Cambodia’s efforts to leverage its position at the geographic heart of mainland Southeast Asia have been bearing fruit with Singaporean logistics company YCH Group announcing a US$300 million plan to develop a "Cambodia SuperPort” in Phnom Penh to complement a similar project in northern Vietnam.
At the same time, Cambodia is emerging as a promising alternative route for Lao electricity exports to Singapore – bypassing Thailand and Malaysia – following Cambodian Prime Minister Hun Sen’s visit to Laos last week.
On February 16, YCH announced that its joint venture with Cambodian logistics company WorldBridge Group – PPLC SuperPort and Industrial Co Ltd – had signed a collaboration agreement with International Finance Corp (IFC), the private sector arm of the World Bank.
The IFC has a similar agreement with YCH and Vietnamese conglomerate T&Y Group whose joint venture – T&Y SuperPort Vinh Phuc Joint Stock Company – is developing a separate logistics centre 60 kilometres from Hanoi, also expected to involve capital expenditure of around US$300 million.
“YCH Group intends to invest more than US$2 billion in the next five years to enhance Asean connectivity to improve intra-Asean trade, as well as trade with the rest of the world,” YCH chairman Robert Yap says.
In announcing its collaboration with the Cambodian venture last Thursday, the IFC said the new Phnom Penh Logistics Complex would deliver a “major boost to infrastructure, trade, and connectivity in Southeast Asia”.
Phnom Penh: centre for Greater Mekong
The location in Phnom Penh with connections to all modes of transport “will enable it to become the country's first fully multimodal logistics facility”, the IFC says.
“As Cambodia is located in the centre of the Greater Mekong sub-region, the SuperPort could serve as a regional transport and logistics hub, contributing to a shift in trade routes through Cambodia,” it notes. “This will help reduce overall logistics costs, improving supply chain efficiency to integrate into regional ones, and boosting Cambodia's competitiveness."
Under the agreement with the Cambodian venture, the IFC says it will strengthen the technical, commercial, legal, environmental and social aspects of the project. The goal is “to make it a bankable investment to attract financing from international lenders”, it says.
In addition, the IFC will provide expertise in working in similar markets, supporting risk mitigation and strengthening environmental and social standards in line with IFC's performance standards.
The two “super ports” in Cambodia and northern Vietnam are seen as complementing each other.
Whereas Phnom Penh is strategically located between two of Asean’s biggest metropolises – Bangkok and Ho Chi Minh City – the Vietnamese project near Noi Bai International Airport is located near border crossings with China and Laos. It is also within reach of 20 industrial parks.
“Both projects are part of YCH Group’s strategy to expand its regional network in Southeast Asia and boost connectivity in the Asean countries,” the IFC notes.
In a February interview with The Investor, an online Vietnamese publication, Chan Yoke Ping, chief executive officer of the Singapore-Vietnamese venture, says Vietnam is “rising to be a manufacturing hub” due to its expanding skilled workforce and strategic location.
“This is causing the migration of large manufacturing firms to switch their attention from China to Vietnam, increasing the influx of opportunities to transport materials or sub-assemblies to the latter. With this, Vietnam is growing exponentially to become a factory of the world, driving the growth of demand in air and sea modes.”
Electricity from Laos to Singapore via Cambodia
The announcements by YCH and the IFC came two days after it emerged that Cambodian Prime Minister Hun Sen had discussed Lao electricity exports to Singapore via Cambodia during a meeting with Lao Prime Minister Sonexay Siphandone on February 13.
It was Hun Sen’s first meeting with Sonexay, son of former Lao People’s Revolutionary Party chairman Khamtai Siphandone, since he assumed the premiership in December.
Sok Chenda Sophea, the minister attached to the prime minister who also serves as secretary general of the Council for the Development of Cambodia (CDC) – the government investment agency – reportedly said the two leaders discussed Lao electricity sales to Cambodia.
“The discussion between the two prime ministers also touched on transmitting electricity from Laos through Cambodia to sell to Singapore,” he was quoted as saying.“Electricity of Laos now passes through Thailand to sell to Malaysia.”
In its aim to become “the battery of Southeast Asia”, Laos has been rapidly developing hydropower plants over the past decade.
In June, it started exporting hydropower to Singapore under the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project, marking the first cross-border electricity trade among the four Asean countries.
Laos has long been exporting electricity to Cambodia. The February 14 remarks, however, appear to be the first public mention of the potential for using Cambodia as a transmission route to Singapore.