Cambodia will consider setting up a special economic zone (SEZ) for South Korean investors with a focus on small and medium-sized companies and high-tech industries.

The move is part of  “strategic partnership” between the two countries, announced after a meeting between Cambodian Prime Minister Hun Manet and South Korean President Yoon Suk Yeol in Seoul on May 16.

In a joint statement on the new partnership, the two sides welcomed an upward trend in Korean investment in Cambodia and a post-pandemic recovery in bilateral trade.

Trade cooperation

“Both sides agreed to leverage bilateral and multilateral economic cooperation mechanisms, including the Korea-Cambodia Free Trade Agreement (KCFTA), the Asean-Korea Free Trade Agreement (AKFTA), and the Regional Comprehensive Economic Partnership (RCEP),” the statement says.

They also agreed to continue talks on launching negotiations on trade in services and investment, and increase cooperation in digital trade and intellectual property “for innovation-driven sustainable development“. In addtion, they will “seek ways to deepen economic cooperation and strengthen supply chains".

Both sides will also jointly promote Korean investment in Cambodia, with a focus on SMEs and export-oriented high-tech industries, such as automobile assembly, electronics, electrical equipment and machinery.

To improve the investment climate, regular consultations are envisaged between the Council for the Development of Cambodia – the government agency overseeing investment – and the Republic of Korea Embassy (ROK) in Phnom Penh.

“In this connection, both sides concurred to foster close collaboration, to explore the possibility of setting up a Cambodia-ROK Special Economic Zone to further facilitate and attract investment projects from the ROK to Cambodia,” the statement says.

Financial cooperation

With 15 South Korean financial institutions already operating in Cambodia, the two sides will pursue further cooperation in the sector, focusing on the application of digital finance.

There has been “significant progress” since the Cambodia Securities Exchange was set up in 2010 as a joint venture between Cambodia’s Ministry of Economy and Finance (55%) and the Korea Exchange (45%).

“Both sides agreed to enhance the cooperation between the securities regulators of the two countries, especially in the area of digital securities, fintech and sustainable bonds,” the statement says.

Cambodia has already developed numerous SEZs including along the country’s borders with Vietnam and Thailand. The two largest are located near the deepwater port of Sihanoukville, where Chinese-owned companies have a strong presence, and Phnom Penh International Airport, where Japanese companies are dominant.

Photo: Cambodian Prime Minister Hun Manet and South Korean President Yoon Suk Yeol meet in Seoul on May 16.  (Facebook page of Samdech Thipadei Supporter)