(NO.2, JANUARY 18, 2019)

MARKET INDUSTRY TRENDS

SSEZ exported $372 million in 2018. Exports from Sohanoukville Special Economic Zone (SSEZ) increased 68% from 2017. The 1,113 ha SSEZ has 161 registered factories and registered investment capital about $918 million. The industrial zone creates 22,495 jobs. The factories produces textiles, electrical, accessories, shoes, travel goods, electronic products, tires, car parts, office equipment and supplies, furniture and sports equipment. (Phnom Penh Post)

International airports handled over 10 million passengers. Combined passengers passing the three international airports in Phnom Penh, Siem Reap, Sihanoukville in 2018 totaled 10.5 million – 20% up over 2017. (Phnom Penh Post)

Cambodian rice to lose EU duty-free status. The decision will be in effect for three years from January 18, 2019 during which time the tariff will be steadily reduced. The sector will forced to pay $53 million in first year based on the amount of Kingdom exported rice to EU in 2018. EU absorbed around 43% or 269,127 tons of total export. Exporters and economists shared similar views that the solutions to overcoming the EU decision are to lower operating costs and diversify markets. Rice Exporter Association expected the increasing export to China because China provided Cambodia the rice export quota of 300,000 tons per last year but the Kingdom could only export 170,000 tons. (Phnom Penh Post)

Kingdom’s rice exports down 1.5%. Rice export dropped due to the industrial lingering challenges – the cost of production and competition with the international market. Export in 2018 totaled 626,225 tons compared with 635,679 tons in 2017. (Phnom Penh Post)

MARKET DEALS

German chemical firm opens. BASF SE announced it had inaugurated its own company in Cambodia to offer a range of solutions for diverse industries, after working through distribution partners since 2014. The company’s main business in Cambodia will be chemicals (monomers and intermediates), performance materials (polyurethane solutions), nutrition and health and agriculture solutions – innovative and sustainable solutions to support the growth of strategic industries like furniture, rubber, footwear, nutrition and health, and agriculture. (Phnom Penh Post).

Royal Field Development tower begins construction. The $150 million multi-purpose tower, which is a joint venture between local company and a well-known US hotel chain, began construction and is set to open in 2022. The tower includes 3 star hotels Fairfield by Marriott Phnom Penh, is located on Russian Boulevard, next to the 7 Makara flyovers. The joint venture is between the Royal Field Development Company Limited, a subsidiary of Chip Mong Group, and the US’s Marriott International Inc. (Phnom Penh Post)

SME Bank set to launch later in 2019. New bank with initial capital of $100 million set to provide financing for SMEs is set to launch this year as fund is set in place for the operation. The new bank will prioritize Cambodian agribusiness and SMEs that linked to foreign direct investment, the tourism sector and the tech start-ups. (Phnom Penh Post).

Acleda Bank, CBC ink business partnership. The partnership will provide financial health check services, which allows clients from financial institutions to check their own credit history at Acleda Bank. Before the partnership, the only one option is to go to CBC. Acleda branch coverage is the advantage for this partnership. (Phnom Penh Post)

LEGAL AND REGULATIONS

Government to harness tech to increase economic growth. A technical working group of the government is established to formulate a digital economy policy which will functions as the roadmap to boost the Kingdom’s economy through technical innovation. The team will seek one to two years to finalize the policy. (Phnom Penh Post)

ACCOUNTING & TAX COMPLIANCE

Government offers massive tax break to CSX firms. The government has granted a huge tax incentive to companies listed on the CSX – a 50 percent reduction on income tax and eliminating all tax debt if the firms are listed on the CSX within three years from now. The sub-decree also states that firms listed within the period will be granted tax relief, including indemnity from paying full income tax, withholding tax, value added tax, specific tax on certain merchandise and services, and public lightening tax. (Phnom Penh Post)

Procedural details for local SME tax incentive will be completed by end of January. Six priority sectors include agro-industries, food production and processing, manufacturing of products used in waste processing and tourism, manufacturing of parts and equipment supplied to other producers, research and development of IT including innovative equipment management services, and enterprises developing SME commercial clusters. Incentives range from exemption of income tax from three to five years for the SMEs in the above sectors which use 60% of domestic raw materials, increase number of employee by at least 20% or located in SME clusters. (General Directorate of Taxation)