Logo of Phnom Penh Post newspaper Phnom Penh Post - SVI to lay groundwork on electronics plant

SVI to lay groundwork on electronics plant

SVI to lay groundwork on electronics plant

A Cambodian subsidiary of Thai electronics manufacturing services company SVI Plc is moving closer to commencing construction on a factory on the outskirts of Phnom Penh that will manufacture electronics equipment for export to the US and Europe, a company representative said yesterday.

SVI (AEC) Co Ltd will construct the 6,000-square-metre electronics component plant in Phnom Penh SEZ. The company signed a 50-year lease for a 67,000-square-metre plot in the industrial park in July 2015.

“We will start with one factory, but there is room for two or three more,” said Phichet Kanogsirima, senior director of materials management at SVI Plc. “We still have big room for expansion.”

He said the Cambodian government recently approved the lease certificates, however the company’s board of directors has still not signed off on the construction budget or timeline.

SVI Plc provides electronics manufacturing services to original equipment manufacturers (OEMs) through its factories in Thailand and Europe.

The SET-listed company reported 8.1 billion baht ($228 million) consolidated revenue in 2015, a marginal decline from the previous year due to a fire at one of the company’s facilities in Thailand in November 2014 that disrupted production.

In January, SVI (Austria) GbmH, a subsidiary of SVI Plc, acquired European rival Seidel Electronics Group for an undisclosed amount. The buy-out gave SVI access to Seidel’s design and manufacturing facilities in Austria and Eastern Europe, and improved its logistics platform.

Robert Sawyer, vice president of business development for SVI (Austria) GmbH, said the company is already beginning to realise the synergies of the acquisition.

“We already have several major European customers who have been having SVI produce for them in Thailand for years who have launched new products starting up production in our new Eastern European factories,” he said.

“In the other direction, we have several of the biggest former Seidel customers who have already audited our Thailand site and approved it for production for their Asian demand, and some of those are keenly interested in our coming Cambodian location, in particular for high-volume mechatronic assembly.”

Sawyer said one of the key factors for customers interested in the Cambodia facility was its eligibility under the Generalised System of Preferences (GSP) for products destined for the US market, especially now that the Trans-Pacific Partnership (TPP) treaty is in doubt.

“While Thailand was not party to TPP, Malaysia and several other ASEAN [competitors] were, so this is a good development for Cambodia as a strategic location from which to serve the US,” he said.

Analysts from Bangkok-based Bualuang Securities Plc said in an investor note issued in June that SVI’s new factory in Cambodia would benefit from low-cost labour and trade preferences, including duty-free access to the US market under the GSP.

“Operating profit margin should be higher than that of Thailand,” they said, adding that the factory’s completion was expected to push SVI’s performance into a “high-growth mode”.

An earlier version of this article incorrectly said that local authorities had approved the factory's construction. SVI representatives said, in fact, only that the land lease certificates had been approved.

MOST VIEWED

  • Sihanoukville building collapse death toll rises to 19

    Minister of Interior Sar Kheng said on Sunday that the government will act against those responsible for the collapse of a seven-storey building in Sihanoukville on Saturday, which resulted in 19 dead and 24 injured as of Sunday evening. Sar Kheng said three Chinese nationals and one

  • Gov’t to probe Chinese exports to US via Sihanoukville

    The government is investigating allegations that Chinese companies are using Chinese-owned special economic zones in Cambodia to export goods to the US and avoid tariffs, said Ministry of Commerce spokesman Seang Thay. The move comes after US embassy spokesman Arend Zwartjes said the US had

  • Banh: The Khmer Rouge worse than sanctions and pressure

    Minister of National Defence Tea Banh said on Thursday that having sanctions and external pressure placed on Cambodia was not worse than life under the brutal Khmer Rouge regime. Tea Banh, who is also deputy prime minister, was speaking to military and ruling party officials

  • Funcinpec ‘set to sell their headquarters’, says source

    An anonymous source from Funcinpec said acting president Prince Norodom Chakravuth had held a meeting with other officials to discuss selling several of the party headquarters across the country while the party president Prince Norodom Ranariddh receives medical treatment at the Royal Phnom Penh Hospital