Although economic hangovers persisted from 2020 – widely regarded as the worst year for Cambodia’s economic growth in more than two decades – the number of large-scale factories in operation managed to avoid slipping into a downtrend throughout 2021, according to Minister of Industry, Science, Technology and Innovation Cham Prasidh.
Speaking at the opening of the ministry’s annual review meeting on February 7, the minister noted that a total of 163 new factories sprung up last year, while 148 others shuttered, resulting in a net gain despite the difficult circumstances caused by Covid-19.
Last year, the 1,879 large-scale factories in operation employed 986,677 people – 76 per cent women – and churned out products to the tune of $7.433 billion, down by about 15 per cent over 2020, of which more than $5.456 billion were exported, he said.
He added that the peaceful atmosphere and series of reforms concerning the investment and business environment provided the confidence needed for local and foreign players to continue to invest in Cambodia.
“The industrial sector has significantly contributed to the development, support and enhancement of sustainable national economic growth and inclusivity, job creation, value-added in the economy, and reasonably increased income for the people,” the minister said.
Garment Manufacturers Association in Cambodia deputy secretary-general Kaing Monika told The Post on February 8 that the net gain in the number of factories was due to the effective control of the Covid situation, production chain improvements, and a pick-up in orders from China.
He also cited the relocation of production capabilities and the diversion of orders from “some unstable countries” – a category that most likely features Myanmar at the top of the list.
“In 2022, the number of factories operating in Cambodia will continue to increase further, and the volume of exports will increase accordingly,” Monika said.
Cambodia Chamber of Commerce vice-president and prominent rubber industry player Lim Heng ascribed the rise in number of factories to the ongoing Sino-US trade dispute, a robust production capacity relative to other countries amid Covid shocks, the ample availability of raw materials, new free trade agreements (FTA), and adjustments to investment conditions.
“The aforementioned favourable conditions have convinced many investors to start to study and invest in Cambodia. On the other hand, Cambodia is also a country that enjoys duty-free access from some major countries on exports,” he said.
The FTA with China would also encourage more businesses to open factories in the Kingdom to capitalise on duty-free exports to the Chinese market, he added.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, said that among the main reasons why so many investors have been drawn to open factories in the Kingdom are: a pleasant investment climate, strong relations with governments and private sectors of other countries, and a growing number of orders for Cambodian products – a fair share of which benefit from duty-free treatment provided by major countries.
“The number of large factories in Cambodia is expected to increase further from 2022 onwards, owing to the already established recognition of the market, production capacity and quality of Cambodian products,” he said.