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Cambodia: Insiders say new concrete factories not enough to stabilise local sector
Four new Cambodian cement factories are set to come online in the near future, tripling the number of local producers, but insiders and officials this week maintained that even increased capacity will not significantly lower rates of cement imports to Cambodia due to prevailing high costs of local production.
According to information from the Ministry of Industry and Handicrafts, only two cement companies are currently operational, annually producing a combined 3.4 million tonnes. An additional three factories are expected to begin production at the start of the new year, and a fourth is currently in construction.
Hort Pheng, director of the Industrial Affairs Department at the Ministry of Industry, projected that the total annual production of all six factories would be around 20 million tonnes, but noted that no efforts were being made to lower costs of production, which continue to negatively impact local cement quality and price.
“Our construction sector is growing, but even if our cement factories produce 20 million tonnes a year, our imports of cement will remain high because our cement prices are still too high to compete with imported products,” he said. “We should focus on lowering the cost of our own cement, so we do not have to depend so heavily on imports.”
Heng Sinsiphat, deputy general manager of Battambang Conch Cement, claimed that his new factory, which will be operational in a few months, should produce 1.8 million tonnes of cement annually. He added that the cement market demand in Cambodia was about 7 million tonnes in 2017, but said he expects demand to grow exponentially in the next few years.
“The growth of investment from China and Korea will push the growth of construction, and I do not think that even the entire supply of Cambodian cement will be sufficient to meet the needs of the growing construction sector,” he said.
However, Sinsiphat added, “Even if we produce enough cement to cover all new [construction] projects, importing will still be a challenge to the local industry, because we cannot compete on quality or cost.”
Tieng Sopheak Vichea, public and government relations manager at Chip Mong Insee Cement, said that the company’s $262 million factory will be operational in February and has the capacity to produce 2 million tonnes of cement a year, though he declined to comment further.
Production figures for the other two factories could not be obtained yesterday.
According to Seang Thai, spokesman for the Ministry of Commerce, the Kingdom imported 1.19 million tonnes of cement last year, equivalent to $85 million.
“Cement imports are still highly important for construction, because our cement supply is not sufficient to meet construction growth,” he said. “We are part of a free market now, and we have to build up our capacity to compete in this market – we cannot ban imports.”
Source: http://www.phnompenhpost.com/business/insiders-say-new-concrete-factories-not-enough-stabilise-local-sector