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.
