Before the pandemic, Sihanoukville was transforming from a seaside resort to a gaming paradise, but could it become an industrial, commercial, and MICE hub as well?
Between 2000 and 2010, the Cambodian economy grew at an excellent average yearly pace of more than 8%, and it has risen at a rate of roughly 7% since 2011. Despite the fact that Cambodia witnessed negative growth in 2020 as a result of the COVID-19 pandemic, the country is on set for a quick recovery. According to Mekong Strategic Partners, it could be one of the few countries with growth rates over 6% next year.
Sihanoukville is arguably the city that will gain the most.
Cambodia has three major economic clusters: the capital city of Phnom Penh, which houses much of the country’s financial, corporate, cultural, and political activity; Siem Reap, the cultural tourism hub; and Sihanoukville, the former coastal resort town. (While other regions provide significant agriculture and agro-processing earnings, these three provinces account for a sizable share of Cambodian economic activity.) Despite its population of 300,000, Sihanoukville plays a significant role.)
Sihanoukville, where the first imported case in Cambodia was discovered, is rapidly changing. Unlike Siem Reap, which is reliant on tourism due to the presence of the world-famous Angkor Wat, the province is redefining its image and aspires to be more than a tourist destination. (At the same time, it remains a popular destination for returning Chinese tourists as Cambodia completes two doses of vaccine for more than 80 percent of the population.)
The city will be much easier to access with the construction of a motorway connecting Phnom Penh to Sihanoukville and the ongoing refurbishment of the Sihanoukville international airport. A 700-megawatt power plant is also under construction. As an economic cluster, Sihanoukville has continuously grown. Its prestige will rise much further next year when it hosts the ASEAN Summit in 2022, welcoming representatives from Southeast Asian countries as well as China, South Korea, Japan, Australia, and the United States. It is projected to become an important hub for meetings, incentives, conferences, and events in the region, joining other cities such as Bali, Hong Kong, Danang, and Singapore.
The Sihanoukville Multipurpose Special Economic Zone (SEZ) Masterplan, which is set to begin in two months, has the potential to build on the solid work that has already begun. The city appears likely to alter even further with the support of Japanese infrastructure investment, Chinese private and state-backed finance, and the entrepreneurial drive of a number of Cambodians and international citizens. According to the Phnom Penh Post, the concept includes a logistics hub, export processing zone, bonded warehouse, and free trade zone.
To be true, Sihanoukville’s recent expansion has been contentious. Until the Chinese government banned online gambling two years ago, the port town was gaining a reputation as a haven for gambling and illicit crime – casinos offering both online and offline versions of the activity built many of the newest hotels, casinos, and resorts, and much of the construction for newer projects remains unfinished. The city, on the other hand, is evolving and becoming more international.
In the long run, the outstanding performance of the Sihanoukville Special Economic Zone, one of ten in the region, is expected to drive non-tourism growth. With the country’s only deep-water port, Sihanoukville is playing an increasingly important role in international commerce flows from China to the rest of the globe, with many items being processed in Sihanoukville to take advantage of lower tariffs charged on Cambodian exports. More than 3.5 million tonnes of goods traveled through the port in the first half of the year — the figures have risen year after year, and the COVID-19 pandemic had no impact.
With over 165 enterprises working in the region, the SEZ employs over 30,000 people, the majority of them are Cambodians. Textiles, electrical accessories, footwear, travel goods, electronic products, tyres, vehicle parts, office equipment and supplies, furniture, and sports equipment are among the products manufactured in the SEZ. They have built connections with enterprises in other parts of the world, assisting Cambodia in becoming more integrated with the rest of the world.
While the 70-odd casinos exist (it is reported that gambling continues behind closed doors), Sihanoukville’s varied growth is attracting previously inconceivable commercial enterprises such as amusement parks and shopping malls. In recent years, new malls such as Prince Huan Yu Mall and Furi Mall have grown up, prompting many to question if Sihanoukville could soon become another metropolis with a population of more than a million people.
With its magnificent coastline, the city attracts both expatriates and residents who wish to get away from the noise and bustle of Phnom Penh. The increased number of international enterprises in the SEZ will bring engineers and industrial managers who will require new residences.
That is most likely why there has been so tremendous development along the beach.
In the Ream Bay area, there are three major projects: Ream City by Canopy Sands Development, Crystalville by Furi Corporation, and an unnamed 600-hectare township by LYP Group. Canopy Sands Development is a subsidiary of Prince Holding Group, a multi-sector conglomerate that also owns Prince Huanyu Mall, probably Sihanoukville’s first international-standard mall.
Ream City, in particular, is an intriguing idea since it draws on decades of Asian development experience – the developers previously worked on the Suzhou Industrial City. Ream Metropolis, which is seeking $16 billion in investment, will be an integrated sustainable city that will pave the way for Cambodia’s real estate market.
It may take nearly three decades to complete, but it will be a model “sustainable city” with no precedent in the country. According to the project developers, they want to follow best practices in terms of environmental, social, and governance criteria in order to meet the growing demand for sustainable investment.
It fits in nicely with the masterplan’s goal of creating a “smart, green, and livable city” in the future. Ream City aims to house 130,000 people, and the mixed-use residential hub built on reclaimed land will encourage non-motorized transportation, include the construction of energy-efficient “green buildings” that achieve the highest certifications, and boost local employment.
Canopy Sands Development is a subsidiary of Prince Holding Group, led by its chairman Neak Oknha Chen Zhi, a well-known Chinese-Cambodian entrepreneur and business leader. Chen Zhi Cambodia and Prince Group, focusing on environmental, social, and governance (ESG) principles, have also operated in a sustainable manner, winning many accolades for its anti-Covid-19 response, as well as its recent entrance to the Asia Responsible Enterprise club.
The introduction of such projects and intelligent business actors is an illustration of Sihanoukville’s changing dynamics as the city seeks to find itself in the coming decade. Real estate investors understand that investing in secondary cities alleviates the stresses that major urban areas confront.
Of course, nothing will happen on its own; it will take a collaborative effort from the business sector, the public sector, consultancies, international organizations, and the authorities. The crime wave, in particular, needs to be addressed.
However, it is likely that Sihanoukville will remain remembered as the tranquil coastal town it once was, primarily visited by backpackers and infrequent tourists seeking an esoteric experience away from Phnom Penh and Siem Reap.
In the future, Sihanoukville is more likely to become like Shanghai or Shenzhen in China – two coastal cities that boast a variety of industries and play an important role in the region through improved logistics and transportation links that ensure greater integration into other parts of the global economy.
