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Agro SEZ to grow China exports

Employees use a forklift to stack pallets of rice at a storage and processing plant on the outskirts of Phnom Penh last year.
Employees use a forklift to stack pallets of rice at a storage and processing plant on the outskirts of Phnom Penh last year. Heng Chivoan

Agro SEZ to grow China exports

A Chinese firm plans to invest at least $2 billion into developing the Kingdom’s first special economic zone geared entirely for agro-processing and storage, with the sprawling zone’s factories and warehouses aimed at meeting the growing potential for Cambodia to export its agricultural produce to buyers in Asia’s biggest economy.

“Since China’s economy is growing, as well as its population, we are facing food shortage issues, while Cambodia could help provide the resources we need,” Shen Chen, chairman of Tian Rui (Cambodia) Agricultural Cooperation SEZ Co Ltd, said following the signing yesterday of a memorandum of understanding with Cambodia’s Ministry of Agriculture to develop the ambitious project.

He said Cambodia’s agricultural sector had attracted many Chinese firms looking to meet their country’s growing consumption, but the Kingdom did not have sufficient storage, processing and packaging facilities to capitalise on the opportunities.

“There are a lot of agro-processing companies that are ready to invest in Cambodia but the main issue that we saw here was the lack of storage facilities for agricultural products from one season to the next, and insufficient capacity to process these goods for export,” Chen said. “Our project will take action to solve these issues in order to promote exports.”

Tian Rui, a subsidiary of China’s Qingdao Tian Rui Group, will invest over $2 billion to develop a new special economic zone (SEZ) in the Kong Pisey district of Kampong Speu province.

According to Chen, the Council of Development for Cambodia (CDC) approved a blueprint for the 100-hectare site in June, while the company has secured an adjacent 200 hectares for expansion.

Tian Rui will construct an agricultural storage facility with 30,000-tonne capacity during the project’s initial phase, while two 100,000-tonne facilities will be added during subsequent stages.

The master plan envisions from 30 to 100 agro-industrial factories once the SEZ is fully operational in five to 10 years. Ten Chinese companies have already registered to operate in the zone, Chen said.

He explained that Tian Rui and other companies operating in the SEZ will source agricultural products from the surrounding countryside.

“The company will work with farmers and buy their agricultural products,” he said, adding that Tian Rui also has its own agricultural land for growing crops.

Once fully operational, Chen expects the SEZ’s tenants to export around 500,000 tonnes of agricultural products to China a year, though he declined to specify the crops involved.

Agriculture Minister Veng Sakhon, who countersigned the memorandum of understanding yesterday, said Tian Rui also agreed to establish an agricultural research centre and an office for sanitary and phytosanitary (SPS) control inside the zone.

“This is a huge investment in Cambodia’s agricultural sector... and is a comprehensive step toward successful exporting,” he said. “However, it faces challenges as farming here is still traditional.”

He said Tian Rui would introduce a new model to promote Cambodian agricultural products, buying them from farmers and providing training on new farming techniques, while cooperating with markets in China to sell the processed and packaged goods.

Yang Phirom, business advisor to CEDAC, an agricultural and rural development NGO, said it was important to develop Cambodia’s agricultural sector, which faces challenges in production and marketing. However, he cast scepticism on the SEZ’s ambitious investment plan.

“So far, we’ve heard of a lot of projects coming but it’s hard to see the results, and our agricultural sector remains in a difficult predicament,” he said.

He added that $2 billion was a huge sum, and “if they used it the right way and provided loans to farmers, I believe our agricultural sector would be better off.”

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