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Cambodia’s industrial and logistics sector poised for a post-pandemic boom

Brian Badzmierowski

Cambodia’s industrial and logistics sectors are growing momentum as companies shift their sights from China and the Kingdom continues to embrace new technology as a means to open the door for investment and growth.

Speaking at a roundtable conference last week, CBRE Asia Pacific Executive Director Troy Shortell said: “Logistics topped the list for Asia Pacific investors for the first time ever last year and this trend has continued through the third quarter of this year.

In this environment, developers and landowners based in Southeast Asia’s emerging and dynamic markets, like Cambodia, will continue to see more opportunities to attract international sources of capital.”

He said business owners are facing a new set of Covid-era concerns, such as rising supply chain costs, environmental concerns, and access to talent. 

The government, Shortell said, would also play a crucial role in enabling growth in the sector.

“Besides private sector investment and collaboration, support from government policies, incentives, or investments will also help continue to unlock this potential for Cambodia, just as it is has done so recently for other Southeast Asian countries in the area of industrial logistics property,” he added.

The construction of warehouses is high on many companies’ priority list as a way to expand and cut costs, as traditional means of distribution gives way to delivery-to-your-doorstep ecommerce and a decline in retail.

Online retailers and third-party logistics companies, Shortell said, will drive the demand.


Garment exports took a hit in 2020, but rebounded during the first half of 2021.

Room for manufacturing, agricultural growth in Cambodia’s industrial and logistics sector

Concerning manufacturing, Lawrence Lennon, the Managing Director of CBRE Cambodia, said the textile and garment industry has benefited as companies started shifting their operations from China to Cambodia during the pandemic.

Lennon said the European Union imported 4 percent of its clothes from Cambodia in 2020, representing about 2 billion Euros ($2.6 million) worth of imports. This was on par with India and Vietnam despite a much smaller scale population. 

“I think what it tells us is the potential of what the Cambodian industry can achieve if the right resources and ingredients are aligned,” he said. 

The manufacturing output as a whole saw a 2.75 percent decrease in 2020, the first-time negative growth was recorded since the 2008 economic crisis.

However, in an encouraging sign, garment, textile, footwear and travel goods exports reached $357.8 million during the first half of 2021, a 1.4 percent increase from last year.

After recording negative growth for the first time in over 10 years, the manufacturing sector is expected to bounce back in 2021.

Lennon said improving the agricultural value chain is a crucial step to increasing exports from the Kingdom. 

“What we would like to see more of is processing added-value products, and this is what we’re expecting to see in the near-term and the mid-term hopefully,” he said. 

“We’re very much hoping that we can see some big changes taking place in this segment. When it comes down to efficiency, we only need to make small changes in the process to make very large developments when it comes to agricultural productivity,” he added.

Aside from the agriculture and garment sectors, Lennon said domestic assembly of vehicles was another potential form of growth. 

In 2022, RMA plans to open the country’s first automotive manufacturing plant in Pursat with the goal of producing 10,000 Ford vehicles per year. 

He added that companies will continue to view Cambodia as an ideal manufacturing hub mainly due to its stable conditions, the low cost of construction, and the relatively low cost of labor compared to the region.

Cambodia’s low labor costs are a major factor in attracting foreign companies.

Ecosystems to invite FDI in Cambodia’s industrial and logistics sector

Allowing SMEs to blossom and improving human resources by educating young people and empowering entrepreneurs was discussed as other factors crucial to sustainable growth at the panel discussion. 

Charles Esterhoy, the CEO of Worldbridge Industrial Developments, said Cambodia has the assets, including a young, tech-savvy population with an entrepreneurial spirit, but said steps must be removed to allow entrepreneurs and SMEs to grow.

“It’s not just SMEs. We need to look at steps before that. We need to look at entrepreneurs, startups, and before that, we need to look at students graduating high school, some going into business, some going into universities. They are the seeds of Cambodia’s sustainable economic growth and development,” he said.

WorldBridge is attempting to bridge the gap between FDI and SMEs with its ultra-ambitious i4.0 SME Cluster dubbed “The Stage,” which Esterhoy said will open early next year.

Located in Takhmao, the cluster proposes to be a small town-like hub of SMEs, suppliers, service providers, i4.0 departments, and market specialists working together to provide higher-value products and logistics solutions.

The goal is to attract foreign investment and improve domestic value and supply chains by coordinating groups of SMEs to work together seamlessly.

“Our cluster project concept is building an ecosystem which removes the barriers and provides the access that SMEs and startups need for sustainable growth,” he said.

He said increasing access to finance and finding ways to curb electricity costs were areas that could be improved to further support SMEs.

Cambodia’s GDP is expected to grow faster than most countries in the region in 2021.

HE Kalyan Mey, Senior Advisor to the Supreme National Economic Council, said: “We need to think big, start small, and move fast… It’s not the government alone, it’s not academia alone, it’s not the private sector alone… It’s a complicated process.”

He said all three branches need to move together, and the time to take action is now. From a private sector perspective, Esterhoy said ecosystems like The Stage should open the door to more foreign investment.

“It’s more about the creating of ecosystems and the creation of value chains from end-to-end. So, from academia to product development, to manufacturing to consumer, and all of the services and supporting stakeholders along the way, is the value chain,” he added.

He said it’s not as simple as manufacturers embracing i4.0 technologies, it’s a matter of creating an ecosystem where all stakeholders along the value chain can easily communicate and seek mutual benefits, something he called “co-opetition”. This is what foreign investors are looking for, he said, and he believes Cambodia can be an attractive country for increased FDI moving forward.

“In Cambodia or anywhere around the world in developing nations, one SME standing alone and trying to break into a global market is very, very difficult. But a complete value chain with 6, 7, 8 participants or stakeholders in that value chain working together and using digital technologies, they can be competitive,” he added.

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