Harrison White
CBRE Cambodia ‘Industrial Revolution 2022’ has provided an up-to-date overview of the industrial and logistics sector in Cambodia and Southeast Asia as well as a platform for multifaceted discussion among industry experts on opportunities and challenges for Cambodia in the logistics and industrial market.
To read the full CBRE Cambodia Industrial Revolution 2022 report click here.
Cambodia’s logistics master plan
H.E. Chhieng Pich, Director General of Logistics, Ministry of Public Work and Transportation presented an overview of Cambodia’s infrastructure developments and their support for the development of logistics and industrial sectors in Cambodia.
According to the Director-General consistent with the vision of the Royal Government of Cambodia, as set out in its Rectangular Strategy Phase IV, to become an upper-middle-income country in 2030 and a high-income country in 2050, Cambodia is envisioned as a country seamlessly and comprehensively connected and integrated into the ASEAN Economic Community (AEC).
Five pillars include:
- To transform the transport system to a comprehensive, high-quality and climate change resilience infrastructure and sustainable national transport system by 2030
- To enhance regional integration in the global supply chain through seamless transport and high connectivity in the Greater Mekong Subregion (GMS)
- To enhance industrial competitiveness through stronger production networks, optimum transport under efficient networks and hubs, and modal-mix
- To enhance air transport of passengers and cargo efficiently so as to boost economic activities and increase the competitiveness of the civil aviation industry
- To enhance competition in logistics through high-quality, diversified and efficient logistics infrastructure and service to respond to various demands
“Cambodia is looking to develop its economic corridors and international gateways capacity to facilitate trade between our two neighbors Thailand and Vietnam. This will be done through capacity expansion to meet increased logistics demand, faster and safer movements along economic corridors and improvement of other transport modes (railway and inland waterway) to offer alternatives,” H.E. Chhieng Pich said.
“We are also working on the improvement of import/export-related permits and inspection procedures towards a Cambodia National Single Window and ASEAN Single Window that will enable the realization of smooth and flexible border crossing procedures to meet business needs,” he added.
Agro-process remains untapped for Cambodia
Mr. Lawrence Lennon, Managing Director of CBRE Cambodia and Mr. Paraj Kakkar, Project Consultant, CBRE Supply Chain Advisory presented the key economic movements and key updates relevant to Cambodia and Southeast Asia I&L markets.
According to Lawrence and Paraj, Cambodia’s local garment was still dominating export while automobile manufacturing is steadily expanding, and the agro-industry still has untapped potential for Cambodia.
“Garment has been the major source of GDP and the biggest contributor to exports in Cambodia for many years. For instance, garments account for 44% of exports from January to April in 2022. The automobile market in Cambodia is making steady progress as the country witnessed Ford and four new auto brands move to open assembly plants in the kingdom,” they said.
“Due to existing limitations on productivity and persistent growth in demand of agricultural products, investment opportunities in agro-industry is still at large for investors,” they added.
ESG is now the key consideration
According to CBRE research from a regional perspective logistics demand in second-tier cities in Southeast Asia and India is rising on the back of growing populations and increasing urbanization.
“With occupiers increasing their investment in and adoption of smart warehouse technology to enhance operational efficiency and storage capacity, interest is growing in newer logistics facilities with modern features such as high ceilings to accommodate automated stacking systems, sufficient loading/unloading zones, and back-up power equipment for warehouse tech and cold storage,” they said.
“There has also been a sharper focus on environmental, social and governance (ESG) criteria CBRE’s 2021 Asia Pacific Logistics Occupier Survey found that 67% of occupiers believe that green or sustainability features will be more prominent in logistics facilities in the future,” they added.
According to CBRE common practices include green certification and energy sourcing, while there will also be a stronger emphasis on social and governance on the operational side, such as on-site safety and wellness programs.
Challenges and opportunities facing the sector
After the presentation, a panel discussion with various company representatives from the Industrial & Logistics sector discussed the challenges and opportunities unfolding in the Cambodian market.
The panel discussion included:
- H.E. Chhieng Pich, Director General of Logistics, Ministry of Public Work and Transportation
- Mr. Lawrence Lennon, Managing Director of CBRE Cambodia
- Mr. Paraj Kakkar, Project Consultant, CBRE Supply Chain Advisory
- Mr. Charles Esterhoy, CEO, Worldbridge Industrial Developments
- Mr. Mike Duggan Managing Director, Maersk (Cambodia)
Reflecting on the major opportunities and challenges facing Cambodia’s logistics and the industrial sector now and in the coming years – the major challenges remained Cambodia’s perceived lack of planning as well as non-ESG compliant infrastructure.
Mr. Charles Esterhoy, CEO, Worldbridge Industrial Developments said during the panel discussion that while Cambodia doesn’t have a history of industrialization which is a challenge however you can also view this is also an opportunity for a clean slate.
“For Cambodia to achieve its full potential the Kingdom needs to take a different approach – in my opinion, a 4.0 concept approach this means decentralized development and infrastructure which is complaint to ESG requirements,” Charles said.
“Cambodia’s greatest asset is its young and energetic demographic however it is our responsibility to ensure that old processes and thinking are not passed on to the next generation as the outside world is forcing us to change,” he added.
