Cambodian Kratié Special Economic Zone -Zhongqi Overseas Group

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Cambodian Kratié Special Economic Zone

Time：2018-02-07

1.Brief introduction to the special economic zone

The zone lies in Snoul county, Kratié Province. The county is biggest international land port of the north-east of Cambodia. The zone is 1.5 kilometers from the international land port of Cambodia and Vietnam, 240 kilometers from Phnom Penh, capital of Cambodia, and 160 kilometers from Hochiminh Port, Vietnam. The projected Trans-Asian railway will run through Snoul County with its Phnom Penh to Ho Chi Minh section. In sum, the zone enjoys a good geographical location and boasts convenient transportations.

The total planned area of the zone is about 9 square kilometers. Its construction task is divided into three phases. As for Phase 1, the planned area is 3 square kilometers and the planned investment is 90 million US dollars. Now the comprehensive office building is completed and put into service, but the supporting infrastructures need further improvement.

The zone is generally planned as a comprehensive industrial park harboring industrial park, trade park, logistics park and others, and is divided into agricultural product and food processing area, industrial processing and manufacturing area, trade and warehousing and logistics area, timber processing area, rubber processing area, construction materials processing area, stone processing area and others, as well as the projected thermal power plant, water treatment plant, sewage treatment plant and others. The zone can allow over 200 enterprises to run their businesses here and provide 100000 job positions. Now a standard plant of 100000 ㎡ is completed.

During the visit to Cambodia by Chinese President Xi Jinping in October 2016, Kratié Special Economic Zone became one of the 11 key projects under the Memorandum of Understanding for Joint Promotion of Key Projects in Capacity and Investment Cooperation signed between the two sides and ranks 8th in the list of key projects in capacity and investment cooperation between China and Cambodia.

In April, 2017 the zone was listed by the Ministry of Commerce of China as one of 103 key overseas zones of China.

2.Supportive Services of the Zone

1) Provide scheduling, hotel reservation, investment consultancy services for enterprises which is to carry out early investigation;

2) rent or sell land lots and standard plants at preferential prices, and build plants according to requirements of the enterprise;

3) provide one-stop management services for enterprises to settle in the zone and 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;
4) Build hotels, apartments, canteens, supermarkets, banks and other supporting facilities;
5) Provide services such as logistics, customs clearance, security and property management; the goods to be imported or exported by the enterprise can go through customs clearance and transportation procedures in the zone;
6) Provide network, telephone, fax and other basic communication services.

