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Investment

Negotiating the SEZ

A snapshot of Phnom Penh’s Special Economic Zone

Written By:
September 24, 2017
Negotiating the SEZ

Founded in 2006, the 357-hectare Phnom Penh Special Economic Zone oversees and operates an industrial zone about 18km west of the city centre. It offers ISO-certified infrastructural facilities, such as the generation and distribution of power, sanitation and sewage systems, and telecommunication networks, as well as a health clinic, banks, and office and residential units, along with services such as investment registration, import/export permits, customs clearance, recruitment support, labour management assistance, 24-hour security, garbage collection and disposal, as well as legal, administrative and accounting consultation. 

Phnom Penh SEZ CEO, Hiroshi Uematsu

As of December 2016, there were 81 tenants producing everything from fashion and textiles, auto parts, pins and pharmaceutical packaging to eyewear, food processors and more. Each day, 17,000 workers file through its gates; 80% of these are female and 55% work for one of the park’s 45 Japanese companies.

“We are now discussing with Electricitė du Cambodge to have a sub-station inside PPSEZ and to be connected by high voltage,”

High electricity rates are a huge challenge for Cambodia, but according to CEO Hiroshi Uematsu, renewable energy could change that. In the past, Phnom Penh SEZ had maintained that it would stick to high-cost grid- and fuel-generated power to assure foreign investors of a stable power supply, but last year the company inked a deal with Cleantech Solar Corporation to deploy a photovoltaic (PV) solar system. The 190 solar panels will generate about 7,500 kWh per month. Still, Uematsu maintained solar would only act as a supplementary power source for now. “We are now discussing with Electricitė du Cambodge to have a sub-station inside PPSEZ and to be connected by high voltage,” he said.

Last year Phnom Penh SEZ raised $8.2 million in an initial public offering and was listed on the Cambodian Stock Exchange in May 2016, becoming the first private Cambodian company to do so. “This meant a lot for the manufacturing industry,” Uematsu said. “We can now accelerate our plan to develop another SEZ in Poipet [on the border with Thailand] so that we can attract even more manufacturers to Cambodia.” The company plans to invest
$8.5 million into this new 53-hectare industrial park.

While Cambodia’s garment factory reputation has sometimes been sullied by reports of poor conditions, ongoing wage negotiations and a 2014 strike, Uematsu emphasised that this had not significantly affected Phnom Penh SEZ. “We closely coordinated with our investors, the Ministry of Labour and other relevant government authorities for demonstrators not to damage factories inside Phnom Penh SEZ,” he said. In the wake of such turmoil, the industrial park offered factory tours for prospective workers to quell any nerves or hesitation. “We do these kinds of initiatives constantly,” said Uematsu. “ We provide decent work conditions because we only invite legitimate investors who are willing to train Cambodia’s workers to a higher skill level.”



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