Border zone offers tax break

Photo by: NATHAN GREEN
Farmers work their fields near Phnom Penh. Ministry of Commerce Secretary of State Mao Thora says agricultural exports are a key way to address the trade imbalance with Vietnam.

The Phnom Penh Post
Wednesday, 19 August 2009
May Kunmakara

Cambodian businesses that set up in new economic zone on Vietnam’s side of border will receive three-year holiday on import-export taxes, official says

Anew special economic zone on the Vietnam side of the border with Cambodia is offering businesses a three-year holiday on import-export duties to set up operations.

Lam Minh Chieu, chairman of the An Giang Provincial People's Committee, where the Tinh Bien Border Gate Economic Zone is situated, said Tuesday the zone was part of an effort to drive trade between the two countries to more than US$2 billion annually by the end of 2010.

"Both sides will be able to sell products across the border free of tax for three years from 2009 to 2012," he told a press conference in Phnom Penh.

"I firmly believe this new economic zone will enhance trade volume of both sides to reach more than $2 billion by 2010."

Bilateral trade between the two countries was worth $637 million in the first half of 2009, according to figures from the Vietnamese Embassy in Phnom Penh, down 29 percent from $900 million for the corresponding period a year earlier.

Of that, Cambodia exports to Vietnam were worth $95 million, down from $123.5 in the first six months of 2008.

Embassy commercial councillor Le Bien Cuong said in a recent interview that he expected bilateral trade to reach $1.45 billion by the end of 2009.

Lam Minh Chieu said nearly 70 percent of trade between the two countries took place across three border gate economic zones connecting Vietnam's An Giang province with Takeo and Kandal provinces in Cambodia.

"Although trade has dropped around 30 percent [through the province] in the first half year of the year, I think that our trade exchange will reach $1 billion by the end of this year."

Tinh Bien Border Gate Economic Zone covers 10 hectares and is about 120 kilometres from Phnom Penh.

The other zones in the province are Khanh Binh and Vin Xuo'ng.

Learning opportunity
Mao Thora, secretary of state at the Ministry of Commerce, said the owners of Cambodia's special economic zones needed to learn from their Vietnamese counterparts.

"We should exchange experience with Vietnam about how to manage, handle taxes and attract investors, and the ministry urges them to do so."

Cambodia has 21 registered special economic zones, only about six of which are operational.

The ministry was working hard to boost exports of the country's agricultural products to Vietnam to help even out the trade imbalance, Mao Thora said.

"[We] are working hard with the Ministry of Agriculture to export cassava, corn, rubber, rice and cashew nuts to Vietnam," he said. "Last year we sold around 1 million tonnes of unmilled rice to them."

Than The Hanh, the director of the Phnom Penh branch of Vietnamese bank Sacombank, said the bank was offering loans to Cambodian traders looking to set up in the zone.

"If we see that their business gains a high profit and has an effective business performance, we will offer them the loan even if they don't cooperate with Vietnamese businessmen," he said.