Chery’s Deputy General Manager, Xu Hui, conveyed this interest during a meeting with Cambodian Prime Minister Hun Manet yesterday.

Hui also revealed that the company is exploring other potential projects, such as vocational training, and plans to collaborate with local partners.

Prime Minister Hun Manet warmly welcomed Chery’s interest, highlighting the automotive sector as a key priority for Cambodia. He emphasized the country’s strategic advantage due to its numerous free trade agreements.

To facilitate Chery’s investment exploration, PM Hun Manet encouraged the company to engage with relevant government ministries, institutions, and the private sector. This includes exploring opportunities in special economic zones and port development.

Founded in 1997, Chery Holding Group is a diversified conglomerate with core businesses in the automotive and auto parts industry, shipbuilding, and port construction.

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During a meeting between Toyota’s Managing Director and Cambodian Prime Minister Hun Manet, the academy plans received strong support. The Prime Minister, however, emphasized the importance of a broader training scope.

The academy should equip students for the overall needs of the domestic and international automotive job market, not just cater to Toyota’s specific needs. This collaborative approach could be achieved through either an independent academy or a partnership with an existing government training school.

Looking beyond immediate training needs, Prime Minister Hun Manet played a key role in shaping the future of Cambodia’s auto industry. He urged Toyota to consider two key areas for local partnership:

Parts Manufacturing: The Prime Minister encouraged Toyota to explore manufacturing Toyota spare parts in Cambodia. This wouldn’t just serve the Cambodian market, but potentially reach international markets as well, positioning Cambodia as a key regional player.

Local Supplier Network: The Prime Minister also championed partnerships with local Cambodian companies to supply accessories for Toyota vehicles. This would foster a strong local supplier network within the industry.

This move by Toyota, along with the Cambodian government’s focus on local partnerships, signifies a commitment to building a skilled workforce and boosting Cambodia’s automotive sector. The academy, along with potential parts manufacturing and local supplier partnerships, has the potential to create a robust ecosystem for Cambodia’s auto industry.

This year kicked off with a significant milestone for Cambodia’s auto industry: the inauguration of the first Toyota assembly plant run by Toyota Tsusho Manufacturing (Cambodia) Co., Ltd. in the Royal Group Phnom Penh Special Economic Zone.

This new car assembly factory, representing a total investment of nearly US$37 million, employs 150 people and boasts the capacity to assemble 1,320 cars in 2024. The production focuses on two popular models – the Toyota Hilux Pickup (1,030 cars) and the Toyota Fortuner SUV (290 cars).

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RMA Group has a long history of investing in Cambodia, dating back to 1992. The company is the largest vehicle and equipment distribution, sales, and service operator in the country. RMA Cambodia is also the authorized distributor of Ford vehicles in Cambodia.

In 2022, RMA Group received approval from the Royal Government of Cambodia to invest in a FORD car assembly plant in Pursat province with an investment of 21 million dollars. The plant is expected to start operations in 2024 and will produce a range of Ford vehicles, including SUVs and pickup trucks.

RMA Group’s investment in the Cambodian automotive sector is a significant boost for the country’s economy. The plant will create jobs, generate export revenue, and help to develop the local automotive supply chain.

Cambodia’s automotive sector is growing rapidly. In 2022, the sector attracted $1.38 billion in investment capital. Automotive components manufacturers and vehicle assemblers from Japan, Korea, and China are major investors in the sector.

The Royal Government of Cambodia has adopted a policy framework to support the development of the automotive sector. The Cambodia Automotive and Electronics Sectors Development Roadmap, which was adopted in 2022, aims to make Cambodia a regional hub for automotive manufacturing and assembly.

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Dr. Tan Monivann, president of the Cambodia Automotive Industry Federation (CAIF), recently spoke at the China-ASEAN Forum on Electric Vehicle Industry in Nanning (China Guigang E.Vehicle).

Doctor highlighted the potential and investment opportunities in the Cambodian EV industry, noting that the new investment law and long-term plan to promote the use of EVs in Cambodia have created a favorable environment for investment.

However, Dr. Monivann also pointed out that there are some challenges that need to be addressed, such as the lack of public EV charging stations. He called for joint consultations between experts and other stakeholders to ensure the smooth operation of EVs in Cambodia.

