SSEZ discuss massive investment in trade and CSX listing

SSEZ discuss massive investment in trade and CSX listing

The Sihanoukville Special Economic Zone (SSEZ), a Chinese company, will be a key driver in bilateral trade between Cambodia and China, reaching $10 billion in 2023, and could prove to be a bellwether in boosting trade activities with other countries in the region and globally, according to Deputy Prime Minister Hor Namhong.

Namhong made the remarks at a bilateral meeting with Chairman of the Board of the SSEZ Chen Jiangang on Monday. He also said that the SSEZ will export products to Asean markets and be an important production base for the Asean community as well, a market with a total population of 600 million people.

Jointly developed and built by Cambodian and Chinese enterprises, the SSEZ states that it has always adhered to the “win-win” approach.  It is committed to improving production and living support facilities and enhancing international service capabilities continuously in order to create a perfect operation environment for enterprises from all over the world with the aim to establish a multi-national development platform for enterprises.

“The SSEZ is the legal child of the Royal Government of the Kingdom of Cambodia and the Chinese government, under the belt and road initiative (BRI) endorsed by China’s president Xi Jingping,” Namhong added.

SSEZ imports and exports 

Chen said that SSEZ is home to a total of 165 companies that employ close to 30,000 people.

He added that from January to October this year, total import and export volume reached $1.3 billion, an increase of 31 percent compared with the same period last year.

“The company has built six housing complexes for workers, providing accommodation for 3,000 employees,” Chen said.

Namhong said that the SSEZ enjoys a special locational advantage because it is close to the deep-sea port of Preah Sihanouk province, which is the engine for exports and imports moving from and into Cambodia. He added that Sihanoukville is one of the pillars of Cambodia’s economy and tourism industry with many Chinese companies already investing there and many more potentially soon to join them.

On Oct 12, China and Cambodia signed a free trade agreement (FTA) in Phnom Penh, with Cambodian Prime Minister Hun Sen and visiting Chinese State Councillor and Foreign Minister Wang Yi attending the ceremony.

The FTA is of great significance economically and politically. Under the Cambodia-China bilateral FTA, Cambodia succeeded in listing close to 340 additional commodities for tariff-free export to China, bringing that total to more than 10,000.

Most of these newly listed products are in the agriculture and agro-processing sectors and are in addition to increases Cambodia attained via the Asean-China FTA, according to the Ministry of Commerce (MoC).

The Cambodia-China FTA will drive more investment to Cambodia from China as well as other countries targeting China for their exports, particularly those in the agro-processing sector, the MoC said.

Cambodia Chamber of Commerce Vice-President Lim Heng said that upon implementation in January, the FTA will give all special economic zones in the country a lift, but the Sihanoukville zone will see an extra boost because the majority of imports and exports to and from China already go through this area.

Heng specifically noted: “The SSEZ will benefit greatly from the FTA next year because the major exports of raw materials including garments and increasingly, agricultural products such as bananas, mangoes and rice are sent to China through Sihanoukville,”

Listing on the local exchange

SSEZ’s Chairman of Board, Chen, said as part of attracting foreign investors and internationally sourced funds needed to build up the special economic zone, it is preparing documentation for listing on the Cambodia Securities Exchange (CSX).

He said listing is intended as a means of attracting international investment, particularly from the European Union and the US. “We have requested that Deputy Prime Minister Hor Namhong support the company in our CSX listing effort. We will also undertake a secondary listing on the Hong Kong Stock Exchange,” Chen said.

Chief Executive Officer of RHB Indochina Securities Iv Ranarith, who has been appointed as the principal adviser for the initial public offering (IPO), said that the company is looking to list next year.

“We have not finalised the share price or the valuation yet. The work on the IPO is progressing well and we are confident on our preparations to target a listing by next year,” Ranarith said.

Speaking to Khmer Times about the potential listing, Chief Executive Officer of the CSX Hong Sok Hour said, “We welcome all companies incorporated in the Kingdom, as long as they comply with our requirements. I believe more Chinese-owned companies incorporated in the Kingdom will look to list on the CSX and that will bring more Chinese investors as well,” he said.

The CSX currently includes 13 listed companies – seven equity firms and six corporate bond firms – with the total value collected from the capital market at $253.94 million (more than $110.9 million from stocks and $143 million from bonds).

Cambodia Chamber of Commerce Vice-President Lim Heng said that if the SSEZ was successful in listing on the CSX it would showcase the strength of the exchange.

“It would be great if the capital needed to fund the planned expansion came from the local stock exchange. It would highlight the strength of the market to foreign investors, potentially raising the amount of capital flowing into the CSX in future over the volume seen over the last three to four years,” Heng said.

Namhong also expressed his support for the SSEZ listing on the CSX and, following that, on the Hong Kong stock market. He stated that he was happy to join the inauguration of the coal power plant in the SSEZ, which will facilitate production in the zone going smoothly.

So far, there are two coal-fired power plants in the province. CELI+II is located in Otres commune, Stung Hav district, Preah Sihanouk province, and generates 235 megawatts.  CIIDG I + II is located in Otres commune, Stung Hav district, Preah Sihanouk province, and generated 377 megawatts. The proposed Sihanoukville coal-fired CIIDG power station 2 will generate 700 megawatts in Preah Sihanouk (Sihanoukville) province and will be operational in two phases targeted at commencing in 2023 and 2024.

Credited: Khmer Times