The future of Sihanoukville lies in far sighted vision of Khmer prime minister
What will Sihanoukville look like in 10 years from now?
The “Sihanoukville multi-purpose city”, which Samdech Techo Hun Sen envisioned last week, is set to transform Preah Sihanouk province into a national economic development pole with a fastest speed.
So far, the project summary can include: 10 SEZs on a total area of 2586.26 hectares with total investment capital of over $ 1,481 million. In addition, the Master Plan of the Sihanoukville International Airport to 2040, the master plan of Ream City, the deep-water port of Sihanoukville.
This multipurpose city plans will also extend to cover the nearby province projects including the deep-water port of Kampot and the international port of Kep, which is in the process of completion. While a bit further west part, in Koh Kong, the recently completed National Highway 55 and National Highway 10 constructing project, which is expanding to facilitate freight from Laos, Thailand and northern Vietnam to the international sea by deep-sea ports, of which two more will be built in Koh Kong, plus Dara Sakura International Airport and many other more.
With these ambitious development plans, as we see in most investment plans, is to achieve less than 10 years. The question is, with a population of just 16 million, that could grow to just 25 million at most by 2050, on what purpose are all these projects to serve for?
Here, we might avoid not to mention the military base purpose, as for the government has repeatedly denied this baseless accuses. Yet, in terms of economics, it can be seen that Sihanoukville, Cambodia, is moving into a major trading center in the region, which will serve as an important economic link to the global 4th largest market, ASEAN, to the Future of the World’s First Economic Power, China.
ASEAN markets for the future Hegemony
To access ASEAN market, China needs her best friend, Cambodia. In terms of foreign policy, the Philippines, Indonesia, Vietnam and Malaysia, especially Prime Minister Mahmoud Mahathir’s attitude on Chinese investment, show a slight stance for China. Laos is a land locked country and has little influence in ASEAN, so it is not too important for China. Probably, just building a few railroads of the one belt one road is already enough. For Myanmar is also a favorable condition for China, but geo-politically this country is a bit not in that good position.
Singapore, as another example, though it is already an international financial center, this country is too advanced, but also too small for human resources, with no land, no natural resources. Such a rich country would be very challenging in the eyes of investors whereas developing countries would always have more opportunities.
Cambodia is the best choice for China. Geo-politically, Cambodia is a country in the center of the whole of ASEAN. It location is just right in the middle of the ASEAN countries, both the inland and the island ASEAN. Investing in Cambodia is equivalent to allowing the flow of goods into other ASEAN markets free of various taxes, given by the ASEAN Free Trade Agreement.
There are many reasons that make it clear that Cambodia is the best option. Many reasons can be a proof that the Chinese still misses the small but rich southwest territory of Cambodia.
The Returns of Chinese Capital to Sihanoukville
There are several factors that can be foreseen that Chinese investors’ return to Cambodia may regain momentum in terms of size and behavior after the COVID 19 era:
1) Thousand Years of Friendship: Restricting China’s friendly business relationship with ASEAN, the important strategic entrance is Cambodia. Cambodia is the oldest and possibly the most sympathetic Chinese among ASEAN friends. Since the history of friendship from the time of the Angkor era, the ten thousand years of Cambodia-China friendship has never seemed to have any tension.
2) The future of the world is an era of Asian civilization, not of Western world:
Everyone is aware of the decline in popularity of US hegemony since Donald Trump came to power and the withdrawal of foreign political influence from Asia-Pacific and the rise of Chinese hegemony to the new world leader. The hegemony of China’s new digital-backed superpower needs to be sustained as well, and ASEAN is able to meet this demand as the untapped potential extends to 4402,979 km2, nearly a third of all Asia.
3) COVID 19 helped boosting China-US trade war tensions: helped China’s economic influence draw closer to ASEAN. With a population of 622 million by 2020, ASEAN is classified as one of the world’s largest economy, with economic potential that remains largely unused, especially in comparison to Europe, which is almost depleted. ASEAN will become the world’s fourth largest market by 2050 and that is the reason why the superpower China keeps eyeing on this emerging region.
China is willing to further strengthen trade, investment and economic cooperation with ASEAN countries, the Chinese Ministry of Commerce said on Thursday.
“China is willing to work with ASEAN countries to make full use of the relevant free trade arrangements in the region and support bilateral trade and investment,” Gao Feng, spokesman for the ministry, told a press conference.
4) FTA between China and Cambodia on the move: It is likely that by the end of this year, China-Cambodia free trade agreement could be finalized. The deal is meant to be a big blow to Cambodia’s economic engine, which has been badly hit by the COVID 19, and Cambodia economy still needs China to recover.
“When Cambodia has free trade with China, the Chinese market will open up the market for Cambodian products, which is of significant economic interest,” said PM Hun Sen.
Once this agreement is sure, the flow of experienced foreign direct investment (FDI) into the Cambodian economy will be greater and greater.
A future that is neither too long nor too soon
From the arguments raised, we can now imagine what the future of Sihanoukville might become as “Sihanouk International Finance Center”. The future of the Sihanoukville International Financial Center, which the Prime Minister of Cambodia had mentioned when he visited the 34-road project site last week, implies that the ambition is bigger than just a typical urban development project.
“… this Sihanoukville International Financial Center is a dream. Maybe the next generation will have to do this…” said PM Hun Sen.
As to the question of whether this multi-purpose city development will bring benefits to the motherland, especially its local poor people, it depends on whether we have adequate legal, administrative infrastructure and knowledge based human resources to absorb those benefits.
Human resources are key areas to invest in. The key is that to realize the dreaming Sihanoukville International Financial Center, it requires human resource with advanced level skills and knowledge, at least near Singaporean standard. By that time, Cambodia could have shifted its economic engine, which had relied on three major sectors: tourism, construction and textiles, to rely on tourism, technology and heavy industry instead. In so doing, the government’s economic policy to raise the country’s economic status from the low-income country to upper-middle income country by 2030 and to the high-income country by 2050 will be likely achievable for sure.
The real estate sector will still play a key role in this long multi-sector urbanization process from now on. What Cambodian investors and general investors should be prepared is to start investing in the sector from now on or to miss the opportunity to benefit from the success of a multi-purpose city in the future, which will be too narrow space to compete in.
However, now it seems that Cambodia is more mature in business with other countries including China, especially with its previous experience with online gambling, and the lessons that every country has learned from the recent COVID 19.
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