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Automotive, electronics sectors set to rev up

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Automotive component and electronics exports reached $200 million and $900 million in 2019, up from $60 million and $400 million in 2015, according to the roadmap. PHOTO SUPPLIED

Automotive, electronics sectors set to rev up

The government has developed a game plan to turn Cambodia into a regional and global production hub for automotive and electronic components, draw in more investment in the field, and boosting exports by billions of US dollars in the long run.

The Cambodian automotive sector has experienced rapid growth in recent years, according to the recently published “Cambodia’s Automotive and Electronics Sectors Development Roadmap”, which was compiled by the Council for the Development of Cambodia (CDC), the Kingdom’s apex trade body.

The annual average recorded by automotive sector exports in the 2016-2019 period was double the corresponding figure for 2009-2012, driven by higher levels of foreign investment.

On average, the Kingdom received four new automotive sector investment projects each year from 2016 to 2019, representing capital of $22 million per annum, versus a mere $4 million in the 2009-2012 period, the CDC said.

This, it said, has spurred rapid growth in the automotive labour force, averaging an additional 500 workers each year, with the current total at around 10,000.

Top buyers of the Cambodian automotive sector’s products include Thailand and Japan, the latter of which is also a prominent source of investment in the field, the CDC added.

“The automotive and electronics sectors have been earmarked as priority sectors for Cambodia to develop. Through partnership[s] with the private sector, these sectors have grown rapidly in recent years,” the roadmap said.

The roadmap cited CDC vice-chairman Chin Bun Sean as saying that the document aims to take the government’s production-hub ambitions step-by-step, starting with simple components in the short-term, and later pursuing more sophisticated-skills development and higher value-added activities to manufacture more complex items.

To this end, the roadmap outlines 20 key initiatives in five domains: infrastructure; human capital and innovation; “trade facilitation”; the business and investor environment; and inter-ministerial coordination and strategies.

“Trade facilitation” is the general term for the overall framework of measures aimed at removing legal and technical obstacles across the full spectrum of border procedures to help make the international movement of imports and exports cheaper, easier, faster and more efficient and predictable, while safeguarding safety, security, health and other legitimate regulatory goals.

“I am of [the] optimistic view that this roadmap will serve as an important document that will provide guidance [for] future work plan[s] and [that the] line ministries and institutions, private sector, and all stakeholders can contribute to promoting the development of the automotive and electronics sectors in Cambodia,” Bun Sean was quoted as saying.

“Concurrently, [ensuring] that all challenges identified in this roadmap are effectively and timely addressed require[s] a high degree of cooperation and responsibility from all stakeholders,” he added.

Prime Minister Hun Sen was quoted in the roadmap as saying that, with the instrument in place, Cambodia will be able to maximise benefits from “opportunities emerging from key trends that will shift the future value chains”.

The road map will also open the door for the modernisation and diversification of the Kingdom’s industrial base towards higher value-added production with a more skilled and specialised workforce, he said.

“I strongly believe that this roadmap will serve as an important guide for promoting the development of the automotive and electronics sectors to contribute to the socio-economic development of Cambodia in a sustainable, resilient and inclusive manner.

“I would like to encourage all relevant ministries and institutions, [the] private sector, and stakeholders to implement and jointly implement all the initiatives put forward in this roadmap with a strong will and a high sense of responsibility in [the] pursuit of ensuring successful development of both sectors as expected,” the premier added.

According to the roadmap, automotive component exports rocketed more than threefold to $200 million in 2019, from $60 million in 2015, while electronics exports stood at $900 million in 2019 compared to $400 million in 2015, representing a compound annual growth rate (CAGR) of 20 per cent.

“The target of the roadmap is to expand the export[s] of [the] automotive sector by around $500 million and of the electronics sector by around $1.6 billion while generating around 10,000 new jobs in the automotive sector and around 16,000 new jobs in the electronics sector by 2027.

“Female workers are expected to [constitute] around 50-60 per cent of the [aforementioned new] jobs.

“Major automotive component manufacturers and assemblers such as Denso, Yazaki, Sumitomo, and Kyungshin have been successfully operating in Cambodia through the implementation of a Country ‘Plus One’ Strategy, where labour-intensive parts are made in Cambodia for transport to assembly plants in neighbouring countries, Thailand or Vietnam,” it noted.

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