A Chinese steel company is in talks with Sihanoukville Special Economic Zone (SSEZ) to set up an industrial facility in the zone, a marketing executive said on Saturday.
Gu Xia, section chief of SSEZ’s marketing department, said the Chinese company was currently reviewing the land contract, and his company hopes the deal will be signed by next month. He declined to name the firm or the size of its investment, or provide details on the nature of its operations.
“The scale [of the investment] is still under discussion, but according to their plans it will offer jobs for maybe 400 to 500 workers,” he said.
SSEZ – jointly operated by Jiangsu Taihu Cambodia International Economic Cooperation Investment Co Ltd and Cambodia International Investment Development Group Ltd (CIIDG) – is the largest special economic zone in Cambodia, with over 100 tenants. A total of 88 mostly-Chinese factories currently operate in the 1,113-hectare industrial park, providing jobs for about 15,000 workers.
The zone recently announced a plan to expand to 300 factories by 2020, providing 100,000 more jobs.
While it remains unclear whether the Chinese company will produce steel or re-work imported steel products, Meas Proeksa of the Cambodia Constructor Association said there is a high demand for local steel production to feed the booming construction sector. He said local manufacture of steel or steel products would reduce Cambodia’s reliance on imports, of which 70 percent come from Vietnam and the remainder from China and Thailand.
Proeksa said it would make sense for a Chinese company to set up a steel mill in Cambodia, as it would pare down the logistics costs of importing steel from Mainland China and could allow it to carve out a share of the market from Vietnamese producers.
“Right now, steel from China is a higher price than steel imported from Vietnam because they need to spend more on transportation,” he explained. “So we hope they can supply steel at a lower price, and I believe if they do they will get a lot support.”
Despite Cambodia’s construction boom, steel imports have declined over the last two years, according to data from the Ministry of Commerce. Cambodia imported 265,408 tonnes of steel last year, down from 412,833 tonnes in 2014.