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Hyundai to boost auto production

HYUNDAI Motor Company will increase production  at its assembly plant in Koh Kong province by more than 160 per cent during the next two years, Lim Visal, director of Hyundai’s Cambodian assembler, Camko Motor Company, says. 

The increase had followed Hyundai’s anticipation of Cambodia’s and ASEAN’s rising demand for cars in the near future, Lim Visal said. 

“The Cambodian market will see a quantum leap in the next four to five years once we reach a [gross domestic product] per capita of US$2,000, and car loans become more affordable,” he said in an email yesterday.

Hyundai’s Koh Kong factory began  assembling cars in January last year. It produced 300 vehicles in 2011 and aims to nearly triple its annual production to 800 cars in 2013.

Although the Kingdom has long produced its own motorcycles, domestic car assembly and production is relatively young.  Lim Visal is optimistic, however, that the economy will continue to support a higher level of manufacturing.

“Development is about moving from low-value-added to high-value-added industries. Comparative advantage is dynamic, not static,” he said. As production costs rose in countries such as China, Thailand and Vietnam, more companies would relocate to Cambodia, he added.

Chanchal Singh, facility manager of Auto Sales Cambodia, said auto corporations were attracted to invest in assembly plants in Cambodia for the apparent tax benefits.

The public would also welcome the job opportunities presented by what were often large-scale investments, Singh said.

Several car manufacturers had expressed investment interest in Cambodian assembly plants but government red tape had stymied some of their plans, he said.

“Stringent government regulations have made it difficult for certain companies and have hindered the process,” Singh said, although he declined to name the companies that had shown interest in the market.

Conditions in Koh Kong’s Special Economic Zone – where the Hyundai plant is located – could be more attractive, he said.

Lim Visal said:  “The government has been welcoming [companies] with open arms by encouraging [Special Economic Zone] development.”

Logistics costs to and from Koh Kong were considerably lower than other areas of the country due to its proximity to Thailand, Jo Young-dae, director of operations at Camko Motor Company, said in November.

The cost of importing parts via Thailand was nearly half that of shipping through the Sihanoukville Port, he told the Post.

Auto sales were up last year in Cambodia.

Year-end reports revealed that many dealerships in Cambodia, including RMA Co, a local importer of Ford and Chevrolet motor vehicles, had surpassed their 2011 sales targets.

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