A Cambodian industrial park that has long served as a base for Japanese and Chinese manufacturers is looking to diversify as shifts in global supply chains create opportunities for the Southeast Asian country to attract more companies.
The Phnom Penh Special Economic Zone in the capital houses more than 90 tenants from 15 countries in an area of 3.57 square kilometers. It is one of Cambodia’s leading industrial parks, along with a 10-sq.-km Chinese industrial park in Sihanoukville.
Currently, Japanese and Chinese companies account for two-thirds of its tenants. The two economies remain important for the industrial park as sources of investment, but the operator says it aims to attract more Thai and Vietnamese companies, as well as global companies moving their bases from the two neighbors.
“Geographically, it is easy to complement Thailand’s supply chain, and we have been trying to attract companies to PPSEZ with the ‘Thailand plus one’ sales pitch,” Hiroshi Uematsu, the chief executive of the operator Royal Group PPSEZ, told Nikkei Asia in an online interview, referring to a movement in which companies in Thailand also set up new bases in neighboring countries due to rising costs in Thailand.
The PPSEZ is 540 km from Bangkok, about 10 hours by truck.
Cambodian Foreign Minister Sok Chenda and Thai Foreign Minister Maris Sangiampongsa met in Phnom Penh on June 28 and discussed that establishing mutual special economic zones in border provinces would “enhance supply-chain connectivity and create economic synergies,” according to the Cambodian authority.
Phnom Penh is about 200 km away from Ho Chi Minh City and the southern Vietnamese province of Dong Nai, which hosts many industrial parks. “We believe it is possible to encourage production transfer from Vietnam and build a cooperative supply chain,” Uematsu said.
Uematsu said Cambodia will draw more companies as companies reconfigure their supply chains due to geopolitical changes. “If Donald Trump wins the November U.S. presidential election, trade conflicts between the U.S. and China may escalate, and Cambodia will attract even more attention as a production relocation destination,” he said.
“Although Western countries have been criticizing Cambodia for its dictatorship, Cambodia is in a way (politically) stable,” Uematsu added.
Source: Nikkei Asia
