Kampong Speu province’s “first” paper mill, with registered investment capital of about $30 million, is scheduled to go online in the “next four or five months”, and generate some 2,000 jobs, according to provincial governor Vei Samnang on December 14.
Samnang affirmed to The Post that the mill would be able to produce retail-ready paper, as opposed to just paper pulp, adding that its facilities would be equipped with state-of-the-art German machinery and that its production raw materials would be sourced from the US and Thailand – and domestically to a lesser extent.
However, the governor did not mention whether the plant would supply domestic or international markets.
He identified the company behind the project as a Chinese firm with extensive experience in the paper industry, named “Tung Giant Corporation Cambodia” (“TGCC”), which was not listed on the Ministry of Commerce’s business registry as of press time.
“This factory will provide a bunch of benefits for the people of Kampong Speu, and play its part in boosting national economic growth, to meet the Royal Government’s vision of transforming Cambodia into an upper-middle income country by 2030 and a high income economy by 2050,” he said.
Citing potential negative impacts from real estate speculation, Samnang declined to provide a more specific indication of the mill’s location beyond “along National Road 44” in the province.
National Road 44 extends for about 84km: from Rokar Thom commune in northern Chbar Mon town – the provincial capital – west-north-west to Tasal commune in Oral district.
According to Samnang, some of the features that have meaningfully contributed to the current steady stream of investors to Kampong Speu and elsewhere in Cambodia include: the new Law on Investment; a notable market presence in a range of major countries; an adequate supply of skilled labour; relatively high levels of political stability, security and peace; and a fairly complex mosaic of infrastructure.
Additionally, the Kingdom’s “consistently positive” reputation in the international sphere has been bolstered by the government’s Covid-era strategies aimed at promoting economic growth and overcoming difficult obstacles, he opined.
Cambodia Chamber of Commerce (CCC) vice-president Lim Heng agreed, adding that the domestic labour force is plentiful and reasonably cheap, and underscoring how favourable the provisions of the new investment law are.
He added that the Kingdom has entered into a number of bilateral and regional free trade agreements (FTA), and also benefits from preferential tariff treatment from various countries.
“The momentum of investment in Cambodia will continue to build in the future, on the back of the trade agreements it has signed, such as the bilateral Cambodia-China Free Trade Agreement [CCFTA] and Cambodia-Korea Free Trade Agreement [CKFTA], along with the Regional Comprehensive Economic Partnership [RCEP], all of which have entered into force,” Heng said.
An FTA is an international treaty between two or more economies designed to reduce or eliminate certain barriers to imports and exports among them, generally while safeguarding safety, security, health and other legitimate regulatory objectives. Such a pact can also serve to facilitate and promote greater economic ties among signatories in areas such as investment and intellectual property protection.
For reference, the World Bank recognises Cambodia as a “lower-middle income” country – one rank below the “upper-middle income” designation – with gross national income (GNI) per capita of $1,551 for fiscal year 2021 (FY21) – the 12-month period ended June 30, 2021 – in nominal terms as calculated by the bank’s Atlas method.
In the current fiscal year 2023, group classifications are based on these calculations of FY21 GNI per capita, as follows: “low income” $1,085 or less; “lower-middle income” $1,086-4,255; “upper-middle income” $4,256-13,205; and “high income” $13,206 or more. The World Bank updates these thresholds each year on July 1.
Cambodia’s GNI per capita grew at an annual average of nearly 10 per cent from $350 in FY03 to $1,530 in FY19, which suggests that meeting the government’s 2030 and 2050 targets mentioned by the Kampong Speu governor will be a daunting challenge, especially the former.
Of note is that the linked lower thresholds for the “upper-middle income” and “high income” groups were each raised at an annual average of 1.8 per cent, from the figures set on July 1, 2004 to those given 16 years later.
On the up side, foreign direct investment (FDI) inflows, a key driver of Cambodia’s economic growth, have been accelerating in recent years.
The National Bank of Cambodia (NBC) reported the cumulative total FDI inflows in the Kingdom between August 5, 1994 and December 31, 2021 at 168.8 trillion riel ($41.0 billion), up 11.2 per cent from the nearly 152 trillion riel recorded by end-2020. The Greater China Region – comprising mainland China, Hong Kong, Macau and Taiwan – accounted for the lion’s share at $18.0 billion or 43.9 per cent.
For context, August 5, 1994 was the day when the late King Norodom Sihanouk signed Royal Decree No 03/NS/94 promulgating the old Law on Investment and establishing the Council for the Development of Cambodia (CDC), the government’s highest decision-making body for large-scale investments.