Kratié SEZ: an emerging key player in Cambodia's economic development along the Mekong River

In recent years, to attract foreign investment and drive industrialization, the Cambodian government has actively promoted the establishment of Special Economic Zones (SEZs) in Kratié Province, making the province gradually become an important engine for economic growth in the East.

1. Location Strategy: the hub value of the Kratié Province

1.1 Geographical Coordinates

Kratié Province, located in northeastern Cambodia on the Mekong River's alluvial plain, serves as a transportation hub in eastern Cambodia, boasting rich natural resources and a strategic geographical location. 

Through regional cooperation mechanisms such as ASEAN, CLMV (Cambodia, Lao PDR, Myanmar, and Vietnam), ACMECS (ASEAN-China Mekong Cooperation), and the Greater Mekong Subregion (GMS), as well as major projects like Funan Techo Canal, Kratié Province can benefit from increased trade, investment, and infrastructure development, contributing to regional economic integration and sustainable development. 

1.2 Transportation Advantages of the Kratié SEZ

The Cambodian Kratié Special Economic Zone is invested and developed by Zhongqi Holding Group, which is a modern comprehensive industrial national park for domestic and overseas investors.

① Convenient cross-border trade: The zone lies in Snuol district, Kratié Province. The district is the largest international land port in northeastern Cambodia. The zone is 1.5 kilometers from the international land port between Cambodia and Vietnam. In addition, the projected Trans-Asian railway will run through Snuol district with its Phnom Penh to Ho Chi Minh section. In sum, the zone has a favorable geographical location and offers convenient transportation.

② Water transportation resources: The zone is 160 kilometers from the Hochiminh Port, Vietnam, coupled with the benefit from the Funan Techo Canal project, can greatly reduce logistics costs.

③ Perfect road network: Through national roads (like NR7, NR76, NR74, etc.), it connects major economic hubs such as Phnom Penh and Siem Reap, forming a convenient transportation system.

2.Brief introduction of the Kratié SEZ

2.1 The Zone Planning

The total planned area of the zone is about 9 square kilometers, harboring general industrial area, export processing area, free trade area, and living area. The construction work is divided into three phases.

2.2 Principal Businesses

The principal businesses of the zone include processing of industrial crops, wood furniture, construction materials, rubber products, warehousing and logistics. Once completed, the zone can allow over 200 enterprises to run their businesses here and provide 80000-100000 job positions.

2.3 Infrastructure

-Geological Conditions: The land in the zone is back-filled in different areas according to the plots. The site is flat and the underground is composed of clay and weathered sandy soil, which is suitable for building standard factory buildings and arranging heavy machinery and equipment.

-Water Supply: The zone has a reservoir with a water storage capacity of 3.5 million  cubic meters and a daily water supply capacity of 20,000 tons.

-Power Supply: The zone has built a 230kV substation.

-Communication: The planned communication design is 41,000 lines, which can be accessed by 10G and have good signal coverage.

-Roads: All roads in the zone are paved with reinforced concrete, with main roads 21m, sub-main roads 14m, and auxiliary roads 12m.

-Sewage Treatment plants: The total scale is 180,000m³.

-Standard Factory Buildings: The first phase has a standard factory building of 100,000 square meters, while the second phase has a standard factory building of 200,000 square meters.

-Staff Apartment: The building area is 20,000 square meters, providing accommodation guarantee for employees of enterprises in the park.

-Hotel: The zone plans to build a 6,000 square meter hotel and restaurant to meet the needs of visitors.

-Exhibition and sales center: The park plans to build an 8,000㎡ exhibition and sales center to meet the product display and sales needs of various enterprises.

-Commercial facilities: The life service center plans to build 20,000㎡ commercial space to meet daily life needs.

3.Advantages of the Kratié SEZ

3.1 Tax incentives

① Export tax: Free

② Import tax: All construction materials, production equipment, raw materials and spare parts to be imported by the invested project will be exempted from duties and value added taxes

③Corporate income tax:

- According to the type of business and the amount of investment, a project may be exempted from corporate income tax for 6-9 years; 

- If the profits is used for re-investment, the corporate income tax is exempted; 

- After the above-mentioned tax-free period, the corporate income tax will be paid at a rate of 20% under applicable tax laws.

④Value Added Tax:

-Production equipment and construction materials will be exempted from value added tax;

-Raw materials: Industry serving the export business is exempted from value added tax;

-industry serving the market of Cambodia shall pay value added tax at a rate of 10%.

⑤Land use policy: foreign investors may use the land through long-term leasing. The real estate and personal properties on the ground of the land lot shall remain the property of the investor under applicable laws.

3.2 Preferential Land Prices

Rent or sell land lots and standard plants at preferential prices, providing property management fee exemption policies for early settled enterprises. For projects with larger investment amounts, high-technological projects or high added-value projects will enjoy more preferential policies.

3.3 High-standard Facilities

The zone’s infrastructure construction is carried out in accordance with the high standards of national modernization, meeting the needs of investors in terms of water, electricity, communications, roads and environmental protection.

3.4 "One-stop" Management Services

The Kratié SEZ provides one-stop management services for enterprises to help them complete the procedures of investment application, registration, customs clearance of export and import, commodities inspection and quarantine, and application of certificate of origin, and provide labor forces;

3.5 Three Language Translation Service

The zone provides Chinese, English and Cambodian language translation services for investors.

4. Future Development Prospects

As the Cambodian government increases its efforts to develop the eastern region, the Kratié Special Economic Zone is expected to become an important investment destination in Southeast Asia in the future.

It is expected that in the next few years, the zone will achieve breakthroughs in the following aspects:

1. Attract more foreign-funded enterprises, especially investors in the fields of agriculture and green energy.

2. Strengthen trade exchanges with Vietnam and ASEAN countries and expand international markets.

3. Improve the infrastructure and provide enterprises with a better business environment.

In conclusion, The Kratié Special Economic Zone is emerging with its unique location advantages, abundant resources and supportive preferential policies from the government. For enterprises looking to invest in Southeast Asian, it provides attractive development opportunities and is an ideal choice for expanding into the Cambodian market.