The government has taken some steps to address the challenges facing the EV industry. For example, it has provided subsidies for the purchase of EVs and has supported the development of a national EV charging infrastructure.

The future of the Cambodian EV industry is bright. With the right support, the market is expected to continue to grow rapidly in the coming years. This will help to reduce air pollution, improve energy security, and create jobs in the automotive industry.

According to the data from the CDC, investment capital in automotive assembly and components manufacturing from 2020 to 2022 was $1.38 billion. Automotive components manufacturers and vehicle assemblers have been growing in Cambodia.

Japan, Korea, and China are major investors, while the main export markets include Thailand and Japan. The Royal Government adopted the Cambodia Automotive and Electronics Sectors Development Roadmap in 2022, an indicator of the sector’s importance for further economic growth.

According to calculations based on data from GDCE, from 2020 to 2022, exports of automotive components were $484.78 million and the compound annual growth rate in exports of automotive components was 10 percent.

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Cambodia has many automotive startups and suppliers, with untapped linkages to the regional and global value chains.

According to the data from CDC, investment capital in automotive assembly and components manufacturing from 2020 to 2022 was $1.38 billion. Automotive components manufacturers and vehicle assemblers have been growing in Cambodia.

Japan, Korea, and China are major investors, while the main export markets include Thailand and Japan. The Royal Government adopted the Cambodia Automotive and Electronics Sectors Development Roadmap in 2022, an indicator of the sector’s importance for further economic growth.

According to calculations based on data from GDCE, from 2020 to 2022, exports of automotive components were $484.78 million and the compound annual growth rate in exports of automotive components was 10 percent.

Cambodia has a thriving domestic motorcycle market, attracting both assembly and component manufacturing.

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The Law on Investment (LOI), promulgated in October 2021, reflects these trends and identifies more than 18 sectors and activities where investment incentives apply. These incentives include income tax exemptions, deductions of capital expenditure through a special depreciation mechanism, and
exemptions for export customs duties. Eligible investment projects can also receive an exemption from customs duties, special tax, and value-added tax for the import of construction material, construction equipment, production inputs, and production equipment, among other items.

While the Law on Investment, which came into effect in October 2021, places priority on more than 18 key sectors, the following sectors are particularly interesting for investors:

Agri-food

Favorable location: most of the population is concentrated in lowlands and hills where freshwater (from rivers, lakes, and underground sources) is abundant.

Weather: thanks to heavy rainfall during the monsoon season (May to October), Cambodia enjoys favorable climate conditions, with temperatures remaining high during the period.

Cambodian agriculture is experiencing rapid transformation due to a combination of increased yields, more productive use of labor due to mechanization, and the expansion of farmland.

Automotive

Cambodia has a growing number of automotive startups and suppliers, with untapped linkages to the regional and global value chains.

According to the data from CDC, investment capital in automotive assembly and components manufacturing from 2020 to 2022 was USD 1.38 billion.

Automotive components manufacturers and vehicle assemblers have been growing in Cambodia.

Japan, Korea, and China are major investors, while the main export markets include Thailand and Japan.

The Royal Government has adopted the Cambodia Automotive and Electronics Sectors Development Roadmap in 2022, an indicator of the importance of the sector for further economic growth.

According to calculations based on data from GDCE, from 2020 to 2022, exports of automotive components were USD 484.78 million and the compound annual growth rate in exports of automotive components was 10 percent.

Cambodia has a thriving domestic motorcycle market, attracting both assembly and component manufacturing.

Electrics and Electronics

Electronics is a fast-growing sector in Cambodia with Japanese and Chinese firms as major
investors.

Cambodia’s electrical and electronics (E&E) exports have significantly increased in recent years,
especially to the United States in 2021, when investors steered sourcing orders to Cambodia
following supply chain disruptions. The positive trend will likely last.

According to the data from CDC, investment capital in electrics and electronics from 2020
to 2022 was USD 264.62 million.

From wire manufacturers to PCB assemblers, Cambodia is home to some of Asia’s top
electronic manufacturers. According to the calculation based on data from GDCE, annual exports in 2022 were USD 1,970.20 million (up 22 percent from 2021).

Based on the same calculation, the compound annual growth rate was 34 percent, from 2020 to 2022.

