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Domestic production strengthens as F&B imports fall

Food and beverage imports to Cambodia have fallen over the past 12 months, marking a notable shift in domestic production and the public’s recognition of the “Made in Cambodia” brand, officials say.

Cambodia spent around $223 million on food and beverage imports to supply the domestic market last year, down 7.4 per cent from $241 million in 2013, the latest data from the Ministry of Commerce shows.

Te Taing Por, president of the Federation of Associations for Small and Medium Enterprises of Cambodia (FASMEC), said the decline reflected an increased domestic production and supply of food and beverage products, which are substituting imports.

“Import figures in 2012 and 2013 were big because there was not much local production activity. But in 2014 more local enterprises began producing drinking water, beers and soft drinks and expanded their operations. Their output has filled majority of demand in the market,” he said.

“Shrinking confidence in the safety and quality of imported products has also pushed local consumers to switch to locally made products.”

The SME peak body president called on Cambodia’s government to provide tax incentives, technical and technology training to encourage businesses to increase their production capacities, which will help further reduce food and beverage imports.

“Big investors receive three years’ tax holiday while SMEs don’t. These are all the challenges. At this moment, the government should lead the sector on production techniques and technology as SMEs are not strong enough yet,” he said.

Cambodian-made products that are substituting imported products include soy sauce, fish sauce, processed noodles, fruit juice, alcoholic drinks, drinking water, processed peanuts and vinegar, according to Srey Chanthy, independent economist and expert on agricultural issues.

Chanthy said promoting the “Made in Cambodia” brand and improved access to technology, infrastructure and warehousing have all contributed to local enterprises’ growth. He expects the country’s import figure to remain stable in 2015 and even decrease as producers continue focusing on providing better quality products.

“Local producers should keep focusing on product quality and safety to be able to win over local consumers’ preference and also to compete with foreign products during the AEC integration,” Chanthy said, adding that the current oil price decline could also provide a window of opportunity for local producer to increase production to fill domestic demand.

“As production costs are higher [in Cambodia] compared to neighbouring countries, producers should try their best to keep prices low to remain competitive.”

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