Japanese investors will put $56 million into a joint venture with local company Sanco Investment Group (SIG) to build a new special economic zone in Banteay Meanchey province’s Poipet town, officials said yesterday.
Chhour Vichet, executive director of SIG, said Thailand’s labour shortage, Cambodia’s ongoing political unrest and the markedly higher minimum wage, which doubled to $9.77 per day in December 2012, all make the Kingdom a well-situated investment alternative.
As the Post reported at the time of the wage increase, Thailand’s leading garment manufacturer, TK Garment Co Ltd, shifted operations to Cambodia in response to the decision.
Thailand’s economy is also facing losses of $685 million from declining tourist numbers as demonstrators continue to block major roads in and out of Bangkok and choke the industry, Bloomberg reported yesterday.
“Now, we are seeing a flow of investment from Thailand due to a large workforce, cheap labour and a central location,” Vichet said.
Cambodia’s minimum wage stands at $100 per month in the garment sector, $200 less than Thailand’s once the country’s daily wage is calculated over the period of a month. Special economic zones were first introduced by the Cambodian government in 2005 with the aim of developing industrial and commercial areas with economic incentives for tenants, such as cross-border trade facilitation. SIG received approval from the Cambodian government to build the new, 250-hectare economic zone in October. An electronics factory already operates on the site and will become incorporated into the project.
Construction of the site’s infrastructure, such as electricity, roads and irrigation, is expected to take up to six months to complete.
The privately funded Poipet venture comes at the same time as two government-funded zones are being planned along the border. The Thai and Cambodian governments in June said that they would build one in Banteay Meanchey, while the other is planned for Koh Kong province. Vichet raised no concerns over the establishment of the special economic zone in Koh Kong.
“It is just the proposed idea, I think it will take time to materialize,” he said. Nguon Meng Tech, director general of the Cambodia Chamber of Commerce, said the new special economic zones, which will increase the total number to 25 across the Kingdom, will spur business activity. “More special economic zones along the border are a good idea because they will improve border trade and we can attract more investors to set up businesses in the industrial parks,” he said.