3. Preferential policy

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. The zone closely neighbors Snoul county of Kratié Province, the biggest international land port of the north-east of Cambodia. The zone is 1.5 kilometers from the international land port of Cambodia and Vietnam, and 160 kilometers from Hochiminh Port, Vietnam. The projected Trans-Asian railway will run through Snoul County with its Phnom Penh to Ho Chi Minh section. In sum, the zone enjoys a good geographical location and boasts convenient transportations.
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. 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. During the official visit to Cambodia by Chinese President Xi Jinping in October 2016, Kratié Special Economic Zone became one of the 11 key projects under the Memorandum of Understanding for Joint Promotion of Key Projects in Capacity and Investment Cooperation signed between the two sides and drew great attention from the two governments. The zone is the key overseas economic and trade cooperation zone for China's investments abroad, and is also the overseas investment park enjoying significant supports from Qingdao City, Shandong Province and China.
In order to speed up the construction and improve the investment environment of the zone, promote the continuous, fast yet healthy development of the zone, and encourage global investment group (entity), natural person and/or other organization to invest in Cambodia, so as to respond to the Going Global and the Belt and Road strategy advocated by the Chinese Government, and seize the strategic opportunity, we hereby provide the following preferential policies for any enterprise that intend to run its business in the zone:
1) Investment manner and industry
1. Investors may invest in money, in kind and/or other means approved by the national law, regulation or policy. All resources, markets, industries of Cambodia are open to the foreign investment (except as otherwise stated by law), and domestic and foreign investors may develop, utilize these resources through cooperation, joint venture or sole proprietorship. The lawful rights and interests of investors are protected by laws.
2. Except as otherwise clearly stated under national laws or regulations, any enterprise or project may enter into the zone so long as it meets state industrial policy and environmental requirements, without any limitation on types of business.
3. encouraged Investment fields. The Investment Law of Cambodia stipulates that the key investment fields encouraged by the government include innovative and high-technology industries; industry creating job opportunities; export-oriented enterprises; tourism industry; agriculture and processing; infrastructure and energy; rural and provincial development; environment protection; investment in economic zones established by law.
2. Way to use land and plant
In order to serve the projects settled in the zone, we will, according to the planning and industrial directions of the zone, give priority in guiding the investors to build plants by themselves, and in addition to this, we will rent some plants to them as a supplement.
1) The price of the right to use the leased land lot in the zone is at RMB 50000 per mu(=0.0667 hectares) for a period of 40 years. If an enterprise has signed the land leasing contract prior to December 31, 2017, purchased 300 mus or more land(the corresponding building area reaches 10000 ㎡or more), has paid off all the sum related to the lease of the land, and settles in the zone within 6 months after conclusion of the leasing contract, it is entitled to a construction subsidy at RMB 5000 per mu according to its construction progress. The subsidy will not be given if an enterprise fails to start its construction within 6 months after conclusion of the contract.
2) From January 1, 2018 on, the price of the right to use the leased land lot in the zone shall increase by RMB 10000 per mu each year.
3) Plant rental: RMB 8-12 /㎡/month, which shall increase at a rate of 10% each year. Any enterprise settles in the zone may lease a plant for its use, or at first lease a plant and later purchase it for its use.
4) After an enterprise that has settled in the zone pays off all the land charges and fees, the zone may build customized plant for it. The enterprise may pay off all the fees and expenses related to the plant built for it in installments within 3 years as per current bank interest rate.
5) The first 10 enterprises that have settled in the zone will be exempted from 12-month property management fee. Any project with more than 30 million RMB of investment, high-technological projects or high added-value projects will enjoy more preferential policies.
6) The fee for maintenance and management of public facilities is 0.024 USD/㎡/month.
All the above sums are taxes exclusive.
3. Preferential policies on taxes
1) export tax: all processed products are free of export taxes(except designated agricultural products and aquatic products).
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.
3. Corporate income tax:
1) According to the type of business and the amount of investment, a project may be exempted from corporate income tax for 6-9 years after the project is started;
2) If the profits is used for re-investment, the corporate income tax is exempted;
3) After the above said tax-free period, the corporate income tax will be paid at a rate of 20% under applicable tax laws.
4. Value Added Tax:
1) Production equipment and construction materials will be exempted from value added tax;
2) 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%.
5. land use policy: foreign investor 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.
4) incentive policy
In order to arouse the enthusiasm of social sectors to attract foreign investment, speed up building and development of the zone, and attract businesses with existing businesses, we hereby provide the following rewards for any unit or person that has attracted investors to establish any enterprise in the zone:
1. objects of reward
People from all walks of life and all organization will utilize various channels and do all they can do to introduce investors to the zone. For any enterprise successfully invested in the zone, if it is in compliance with industry orientation, industry policy, its introducer will be given the said reward.
2. scope of businesses to be introduced
Processing of industrial crops, processing of wood products, stone, construction materials, rubber products, warehousing and logistics, machine manufacturing, technology-based high energy consumption industry and others.
3. reward standard (subject to the paid-in capital)
1) Those who have successfully introduced enterprise to invest, lease land and plant in the zone will be given 1% of the total transaction price after deduction of relevant taxes. Such reward may not exceed 30000 USD in any case.
2) Those who have successfully introduced key project will be given special reward as the case may be.
4. reward procedure
After the investor signs land and plant leasing contract with the zone and within 20 working days after all the rental is paid, the zone will pay the said reward as stated. The zone will not pay any other reward to introducer.