Logo of Phnom Penh Post newspaper Phnom Penh Post - Kingdom’s rosy economic climate to drive automotive components sector

Kingdom’s rosy economic climate to drive automotive components sector

Content image - Phnom Penh Post
Cambodia’s thriving economy continues to woo foreign auto manufacturers. Photo supplied

Kingdom’s rosy economic climate to drive automotive components sector

Cambodia’s auto industry is sizzling as car sales continue to soar. Thanks to the steadfast economic growth and rising consumer spending.

Industry prospects look bright. The Ministry of Public Works and Transport announced that 3.2 million vehicles, including 2.7 million motorcycles, were registered in the Kingdom in 2015 – a 14 percent growth compared to the previous year.

While, in March, the Department of Customs and Excise revealed that Cambodia imported about 6,000 used cars every month.

Economic stability coupled with growing purchasing power, favourable demographics and a culture to compete with neighbours to own vehicles – are driving demand for vehicles at a faster pace in Cambodia – which could even rival its neighbours that boast car manufacturing plants.

Japanese models, mostly Toyota and Lexus are flooding the market (both new and used units), while luxury brands such as BMW, Bentley, Mercedes Benz and Roll Royce are trying to capture the cash-rich elite buyers.

“Cambodia’s car industry’s growth is tremendous and there is a massive change in demand, especially for luxury cars. Cambodia can compete with established players in the region,” Richard Yew, Regional Vice-President of AMB Tarsus Exhibitions Sdn Bhd, which will organise the ‘CamAuto 2018 Expo’ in early November told The Post.

Over 45 international companies will feature auto parts, accessories, service and repair equipment at the exhibition – a clear testimony that Cambodia remains a lucrative market in ASEAN.

The auto components’ sector is still at an ‘infant stage’, says Yew, but foresees a huge potential, largely to be driven by growing demand from the expanding middle class population.

Content image - Phnom Penh Post
Almost all auto parts are imported due to lack of production facilities. Photo supplied

As Cambodia’s economy continues to chalk a healthy seven percent growth this year and a modest 6.8 percent in 2019 and 2020, according to the World Bank, industry experts predict a growth in auto-related businesses – from sales of replacement parts to maintenance and services.

Albeit the automobile sector’s rosy climate, industry observers are still concerned of prevailing weaknesses such as the ‘grey market’ that could stifle Cambodia from developing its home-grown automobile industry and continues to depend on imports.

This will only strain the country’s foreign reserves. Last year, the Kingdom imported auto parts and accessories worth $488 million from Thailand, according to Thailand’s Department of International Trade and Promotion.

“Cambodia imports all vehicles and components from overseas, and there are not enough dealers and distributors in the country, especially for components.

“Investors are more interested in importing and selling products rather than manufacturing locally,” Dr Tan Monivann, Vice President of the Cambodian Chamber of Commerce told The Post.

He said companies should take advantage of the latest government policy, which was announced early this month that offers special tax incentives to small and medium enterprises (SMEs) to expand their businesses.

On October 2, Prime Minister Hun Sen signed a sub-decree on tax incentives for SMEs aimed at stimulating the local manufacturing sector and job creation.

The six core sectors are – agro-industry, food production and processing, manufacturers of waste processing products, tourism, producers of parts and equipment, and research and development of information technology.

But there are other prickly issues plaguing the auto sector, especially the components segment.

According to Kevin Khou, manager of Hong Ly Heng Auto Part, imported counterfeit auto components are hurting the market.

“Counterfeit auto products are destroying the market. This is very unhealthy and we need to push quality products because it also concerns safety issue,” said Khou.

The expo will be held at the Diamond Island Exhibition and Convention Centre in Koh Pich from November 1 to 3, where participants from China, Malaysia, South Korea, Singapore, Thailand, Taiwan and the United Arab Emirates are expected to exhibit their products.

MOST VIEWED

  • Gov’t says tourism recovers slightly despite pandemic

    The Ministry of Tourism and the Phnom Penh municipal administration have recognised 33 tourism businesses in the capital which have consistently implemented safety measures for tourists and adhered to the code of conduct issued by the ministry. Recently, the ministry announced that tourism businesses had to

  • Mull ASEAN border opening, PM urges

    Prime Minister Hun Sen has requested that ASEAN launch a scenario for gradually reopening cross-border travel and trade between countries in the region. He said ASEAN has had more success combating Covid-19 compared to other regions. The prime minister’s request was made at the

  • Ministry reports 11 new Covid-19 cases, reiterates vigilance

    Minister of Health Mam Bun Heng has urged people to continue practising virus prevention techniques after 11 people tested positive for Covid-19 within two days after arriving in the Kingdom. Speaking on Sunday, Bun Heng stressed the importance of washing hands, wearing masks or scarves when

  • Nine on Indonesia flight Covid-19 positive

    The Ministry of Health on Saturday confirmed nine more imported cases of Covid-19. The nine ‒ eight Cambodians and one Indonesian, aged 22 to 26 ‒ arrived in Cambodia on Thursday via a direct flight from Indonesia and are receiving treatment at the Khmer-Soviet Friendship Hostipal in Phnom Penh.

  • Kingdom’s financial sector healthy

    Cambodia's financial sector remains on a sustainable growth path despite the Covid-19 pandemic squeezing crucial industries, National Bank of Cambodia (NBC) governor Chea Chanto said. Tourism, garments and footwear have borne the brunt of the Covid-19 impact, he said, whereas the financial and agriculture sectors

  • Vietnam told to remove border tents

    Kandal provincial governor Kong Sophoan has ordered local authorities to prohibit the construction of buildings in areas bordering Cambodia and to report any irregularities immediately. Recently, Vietnamese officials removed another seven tents from the border area with Cambodia. His remarks were made on Wednesday afternoon

  • Migrant workers set to return from Malaysia

    The Ministry of Foreign Affairs and International Cooperation confirmed on Thursday that 158 Cambodian students and migrant workers will fly home from Malaysia on Friday morning. This is the second flight to bring Cambodians home from Malaysia. A ministry notice said Malaysia Airlines Flight MH754 will

  • Cambodia to remain neutral on ASEAN-China territorial dispute

    Minister of Foreign Affairs and International Cooperation Prak Sokhonn told an informal meeting of ASEAN foreign ministers on Wednesday that Cambodia will stay neutral on the South China Sea. He appealed to all stakeholders to continue fostering a conducive environment that contributes to the end

  • Keeping it riel, Cambodia steps up de-dollarisation

    The economic downturn has supplied the National Bank of Cambodia with an opportunity to step up its agenda to return the shine on the riel while coping with Covid-19 challenges Late May, an instruction by the National Bank of Cambodia (NBC) to financial institutions to

  • ANA finds ancient Sanskrit inscription

    The Apsara National Authority (ANA) has found a Sanskrit inscription carved on ancient stone. The inscription was discovered on the underside of a stone on Wednesday, in front of the Tonle Snguot temple which workers were cleaning. Archaeologist and Apsara Authority deputy-director Im Sok Rithy