Thailand's second-largest cement company has suspended a cement-plant project valued at about $200 million in Kampot province because of political uncertainty and better investment opportunities in Myanmar, according to a senior executive.
Philippe Arto, the managing director of Siam City Cement Public Company Limited (SCCC), said on Wednesday that the board of the exchange-listed firm decided to “put on the shelf” the plant, which was expected to produce between one million and 1.5 million tonnes of cement a year to feed the growing demand in Cambodia’s construction sector.
His comments, which first appeared in the Bangkok Post, were picked up at an SCCC-hosted supplier day conference in the Thai capital.
Arto could not be reached yesterday, and a representative declined to say whether the managing director’s comments referred to post-election gridlock in the country or the state of diplomatic ties between Cambodia and Thailand.
At the conference on Wednesday, Arto said that the project was “not a priority while we have many things to do in Thailand”, adding that SCCC is also looking at expanding into Myanmar to take advantage of rapid growth there in the cement market.
Shares of SCCC, which is 27.5 per cent owned by Switzerland-based Holcim Ltd, closed at 364 baht ($11.3) yesterday, a drop of 12 baht from the day before.
An agreement to conduct a feasibility study between the Thai cement company and Chip Mong Group, a Cambodian construction supplier, was signed on December 8 of 2010. Construction on the plant was supposed to start in 2011.
Sok Chantha, public relations manager at Chip Mong, said he hadn’t been told about the decision, and said that the companies were still studying the social and environmental impacts.
“I think that their reasons make sense,” Chantha said, referring to Arto’s comments about uncertainty. “We are all concerned because we don’t know what will happen tomorrow,” adding that if a company invests millions, “they need to think about the political situation”.
Cambodia is still reeling from the fallout over the July 28 national election. The opposition Cambodia National Rescue Party, which won 55 of the 123 seats in the National Assembly, is challenging the results based on allegations of voting fraud, and is holding a mass demonstration on September 7.
Confidence in the economy fell 51 per cent in the post-election period, according to a survey of foreign business leaders working in Cambodia.
The Indochina Research survey found that 98 per cent of respondents expressed confidence when asked about a month before the elections. But, in a follow-up in the weeks after votes were cast, the fig-
ure dropped to 47 per cent.
Kampot province governor Khoy Khun Huor said that pulling back on the project, which was planned for Toukmeas district, would not impact cement production.
Firms K-Cement and Kampot Cement are already in place, the governor said, while the Chinese-funded Cambodia Cement Chakrey Ting factory is being built and should open in 2014.
“Right now, they are accelerating the construction of the factory building,” he said.
The shake-up is the second time in the past month that a Thai-Cambodia venture has undergone changes. Earlier this month, Thailand’s The Nation newspaper reported that Thailand’s Ratchaburi Electricity General Holding was pulling out of a power plant deal in Koh Kong province.
Ly Yong Phat, chairman of LYP Group and president of KKPower, said yesterday that the joint investment was moved to another project, not withdrawn.
“We are still working with them,” he said. “We changed our investment from coal power plant into installing power-grid lines in our country; we are conducting our feasibility study now.”
“We have a new Thai partner to join in building the coal power plant with us. But I cannot say now who it is because we are working on it. When everything is done, I will let you know. Now we cannot do anything because we are waiting for the new government to form.”
Thailand is the eighth-largest investor in Cambodia, having poured $746 million into the country from 1994 to 2011.