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Logo of Phnom Penh Post newspaper Phnom Penh Post - Cambodia's small auto industry likely to expand as AEC looms

Cambodia's small auto industry likely to expand as AEC looms

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Automobiles are displayed on the sales floor of a Ford dealership in Phnom Penh this weekend. Photograph: Seth Kimsoeurn/Phnom Penh Post

The Cambodian automotive industry will expand after the Kingdom’s integration into the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) in 2015, thanks to the free flow of goods within the bloc and Cambodia’s competitive advantage as a low-cost manufacturer, according to Cambodian Commerce Minister Cham Prasidh.

Speaking at the First Phnom Penh International Motor Show on Friday, Prasidh said the number of vehicles produced annually in the ASEAN region is expected to surpass two million after the area becomes closer to being a single economy.

“Companies can import tires from Malaysia, the mirrors from Indonesia, or other spare parts from other countries and then assemble them in Cambodia where the production cost is cheaper,” Prasidh told reporters. “Many Japanese-base companies in Thailand and Vietnam are considering coming to Cambodia.”

As a country with a large young labour force of low-cost workers, Cambodia has been developing its automotive landscape over the past few years.

In 2011, a joint venture between Hyundai distributor KH Motors and the Ly Young Phat Group began assembling cars in Koh Kong province. A year later, in March, Ford began assembling the 2012 Everest SUV in Sihanoukville for the domestic market.

In September last year, UK-based BIW automotive company signed a $2 billion joint-venture investment with ACICA Automotive (Cambodia) to build a factory in Preah Sihanouk province to produce a Cambodian-made vehicle within the next three years.

DJ Simpson, district manager of Southeast Asia Ford export and growth operations, agreed that Cambodia has a place for motor companies in the future.

“We believe that when Cambodia is integrated in to the AEC in 2015, it will open up the door for Cambodia to attract other industries: the [automotive] industry will grow,” Simpson told the Post over the weekend.

Sok Chenda Sophea, secretary-general of the Council for the Development of Cambodia, said the government’s industrial policy will accelerate industry and boost manufacturing in the automotive and electronics sectors.

“With the industrial policy in hand, I believe that all the challenges that the private sector is facing will be resolved,” he said.

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