Sihanoukville, once an emerging beacon of Cambodia’s economic expansion, has been haunted by over 300 unfinished or “ghost” buildings. 

The economic fallout from the Covid-19 pandemic left a massive dent in the construction sector, halting projects and freezing investments, particularly from foreign developers who withdrew during the crisis.

However, as of early 2024, a significant shift is underway. Thanks to the government’s One Window Service Office (OWSO) policy, 101 of these abandoned structures are poised for revitalisation, breathing new life into the province’s construction and investment sectors.

“We must stimulate business, trade and investment activity in Sihanoukville to foster sustainable development in the medium and long term,” Prime Minister Hun Manet remarked during the January 31 launch of the “Special Investment Promotion Programme in Preah Sihanouk Province 2024”. 

At the start of the year, 360 buildings in Sihanoukville were left incomplete, requiring an estimated $1 billion in additional investment to see them completed. 

The projects, many of which were halted by the pandemic’s economic turbulence, were left in limbo as developers faced financial hardships and withdrew their support. 

Puy Kea, president of the Club of Cambodian Journalists (CCJ), interviews Preah Sihanouk provincial governor Mang Sineth (centre) during a trip with journalists from over 30 institutions to promote the potential of Preah Sihanouk province from December 15-18. Hong Raksmey

The resulting economic vacuum threatened to stall the province’s ambitious plans to establish itself as a “Model Multi-Purpose Special Economic Zone” (MPSEZ).

In response to this challenge, the government launched an innovative initiative aimed at jumpstarting the stalled construction and revitalising the region’s economy. 

On January 26, the prime minister signed a sub-decree to establish a special working group that would oversee the development of new investment projects and resolve the bottlenecks surrounding existing ones. 

This working group will function as the OWSO, a one-stop service office offering a streamlined process for approvals, permits and business licences for investors.

Manet emphasised that the initiative is a direct response to the need for strategic efforts to rejuvenate the province’s economy.

According to provincial governor Mang Sineth, 101 of the over 300 ghost buildings have received approval for redevelopment. 

More than 40 of these structures have already resumed construction, and seven have already been completed. 

A view of some buildings stalled due to the financial challenges of development companies. Hong Raksmey

Sineth expressed optimism about the government’s efforts, noting that the simplified procedures and tax exemptions offered under the programme have helped overcome some of the significant obstacles that developers faced.

“Last month, I held a meeting with all the investors of stalled buildings, especially those who have received investment support from the special working group. We wanted to identify where their projects were stalled and offer assistance in overcoming these challenges,” he explained.

The government’s proactive approach has seen remarkable success in facilitating critical projects. 

One notable example is a solar factory aimed at exporting goods to European markets that faced supply chain interruptions during the pandemic.

Through the intervention of the OWSO, the facility was able to resume operations, showcasing the potential of the initiative to revive not just real estate projects, but also key industries in the region.

Minister of Economy and Finance Aun Pornmoniroth also spoke at the launch of the programme.

He outlined how the new initiatives are designed to boost business and investment activities, positioning Preah Sihanouk as a hub for economic growth, even amid uncertainties in regional and global economies.

“I have instructed the Preah Sihanouk investment working group and the secretary-general of the financial and economic policy committee to act quickly and implement this programme within a month,” said Pornmoniroth. 

To do so, he said, they needed the active participation of the leaders of several relevant ministries and institutions.

A collaborative effort to overcome challenges

One of the major hurdles in the ongoing development of these buildings has been the issue of land ownership. 

Many of the unfinished structures are owned by foreign developers, while the land on which they sit is owned by Cambodian nationals. 

Negotiations have often stalled because of significant discrepancies between the asking prices of landowners and the financial capacities of the building owners.

“The Special Investment Promotion Team is actively working to mediate between landowners and building owners,” Sineth said. “We are trying to create an understanding of the current situation, and although it may take time, we are confident that these issues can be resolved.”

Additionally, Sineth pointed out that the government has gone beyond merely facilitating negotiations by offering a range of incentives. 

These include full tax exemptions and, in some cases, a three-year tax break after the completion of a building. 

This is part of a broader strategy to encourage both local and international investors to resume their projects in Sihanoukville.

Despite the challenges, the province has seen a surge in interest from new investors. 

In 2024 alone, 242 investment applications were submitted, with 212 receiving approval. 

The remaining 30 projects are still under evaluation, signalling continued confidence in Sihanoukville’s future as a major economic hub in Cambodia.