Phnom Penh Dry Port owner So Nguon tells the Post about rising from a small brick-maker to a major business operator
The Rise of So Ngoun
So Nguon began his career as a brick dealer after raising enough capital for a kiln. By 1993, he owned six lorries to support a startup transport company, later adding six trucks and more land. He now owns a 25-room hotel in Sihanoukville and two dry port business. Other ventures include a farm in Stoeung Chral and a 10-storey apartment complex in Boeung Keng Kang. In 2007, he opened a larger dry port on 10 hectares of land outside Phnom Penh.
What made you want to invest in the dry port business?
Actually, I am the third to invest in dry ports after Meng Sreang partnered with a Malaysian and Singaporean firm for the Sihanoukville port. I started in 1990 with 70 lorries to transport containers.
I transported cargo for Meng Sreang for about two years until I opened my own dry port ... I did not go to school, so I needed practical experience.
How much was your initial investment?
I had about US$1.4 million from land sales and bank loans. About $1 million of that was borrowed from Canadia Bank against five hectares of land [in Vietnam], and I raised another $400,000 from the sale of three additional hectares of land I had purchased in 1987. I used the money to buy Soviet trucks from the government at a low cost in 1993.
My biggest asset is the five hectares of land I bought in 1985. At that time under Vietnamese rule, I was not allowed to own large tracts of land unless I operated a business. So I got the idea of running a brick kiln business - it's just luck that I bought a lot of land because I thought the price would increase.
Cambodia is developing and modernising. I go to many foreign countries and see that the
situation here has to change.
Does the dry port business have a lot of potential in Cambodia?
The country is developing and modernising. I go to many foreign countries and see that the situation here has to change.... I have two dry ports, one on 10 hectares of land in Phnom Penh and another on seven hectares in Bavet.
I also have eight cranes - five in Phnom Penh, two in Bavet and one in Sihanoukville. I plan to buy another one for the port in Phnom Penh.
How much have you invested in your dry ports?
I don't spend much on these projects because I own the land. In Phnom Penh, I spent $2.5 million on buildings and two warehouses, one of which is 15,000 square metres. For the port in Bavet, I spent $4.5 million.
Why have you built a new dry port outside Phnom Penh?
I had a long-standing plan to invest outside of Phnom Penh. The land was cheap at the time - only $25 per square metre in 2002. The country was developing very fast, so big trucks would not be suitable for the city. I also wanted to modernise services and equip the port with modern technology up to international standards.
I went to see warehouses in Thailand, France and Vietnam and adapted these styles to my new port in Phnom Penh. Now, the So Nguon Dry Port has two 15,000-square-metre warehouses with high security and modern technology.
What are your plans for the old dry port?
I use the old port for repairing lorries, but in the future I will construct buildings for office rentals and social events.
Are you concerned about competition from other dry ports coming online?
I do wonder why the government is allowing more dry ports in the city. Cambodia is too free - everyone can do the same business when they see others that have been successful. I believe some will fail because of the nature of competition. I also worry that my customers will leave if my competitors cut their prices.
However, I have an advantage over new ports because I have a loyal clientele.
They will leave me if I charge higher prices or if I can't handle their cargo, but I don't think competitors are better than me because they need lorries, good locations and enough space. The 10 hectares of land that I have is not enough and some of my competitors only have about three hectares.
Cambodia is in the process of upgrading rail services. Will this hurt your business?
That's also a problem, but trains take longer than trucks because they need more time to load containers. If customers are in a hurry, they will use trucks. But the country is developing and the volume of cargo transportation is also increasing. So, we are not afraid of competition from trains.
What are some of your other business interests?
I have diversified into a few sectors. In 1997, I built a 25-room hotel in Sihanoukville. In 2002, I built a 200-hectare farm in Stoeung Chral to raise cattle and grow fruit. In 2005, I started building a 10-storey apartment in Boeung Keng Kang, which was finished in May 2008.
In the future, I plan to build a five-star hotel on five hectares of land I own in Siem Reap.
How do you respond to the claims that your aging, Soviet-made trucks are causing accidents in the city?
I feel irritated because this is not true. I have only 30 Soviet lorries that I bought in 1996. I've purchased 30 new American lorries to replace them. If I were using poor-quality trucks, I would lose customers.
If my trucks were causing accidents every day, my business would go bankrupt because I would not have enough money to compensate the victims.
I have more than 20 mechanics who repair my older vehicles, but we can't repair all vehicles at once because it would affect my business.
To what do you credit your success in business?
First, I understand the economic and political situation. Second, and most important, I plan for the future.... Third, I kept my business going through good and bad and bought land when it was cheap, even when the country was still fighting with the Khmer Rouge. Fourth, I observed what the postwar situation would be like and asked advice from others. So, to become rich I had to keep buying land, especially in the city when it was cheap.