សារជាគន្លឹះ / Key Messages:
- ដើម្បីក្លាយជាប្រទេសដែលមានចំណូលមធ្យមកម្រិតខ្ពស់នៅឆ្នាំ២០៣០ វិស័យកម្មន្ដសាល និងសមត្ថភាពភស្តុភាររបស់កម្ពុជាត្រូវធ្វើការកែលម្អឱ្យប្រសើរឡើង ដើម្បីផ្គត់ផ្គង់ដល់សេដ្ឋកិច្ចដ៏ទូលំទូលាយក្នុងតំបន់ ដែលបច្ចុប្បន្នផ្តោតលើប្រទេសថៃនិងវៀតណាម។ នវានុវត្តន៍ក៏ជាគន្លឹះសំខាន់មួយដើម្បីលើកកម្ពស់គម្រោងឧស្សាហកម្មថ្មី ។
- ព្រឹត្តិការណ៍ពិភពលោកនាពេលថ្មីៗនេះ និងការធ្លាក់ចុះបរិយាកាសធុរកិច្ចរបស់ប្រទេសជិតខាង ធ្វើការអោយមានការរំពឹងទុកខ្ពស់សម្រាប់ប្រទេសកម្ពុជាក្នុងការបំពេញតម្រូវការរបស់ក្រុមហ៊ុននានាដែលមានបំណងអនុវត្តតាមយុទ្ធសាស្រ្ត “បូកមួយ[1]”។ ទោះយ៉ាងណា កិច្ចការបន្ទាន់បំផុតនៅក្នុងដៃដែលនៅតែបន្តរបស់កម្ពុជានោះ គឺការពង្រឹងការតភ្ជាប់ក្នុងតំបន់។
- ការលើកកម្ពស់វិស័យថ្មីៗ ដូចជានវានុវត្តន៍នឹងមិនត្រឹមតែបង្កើនឱកាសសម្រាប់អាជីវកម្មដែលមានស្រាប់ប៉ុណ្ណោះទេ ប៉ុន្តែថែមទាំងអនុញ្ញាតឱ្យកម្ពុជាបង្កើតគម្រោងដែលអាចផ្តល់នូវតម្លៃនិងកំណើនថ្មីនៅក្នុងប្រទេស និងទូទាំងសកលលោក។
- ការចូលរួមរបស់កម្ពុជាទៅក្នុងសេដ្ឋកិច្ចតំបន់ឱ្យមានលក្ខណៈទូលំទូលាយ និងការលើកកម្ពស់នវានុវត្តន៍ អាចជាប្រភពកំណើនទ្វេរដងសម្រាប់កម្ពុជា។ សកម្មភាពជាក់លាក់ ដូចជាការសរសេររៀបរាប់ក្នុងចំណុចទី៣ គឺតម្រូវឱ្យកំណត់គំនិតផ្តួចផ្តើមទាំងនេះលេចចេញជារូបរាង។
- In order to become an upper-middle income country by 2030, it is important that Cambodia’s manufacturing and logistics capabilities are improved so that it can cater to the broader economic region that is currently centred around Thailand and Vietnam. To promote new industrial projects, innovation is key.
- In light of recent global events and the relative decline in neighbouring countries’ business environments, there are heightened expectations for Cambodia to meet the needs of companies wishing to follow the “Plus One”[1] However, the most urgent task at hand continues to be strengthening connectivity within the region.
- Promoting new fields such as innovation will not only enhance opportunities for existing businesses, but will also allow Cambodia to create projects that can offer new value and growth in the country and globally.
- The establishment of Cambodia’s role in the wider economic region and the promotion of innovation can be dual sources of growth. Specific actions, such as those written in [III.] are required to set these initiatives in motion.
I. Exploring the Requirements of the Plus One Strategy and Transforming into a Manufacturing and Logistics Hub
- Current Situation in Neighbouring Countries
Cambodia has a strong geographic advantage due to its location between Bangkok and Ho Chi Minh City, which are the two major manufacturing centres in Southeast Asia. However, these neighbouring countries are experiencing difficulties in their respective business environments due to a rise in labour costs, the tightening of the labour supply and limited industrial space. These factors are making business expansion in those two major manufacturing centres more challenging. The global call for resilient supply chains, which has been amplified by the Covid-19 pandemic and US-China trade frictions, is also providing a useful tailwind for Cambodia. For example, in Thailand in particular, banks and governmental organisations have begun supporting companies that are currently operating in Thailand in expanding their operations into neighbouring countries, including Cambodia. There is a pressing need for Cambodia to prepare for this expansion in investment, particularly in relation to the manufacturing sector.
