they have already built a gate, a drainage system, telephone lines, and factory plots.
Only re-started in the mid -1990s, manufacturing and heavy industry are now the fastest growing sectors of the Cambodian economy. In 1996, there were less than 10 factories with combined export value of $6 million USD. A year later there were 283 factories with an export value of $2.1 billion USD and employing 325,000 workers. Ray Chew, Business Development Consultant for PPSEZ, said in the rush to get the economy back on its feet, some factories were not built properly.
"Poor planning and construction creates environmental issues, such as traffic jams," he said. "You have to pay attention in the development process. I think that special economic zones are the key to attracting investors. "Centralising industries in a dedicated area like the PPSEZ, helps with the zoning of Phnom Penh, which in turn will improve the quality of life for people living in the city, and make it a good place to live and work."Concentrating factories in one area makes them easier to control. Measures such as pollution containment and waste water treatment are shared, as are service expenses such as security.
Ray also stressed the ease of setting up a factory through the PPSEZ. "In order to obtain permission, one must go through three or four government departments. In the PPSEZ, we can do it all internally, as we already have permission. I think that, just by saving this effort, we can attract many investors."
Ray also stressed the ease of setting up a factory through the PPSEZ. "In order to obtain permission, one must go through three or four government departments. In the PPSEZ, we can do it all internally, as we already have permission. I think that, just by saving this effort, we can attract many investors."
The land for the PPSEZ belongs to Attwood Group, and the development is a joint venture with a Japanese developer, Zephyr.Lim Chhiv Ho, Chairman of the PPSEZ, said at the signing ceremony Zephyr will provide 49% of the investment capital, and PPSEZ will have
a 51% controlling stake. Together they have already built a gate, a drainage system, telephone lines, and factory plots.
PPSEZ is a groundbreaking achievement said Phnom Penh Special Economic Zone Marketing Director Lity Yap. It is one of the few explicit special economic zones in Cambodia, and is the first of its kind in Phnom Penh.
"PPSEZ is on track to become the second fully-operational special economic zone in Cambodia after the Bavet Zone on the Vietnamese border, which already has factories operating," she said.
"I think that garment factories will come first, followed by electronics companies, food processing, and then perhaps food packing."
The site’s greatest asset is its position. Only 15 km west of Phnom Penh and 8km west of Phnom Penh International Airport, the area is just off National Highway 4, the nation’s main artery. The highway carries traffic from Sihanoukville, Cambodia’s only deep sea port, 207 km away. It is also the only link to the fertile north-western provinces.
The site’s greatest asset is its position. Only 15 km west of Phnom Penh and 8km west of Phnom Penh International Airport, the area is just off National Highway 4, the nation’s main artery. The highway carries traffic from Sihanoukville, Cambodia’s only deep sea port, 207 km away. It is also the only link to the fertile north-western provinces.
"The PPSEZ is located at the heart of Cambodia," said Ray. "Cambodia is a part of the ASEAN Free Trade Area so it has great investment potential. There is a growing tourism market, land is available, labour is cheap, and there are many natural resources. I think Cambodia will be the most dynamic manufacturing hub in the region as most of its products enjoy low tariffs in ASEAN nations, between 0% and 5%. Investors in Cambodia can enjoy duty-free access to some of the world’s most lucrative markets."
Ray said the first stage, constructing infrastructure, will finish in January 2007. This includes road building, allocating land plots, and installing an electricity network. Factories will start working around January 2008.
Yap said that PPSEZ is a legal zone, set up with the official approval of the Cambodian government. Co-operation with local and international investors will build an environment conducive to the development of the industrial and trade sectors in Cambodia, she added.
Yap said that PPSEZ is a legal zone, set up with the official approval of the Cambodian government. Co-operation with local and international investors will build an environment conducive to the development of the industrial and trade sectors in Cambodia, she added.
"Our first task is to develop the zone with infrastructure, so investors are provided with all necessary services. We call it the One Stop Service," said Yap. "We offer watertight ownership of land and buildings. With this we can ensure the legal right to transfer income to overseas countries.
"The overall size of the zone is 350ha, so we must develop it step by step. We will begin with accommodation and factories in the first 141ha. These lots will be commercial and residential, with space for infrastructure, such as the dry port. The second stage involves the construction of 90ha of factories and utilities, and the third stage will be more factories and residential lots in the remaining 130ha."
There are already 12 special economic zones in Cambodia, with others planned. Asked how PPSEZ will be able to compete with them, Lity Yap and Ray Chew said that a strong marketing campaign will be necessary.
"Our sucess depends on marketing and hard work " said Yap.
Ray added that "strong marketing will attract companies to the PPSEZ. Our developer at the Vietnam border will attract Vietnamese investors, the zone developer at the Thai border will attract Thais. In Phnom Penh, we will work to attract everyone - Japanese investors, Thai investors and Singaporean investors."
Ray added that "strong marketing will attract companies to the PPSEZ. Our developer at the Vietnam border will attract Vietnamese investors, the zone developer at the Thai border will attract Thais. In Phnom Penh, we will work to attract everyone - Japanese investors, Thai investors and Singaporean investors."
An ethos of hard work, combined with watertight legality and thoughtful planning, looks set to make the PPSEZ a blueprint for special economic zones throughout the ASEAN region.
# posted by FunMan @ 12:13 AM 
