Zones 'should not be rivals'

Zones 'should not be rivals'

Cooperation call for Trat, Cambodian SEZs

Direct competition between Cambodia’s Koh Kong SEZ and that in Khlong Yai would hinder
economic flows between the two border provinces, IEAT urged. CHANAT KATANYU
Direct competition between Cambodia’s Koh Kong SEZ and that in Khlong Yai would hinder economic flows between the two border provinces, IEAT urged. CHANAT KATANYU

 The Industrial Estate Authority of Thailand (IEAT) is being urged to find ways to cooperate with Koh Kong Special Economic Zone (KKSEZ) in Cambodia to ensure the presence of Trat's SEZ in Khlong Yai district will generate maximum benefits for the two neighbouring countries.

Uthai Tanchai, chairman of Trat Chamber of Commerce, said the Trat SEZ should not be developed in a way that it competes directly with its Cambodian counterpart.

"If the Thai government does not plan carefully Trat's SEZ development, the 889-rai industrial estate will directly compete with KKSEZ and cannot create any economic flows between the two border provinces," he says.

Founded in 2002, KKSEZ, about 45 kilometres from Khlong Yai district, aims to create jobs for Cambodians. It is owned and operated by Koh Kong SEZ Co of LYP Group, which is owned by tycoon Ly Yong Phat.

LYP Group runs a five-star hotel, Koh Kong Resort and Casino, water and power supply businesses and a television station, among others.

KKSEZ is one of 11 SEZs supported by the Cambodian government to attract foreign direct investment.

This industrial park has an area of 2,100 rai but has only five plants: Hyundai, Hana Group, Yasaki, Mikasa and KKN Apparel.

"Factories located in KKSEZ are all small-scale because Koh Kong still relies on power supply from Thailand," Mr Uthai says.

Hana Group, a SET-listed electronics manufacturer, for instance, has to ship parts to be assembled at its Thai plant, while Hyundai has a monthly assembly capacity of only 40 cars to meet demand for left-hand-drive cars in Cambodia.

"KKSEZ has not seen any financial achievement over the past 13 years due to a lack of well-managed public utilities and infrastructure," says Thitidej Tongpatara, vice-president of LYP Group.

Koh Kong developed local power and water supplies only a few years ago. 

Mr Uthai says the IEAT should position Trat's SEZ to focus mainly on investors or industries keen to set up head offices in Khlong Yai, which is convenient in terms of transport facilities, while labour-intensive manufacturing should be promoted in KKSEZ to create more jobs for Cambodians.

Closer cooperation is needed to attract Thai investors to invest in SEZs in Cambodia's border provinces.

"There's a big difference in daily wages between Trat and Koh Kong," says Mr Uthai. "Cambodians would prefer to work in Trat if Thai companies set up factories for labour-intensive industries."

Daily wages in Koh Kong average 150 baht compared with more than 300 in Trat.

Nonetheless, Mr Thitidej, a Thai national who has worked in Cambodia for 15 years, has a positive outlook on the Trat SEZ, believing it can generate more economic flows into Koh Kong.

Thailand has many advantages such as public utilities, infrastructure and government support, while its disadvantages are a higher minimum wage and cuts to the Generalized System of Preferences tariff system by developed countries.

Mr Thitidej agrees that Khlong Yai district can become an industrial zone for skilled labour or a logistics hub, while Koh Kong is a labour-intensive area. The two SEZs give investors a choice on which location is worth their investment.

"I do not think the SEZs are competitors. Khlong Yai's SEZ will help to transfer technology or innovation from Thailand to Cambodia that will help upgrade production," says Mr Thitidej.

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