- Cambodia’s Current Situation
As of October 2023, 250 Japanese companies have joined the Japanese Business Association of Cambodia (JBAC). Most of the existing manufacturing companies in Cambodia have been operating for more than a decade. Green-field investment by Japanese companies in Cambodia reached its peak in 2015 due to the rapid rise in the minimum wage, which nearly doubled between 2012 and 2015. Since then, labour-intensive industries have avoided investment in Cambodia.
In recent years, the majority of new investment has been targeted at the service industry. Several large-scale investments in the manufacturing sector are being made by existing companies that have been approved as Qualified Investment Projects (QIP).
These companies, which have made the decision to expand existing factories, consider Cambodia to be an important manufacturing site as they focus on the “Plus One” strategy. Their expectations are not only limited to cost benefits, though. The disruption of the global supply chain has been regarded as one of the most critical risks in recent years and some Japanese manufacturers have decided to upgrade their existing factories in order to secure supply chain resilience[2]. These companies have made great efforts to develop their human resources so as to ensure their factories have become more sophisticated since their operations commenced. With the progress they have made in developing human resources through employee training programmes, the factories have gradually transformed labour-intensive operations into higher-value operations, such as product design and product development.
An additional positive for Cambodia is that Japanese companies with factories in both Thailand and Vietnam are starting to seek opportunities to control inventory in one location and are attempting to supply parts and materials from there too. Cambodia not only offers potential for “Plus One” company expansion, but it can also serve as a pivotal logistics hub for inventory storage and management.
Conversely, Cambodia’s rate of local parts and materials procurement is the lowest in ASEAN at 5 to 8 percent, according to a Japan External Trade Organization (JETRO) survey of Japanese companies. This indicates a reliance on imports. Despite incentives like the duty-free import measures that are provided under the QIP scheme, the relatively high logistical costs have led some companies to reconsider their entry into Cambodia. In addition, the JETRO survey also showed how Japanese companies view the risks and merits of the business environment in Cambodia (see the tables below). With regard to risks, administrative and tax procedures are the top issues that companies identified as needing to be solved.
- Preparation Requirements
Securing connectivity with neighbouring countries is one of the most significant challenges in turning Cambodia into the region’s “Plus One” manufacturing base and logistics hub. This issue has been discussed at length and in many forums, predominantly during the dialogue between the Federation of Japanese Chambers of Commerce and Industry in ASEAN (FJCCIA) and the ASEAN Secretary-General[3], as well as at the Cambodia-Japan Government-Private Sector Dialogue[4].
The simplification of customs procedures through the digitisation of customs documents and the reduction of logistical costs also needs to be addressed as a priority issue.
Developments in logistics infrastructure, such as the opening of National Road No. 5, which was made possible through support from the Japan International Cooperation Agency (JICA), and the expansion of border
facilities, including new customs checkpoints at the borders of neighbouring countries, are expected to facilitate smoother physical logistics. By 2027, the expressway from Phnom Penh to Bavet is scheduled to be completed, and this is expected to deliver further improvements in accessibility and connectivity.
This year marked the launch of Cambodia’s first multifunctional bonded logistics warehouse, which allows overseas suppliers to store parts and materials in a warehouse for up to two years without transferring ownership to domestic buyers. This is part of a pilot project being undertaken jointly by the Japanese and Cambodian governments and operated by AEON MALL (CAMBODIA) LOGI PLUS Co., Ltd. This facility allows businesses, such as manufacturing, retailing and cross-border e-commerce businesses to shorten the lead time for procurement and shipment. In addition, cargo can be transported to other countries without customs clearance, so companies with bases in multiple countries can implement their supply networks from Cambodia.
II. New Fields as New Growth Engines
- Cambodia’s Current Situation
In order to become an upper-middle income country by 2030, Cambodia is required to accelerate economic growth by revitalising its existing industries, as well as developing new industries. This development should be driven by digitalisation and innovation.
A recent example of this kind of development is the harnessing of Japan’s technological expertise to develop Cambodia’s central bank’s new digital currency, Bakong. QR payment systems using the Bakong system have spread rapidly to markets and street vendors, providing improved convenience to the Cambodian people.
