Logo of Phnom Penh Post newspaper Phnom Penh Post - Nestl茅 shuts down production line

Nestl茅 shuts down production line

Nestl茅 shuts down production line

Nestlé Dairy (Cambodia) Ltd, one of the few blue chip multinational corporations

with a presence in Cambodia, shut down its sweetened beverage creamer production

line at its Phnom Penh factory effective April 2, according to a company

official.

The move has cost 39 Nestlé employees their jobs and is a

small but serious blow to a government that has been trying to encourage foreign

corporations to invest in the Kingdom.

According to company general

manager Bertrand Sigwalt, Nestlé conducted an industrial study of its operations

here and concluded that its locally produced Bear Brand Sweetened Creamer was

"not competitive".

Sigwalt said the move was part of a business

restructuring to improve the company's long-term competitiveness and that

smuggling, mostly from Thailand, was part of the reason Nestlé decided to close

the production line of the only product it made, canned and marketed in

Cambodia.

"My main competition is from Thailand," said Sigwalt, citing

Alaska and Falcon brand creamers as the two products Nestlé could not compete

with.

Smuggling was one of the key problems cited by investors at the

Fifth Government-Private Sector Forum held on Feb 28. At the time, Prime

Minister Hun Sen said his government was committed to stopping smuggling and

called upon the cooperation of the police, armed forces and local authorities to

help implement a December, 2001 Executive Order designed to counter the illicit

trade. Investors, however, grumble regularly that it is these very same

officials who are in fact facilitating cross-border smuggling.

Nestlé

will continue to "re-package" several products at its 5,500 square meter plant

on Route 5 just north of the Japanese Bridge, including powdered milk, Coffee

Mate, Lactogen and a cereal for children, among others. These products are

imported to Cambodia from Nestlé plants in the region, packaged in cardboard

boxes with both Khmer and English labeling and then distributed nationwide.

Sigwalt called the decision "unfortunate" but said that Nestlé was still

committed to doing business in Cambodia. He said the company had invested "a

couple of million [dollars]" in its factory since 1998.

"We strongly

believe there is potential here," said Sigwalt, noting that in March alone the

company sold three million tins of Bear Brand Sterilized Fresh

Milk.

However, Sigwalt said that overall Cambodia was still a difficult

business environment within which to operate. "We are not making any profit

here," he said.

The company would now focus on "generating demand" and

had recently hired 20 marketing staff to help boost sales.

Swiss-based

Nestlé maintains 500 plants in 88 countries. It initially began operations in

Cambodia in 1970 but shut down its plant due to the civil war prior to 1975.

MOST VIEWED

  • First deportees of the year touch down in Cambodia

    Twenty-five Cambodian-Americans landed in Phnom Penh on Wednesday, marking the first such deportations of the year. “On Wednesday, US law enforcement authorities deported 25 Cambodian nationals that immigration judges determined had no legal basis to remain in the US,” said Arend Zwartjes, spokesperson for the US

  • Qatar Airways to connect Doha and Siem Reap town

    Qatar Airways Company QCSC has announced a new route connecting Qatar’s capital Doha with Siem Reap, a move hailed by local officials as a significant step to boost tourist numbers. A Qatar Airways representative, speaking at the Kuwait Aviation Show, announced on Thursday that

  • Sokha defence denies Tech’s claims

    ON DAY two of Kem Sokha’s treason trial, lawyers for the government said the defence had raised questions in an attempt to allow their client to make a public statement and a conclusion to the case, something his legal team denied. Ky Tech, a

  • Cambodian general visits Myanmar to enhance national defence cooperation

    Royal Cambodian Armed Forces (RCAF) commander-in-chief Vong Pisen is now in Myanmar leading a delegation that aims to improve ties, particularly in national defence, with the fellow Asean member. The timing of Pisen’s four-day visit to the Southeast Asian neighbour is highly symbolic, with

  • Sokha’s treason trial begins

    The treason trial of Supreme Court-dissolved Cambodia National Rescue Party (CNRP) president Kem Sokha began at the Phnom Penh Municipal Court on Wednesday with the presentation of a two-minute video clip. The footage, which was the basis of the charge against him, was dismissed by

  • Probe underway after wreckage of drone with Chinese characters found

    Air Force Command spokesman Prak Sokha said on Sunday that investigations are underway regarding the wreckage of a drone that was recovered in Koh Kong province’s Koh Sdech commune in Kiri Sakor district. The wreckage has been taken to the capital for further examination,