In 2022, the top 5 export markets were the United States, ASEAN, China, Japan, and South Korea.
Industrial development in Cambodia offers opportunities for firms operating in neighboring
countries such as Thailand and Vietnam to form a regional supply chain model to benefit from
the comparative advantages of both nations.

Bike and Parts

According to data from MOC, Cambodia now ranks first in ASEAN and fifth globally for exports
of bikes and bike parts. More than 1.5 million bicycles are exported from Special Economic
Zones each year.

According to a calculation based on data from GDCE, exports in 2022 reached around USD 1
billion (an increase of 54 percent from 2021).

In 2022, Cambodia has become the major exporter to Europe, the destination of more than two-thirds
of exports.

Textile and Apparel

A major powerhouse, Cambodia’s textile and apparel sector has been serving the global market and growing at a solid pace over the years. While diversification of the economy takes place, the garment sector will remain the largest employer for a while. Cambodia is a major garment producer in the world.

In 2022, according to GDCE, the total exports of garment and footwear were approximately USD 13 billion and the sector accounted for 63 percent of Cambodia’s export earnings.

In 2022, Cambodia had a total of 1,968 large-scale factories, and two-thirds of their production are exported to foreign markets.

Moving from a labor-intensive model to a high-value and skills-intensive garment production model is key for the sector to develop in the future.

Furniture and Plywood

The furniture and plywood industry is one of Cambodia’s rapidly rising sectors and is attracting major investments and increased export potential.

According to CDC, Cambodia exports furniture and plywood products to many destinations, including ASEAN, the United States, and the United Kingdom, with a total value of approximately USD 99 million in 2019 and approximately USD 147 million in 2020.

Total investment capital in furniture and plywood is USD 332 million. The sector employs currently more than 9,000 local workers.

Agriculture

Agricultural development has benefited from Cambodia’s geographical location. The Cambodia
Industrial Development Policy 2015-2025, Cambodia’s Trade Integration Strategy 2019-2023, and Agriculture Development Strategy 2019-2023 recognize agriculture as a key enabler to drive Cambodia’s economic growth, job creation, and social advancement.

This can be achieved by focusing on moving up the agricultural value chain by producing agricultural commodities with added value, research and development, capacity-building, product diversification, targeting new export destinations, and improving product quality.

For Cambodia’s agriculture sector, there is untapped potential in some niche markets such as organic products or sustainable agriculture.

Cambodia’s agriculture sector also offers market opportunities for agricultural inputs and machinery; investment opportunities in mid-downstream supply chain activities; and opportunities in contract
farming.

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The country now sees the diversification of the production base and strengthens the competitiveness of the economy by fostering the attractiveness of the targeted and high-value-added industrial activities are increasingly urgent and imperative.

“Cambodia’s Automotive and Electronics Sectors Development Roadmap” published in late 2022 shows its ambition to become an automotive component manufacturing hub soon.

The Royal Government of Cambodia (RGC) is committed to implementing a comprehensive cross-ministerial action plan for the two sectors that will make it easier for investors to set up automotive manufacturing and other operation in Cambodia and increase the cost-competitiveness of their operations. The combined action plan comprises 20 initiatives across the following five areas:

• Cross-ministerial strategies and coordination:

Key initiatives include the identification of locations/SEZs for automotive and electronics sector clusters and strengthening cooperation with neighboring countries like Thailand and Vietnam.

• Human capital and innovation:

Key initiatives include the development of an automotive and electronics labor upskilling program with the private sector and expanding and enhancing job matching services through a public-private partnership.

• Infrastructure:

Key initiatives include reviewing electricity tariffs and reliability targets and harmonizing cross-border transport regulations to reduce logistics costs.

• Trade facilitation:

Key initiatives include implementing ratified Free Trade Agreements, adopting an automated system for public service provision, and simplification export-import procedures.

• Business and investor friendliness:

Key initiatives include implementing the Law on Investment of the Kingdom of Cambodia which provides additional investment incentives and building up the local supplier ecosystem through a supplier match-making platform and quality improvement program.

RGC recognizes that a close partnership with the private sector is key to the effective development of the two sectors. The country is to engage private sector partners to co-develop the sectors, from shaping the overall strategy to designing and implementing the action plan initiatives.

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