The manufacturing sector is also beginning to use state-of-the-art technology to make changes. The Cambodia-Japan Digitalized Manufacturing Centre (CJDM), which opened in 2023, has been equipped with a machine tool that can, when accurate instructions are input into the machine, produce customised products at the push of a single button. Depending on the application, this technology has the potential to reduce a production period of two weeks to two hours. It can also reduce the production cost to one-sixth of the previous amount. Trainers are currently starting to train the engineers who will operate those cutting-edge machine tools, and in a few years, the manufacturing sector in Cambodia may be significantly altered by these advanced technologies from Japan.
The year 2023 marks the 70th Anniversary of the Establishment of Diplomatic Relations between Japan and Cambodia and the 50th anniversary of ASEAN-Japan friendship and cooperation[5] and JETRO is implementing a new initiative that matches Japanese technologies with Cambodian companies. Under this initiative, Japanese companies have proposed solutions to industry problems using a range of technologies that observe the earth’s surface from satellites. One solution, which attracted a significant amount of attention, was the measuring of greenhouse gas emissions from agricultural land with support from farmers to help identify ways to reduce emissions. The reduced portion of emissions would then be sold as carbon credits in Japan and other markets. Several projects have been launched through this initiative and are already in progress.
As mentioned above, we have introduced these projects as examples of initiatives being undertaken in new fields, such as innovation. However, innovation and technology cannot be established on their own. If Cambodia makes good use of Japanese technology and increases the number of projects it is undertaking, the country’s industrial and economic development will become much more prominent.
- Preparation Requirements
In order to form co-creations with companies that have advanced technologies and knowledge, it is necessary to create matching opportunities. JETRO would like to continue collaborating with both the public and the private sectors to hold reverse pitching and business networking events in the field of innovation.
III. The Future of Cambodia
Looking towards the future, Cambodia is on an important path to establishing itself as a key hub, not only for manufacturing, but also as a logistics sector in the wider economic region, including Thailand and Vietnam. To achieve this goal, it is necessary to improve connectivity with neighbouring countries and stimulate the flow of people, goods and capital within the region. Furthermore, in addition to developing the manufacturing and logistics sectors, it is also critical to promote new fields, such as innovation. These two areas are important dual sources of growth for Cambodia. In this context, the following four concrete measures are proposed:
- recognizing issues in the current business environment in Cambodia at dialogue sessions, such as the Cambodia-Japan Government-Private Sector Dialogue
- resolving any identified issues
- disseminating information about the improvements in Cambodia’s business environment to investors in surrounding countries and Japan
- creating business opportunities by holding networking and business matching events in cooperation with private companies and government agencies across various sectors, including areas relating to innovation
JETRO has been involved in all of these processes so far and would like to continue to contribute to the promotion of the creation and expansion of business opportunities between Cambodia and Japan.
[1] “Plus One” is a term used mainly for manufacturing companies operating outside of Japan, which is expanding or extending their business operation to the third country instead of expanding within their existing country. Currently, there are companies seeking for a “Plus One” destination from countries like Thailand, China, and Vietnam, which will be mentioned as “Thai Plus One”, “China Plus One”, and “Vietnam Plus One”.
[2] It is necessary to take into account that the sophistication of manufacturing is largely due to a company’s efforts in developing human resources. Taking a sample manufacturing company as an example, many of the company’s workers previously had difficulty reading and writing. Around 10 years ago, production efficiency was less than half that of other branches. However, because of the company’s continuous efforts to educate and train their workers, their factory in Phnom Penh is now ranked as the fourth most efficient production site out of more than 100 branches worldwide.
[3] The dialogue between FJCCIA and the Secretary-General of ASEAN is a framework for discussing issues and initiatives for regional revitalisation. At the dialogue, the delegation from Cambodia has consistently highlighted the importance of enhancing connectivity in the Mekong region.
[4] The Cambodia-Japan Government-Private Sector Dialogue is a bilateral cooperation framework established following the conclusion of the Japan-Cambodia Investment Agreement for the Liberalisation, Promotion and Protection of Investment. It was signed by Japan’s former Prime Minister, Shinzo Abe, and Cambodia’s former Prime Minister, Hun Sen, on June 14, 2007. The committees formed under the agreement have made recommendations about issues faced by Japanese companies in Cambodia. The Cambodian party was led mainly by government officials, and the Japanese party was made up of representatives from the Japanese embassy in Cambodia, JBAC, JICA and JETRO.
[5] In commemoration of the 50th anniversary of ASEAN-Japan friendship and cooperation in 2023, the Ministry of Economy, Trade and Industry, JETRO and other industry players, including JCCI, released the “ASEAN-Japan Economic Co-Creation Vision” which aims to grow economies and business sectors in both ASEAN and Japan for generations to come.
