Japan and China vie for a share of Cambodia’s growth - leatherbiz: Lea Leatherbiz

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Japan and China vie for a share of Cambodia’s growth

03/08/2018
Hundreds of manufacturing companies, including producers of handbags and other leathergoods, have set up in a special economic zone around Cambodia’s busiest sea-port, Sihanoukville, in recent years creating more than 20,000 jobs. As most of these companies are Chinese, investors from that country are clearly building prosperous links with Cambodia, where the economy is growing at 7% annually.

However, they are not alone and the situation around the Sihanoukville port is less clear than it might appear at first glance.

Cambodia’s coast-lines runs for around 300 kilometres along the Gulf of Thailand and Sihanoukville is roughly halfway along. It has a deep natural harbour and was, therefore an obvious place for the authorities in Cambodia to build their first coastal container port following independence from France in 1953, easing the pressure on the river port on the Mekong at capital city, Phnom Penh. Construction began in 1956.

Now, the port at Sihanoukville handles more than 70% of cargo coming into and leaving Cambodia and the company that operates it is the largest listed company on the local stock exchange. In 2017, the volume of containers it handled reached nearly 460,000, almost double the figure for 2011.

The reason this is less good news than you might imagine for the manufacturers in the Sihanoukville special economic zone is that the port is, and has been for the whole of this century, heavily influenced by investors from Japan, notably the Japan International Cooperation Agency and the Japan Bank for International Cooperation.

With tensions in the wider region still high, the port and the special economic zone have a troubled history, so much so that the port’s Japanese investors have tried to set up a rival special economic zone of their own. According to the Nikkei Asian Review, these efforts have succeeded in attracting only three companies so far, compared to more than 100 at a more established, Chinese-favoured industrial zone nearby.

For their part, Chinese investors now say they will construct a rival sea-port along the coast to the east at Kampot. One difficulty with this plan is that the site is only 10 kilometres from the Vietnamese island of Phu Quoc, which commentators believe is likely to sharpen tensions between Vietnam and China over territorial claims over a number of islands in the region.



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