Cambodia’s first dairy factory is be-ing planned for Phnom Penh, as one of the owners, a Vietnam-based dairy company, hopes to tap strong local demand for its products.

The 2.7-hectare factory, in the Phnom Penh Special Economic Zone (PPSEZ), would produce condensed milk, yoghurt and UHT milk, which is milk sterilised at ultra-high temperatures, Manoj Nutchanart, general manager of BPC Trading, the local distributor of Vietnam’s Vinamilk, said.

BPC Trading and Vinamilk would sign a joint-venture agreement next month to build the factory through a new company, Khmer Dairy Products, which will be 51 per cent owned by Vinamilk, Manoj said. Production would probably begin by the end of next year, he said.

“We have been selling Vinamilk products in Cambodia [for a long time] and we think that, with the volume [of sales we have seen], it is workable to build a factory here.”

According to a recent report by The Saigon Times, Vinamilk chairwoman Mai Kieu Lien said the company exported $40 to $50 million worth of dairy products to Cambodia every year.

She did not reveal what the cost of construction or the production capacity of the planned factory would be.

In 2012, Vinamilk’s total exports to countries including Iraq, Russia and the US reached $180 million.

The company's total sales revenue was $1.3 billion.

With import costs rising every year, having a factory in the Kingdom meant dairy products could be sold here more cheaply, Manoj said.

They might also be expor-ted “if we can find the markets,” he said.

BPC Trading and Vinamilk were in the process of seeking approval from the Council for the Development of Cambodia and had almost fully paid for their 50-year land lease from the PPSEZ, Manoj said.

PPSEZ managing director Hiroshi Uematsu, who confirmed the companies’ plans, said each square metre of land leased in the PPSEZ cost a one-off $60.

That means the land for the planned facility will cost about $1.6 million.

According to local dairy company AngkorDairy’s website, Cambodia imports all its dairy products, mostly from Vietnam and Thailand.