Logo of Phnom Penh Post newspaper Phnom Penh Post - Cambodia’s industrial sector continues to thrive



Cambodia’s industrial sector continues to thrive

Cambodia’s industrial sector continues to thrive

7 Diamond island

Cambodia remains an attractive destination for industrial work, with a low inflation rate of 3 per cent and a low minimum wages of $80 per month, according to the CBRE Asia Pacific Logistics Rental Index.

The index showed a slight increase of 0.7 per cent quarter-on-quarter in the first quarter of 2013 compared to just under 1.0 per cent in the fourth quarter of 2012 as rental growth remained weak for a third consecutive quarter.

Annual growth also continued to decline, falling to 4.4 per cent year-on-year. Leasing activity slowed during the quarter as occupiers opted to stay in their existing premises.

In the first quarter of 2013, Cambodia’s textile exports reached $1.34 billion, compared to $1.14 billion in the same period last year, with export commodities including clothing, timber, rubber, rice, fish, tobacco and footwear. In 2012, exports totaled $6.14 billion.

Factory rents in most markets – particularly in China – continued to record steady gains in the first quarter of 2013, along with the improvement in regional exports. In Southeast Asia, factory rents are generally stable.

In Cambodia rents also remain stable as a continuation of trends seen in 2012, with prime locations in industrial zones commanding rents of $2.5 square metre. Rents in lower quality industrial zones, where units are of a lesser standard, offer rents of $2 per square metre.

CBRE says there remains a distinct lack of supply of industrial units as occupancy levels in existing industrial parks continue to rise. The development of new industrial units has been slow as a direct result of the economic downturn, and the associated impact this had on the construction sector.

However increasing labour costs in China and Japan continue to drive the demand for industrial property within Cambodia.

In particular, Japanese manufacturers are seeking opportunities to relocate operations to Cambodia. Demand for factory space mainly came from tenants in heavy industry. Manufacturers in the chemical and automotive sectors were particularly active in setting up plants in new markets, followed by companies in    the consumer electronics and industrial machinery equipment sectors.

The opportunities to relocate to Cambodia in search of better production prospects are supported by the improving infrastructure, in particular at the deep seaport of Sihanoukville.

The supply of industrial units will be a key influential factor in the growth of Cambodia’s economy, ensuring that foreign direct investment can continue to drive the markets. A number of industrial zones have been proposed for development within sites acquired for the purpose of satellite cities.

CBRE says these industrial zones will provide industrial units to the North, South, and North West sides of Phnom Penh, and will cover approximately 7,000 hectares of land in total. They will be supported by new infrastructure allowing further development of both import and export opportunities.

These developments are still likely to focus more on land disposals than matching market demand and supplying rental units. This can largely be put down to the low returns achieved from current rental prices.

Economic growth in Asia Pacific is expected to gather pace over the course of 2013 and reach around 4.8 per cent for the year as whole. The Cambodian economy has continued its high growth rate as real GDP growth has expanded to 7.5 per cent in 2013. Cambodia is one of the world’s fastest growing countries, and opportunities for foreign investors to capitalize on low production and labour costs will drive the industrial markets forward.

The demand for industrial rental units in prime locations remains high in 2013, as Chinese and Japanese companies look to relocate due to high production costs in their retrospective countries. However the increased demand is unlikely to be met by future industrial parks as the market is largely dominated by owner-occupied locally owned garment factories currently. CBRE predicts this will change as different manufacturers enter the market.

MOST VIEWED

  • Cambodia to waive quarantine requirements Nov 15, no PCR test required

    Prime Minister Hun Sen has decided to lift all quarantine requirements for fully vaccinated travellers and visitors – both Cambodians and foreign nationals – effective from November 15 onward. In a special message addressed to officials and relevant authorities on November 14, Hun Sen said this policy will enable

  • PM: No more quarantine for vaccinated travellers

    Cambodia is lifting all quarantine requirements for vaccinated inbound travellers entering Cambodia by air, waterway or land border checkpoints effective from November 15. Travellers will be required to take a rapid antigen test on arrival rather than waiting for the results of the lengthier polymerase chain

  • No payment required for travellers taking rapid Covid tests on arrival

    Ministry of Health officials said there would be no payment required for the rapid Covid-19 tests given to travellers who arrive in Cambodia from November 15 onwards after the quarantine requirement is lifted for fully vaccinated people. Health ministry spokeswoman Or Vandine told The Post on

  • General’s gun smuggling ring busted

    The Military Police sent six military officers to court on November 22 to face prosecution for possession of 105 illegal rifles and arms smuggling, while investigators say they are still hunting down additional accomplices. Sao Sokha, deputy commander of the Royal Cambodian Armed Forces and commander of

  • More Cambodians studying in US

    The number of Cambodian students studying at US colleges and universities in 2020-21 increased by 14.3 per cent over the previous year despite the Covid-19 pandemic, according to a recent US government report. The 2021 Open Doors report on International Educational Exchange showed that 848 Cambodian students studied

  • Cambodia, Thailand to discuss border reopening

    Cambodian authorities from provinces along the Cambodia-Thailand border will meet with Thai counterparts to discuss reopening border checkpoints to facilitate travel, transfer of products and cross-border trade between the two countries. Banteay Meanchey provincial deputy governor Ly Sary said on November 22 that the provincial administration