Private logistics players are optimistic that the Cambodian transportation sector will become far more competitive in the coming years, driven by tens of billions of dollars worth of projects underway and in the pipeline, as part of the government’s push for infrastructure optimisation and improved integration into the global supply chain.
Cambodia Logistics Association (CLA) president Sin Chanthy told The Post that although transportation costs in the Kingdom are in general higher than in Vietnam and Thailand, they are still below rates seen in the Philippines and Indonesia. “[Local prices] are seemingly a bit high, but not the highest in all of Asia.”
To recap, the Kingdom is in the process of finalising the Comprehensive Intermodal Transport Master Plan 2022-2030 (CIT-MP), which the Ministry of Public Works and Transport says will comprise 150 hard and soft infrastructure development projects, and require an investment of about $30 billion over the next 10 years.
With a focus on promoting trade and commerce, the CIT-MP – which is comprehensive in nature – will cover roads, railways, waterways, airways, logistics and ports, as well as transport interactivity, Chanthy said, positing that following through on the master plan would make Cambodia “truly be cost-competitive in relation to other countries, regionally and globally”.
He opined that other provinces will have to develop facilities akin to the Phnom Penh Logistics Complex (PPLC) and its Sihanoukville counterpart (SLC) in Preah Sihanouk province, which he depicted as a necessity for the Kingdom’s transportation system.
Of note, a Financial Advisory Service Agreement was signed on April 19 by Minister of Public Works and Transport Sun Chanthol and Asad Yaqub, resident representative of the World Bank’s International Finance Corporation (IFC), to forge a public-private partnership (PPP) for the SLC, with the IFC acting as the exclusive lead adviser.
The project is expected to be developed in phases, with an overall cost estimate of about $200 million – according to the IFC – compared to the expected $300 million price tag for the PPLC, as reported by Singapore’s YCH Group, one of the firms behind that development.
Chanthy remarked that the SLC would markedly reduce freight congestion at the Sihanoukville port, and proposed a railway link to the port to trim transportation costs.
On the flip side, the CIT-MP projects will by and large be expensive and time-consuming endeavours, he said, suggesting that they be broken down into many smaller, more manageable stages “based on the growth of the Cambodian logistics and trade sectors” to ensure effectiveness.
Lim Heng, vice-chairman of the Cambodia Chamber of Commerce, the Kingdom’s apex trade body, remarked that new logistics developments are reducing general costs, and that many of the proposed projects would be a major boon for the transportation sector.
“More logistics solutions will promote higher levels of consumer-beneficial competition in the sector – all in all a fantastic thing … [as] Cambodia becomes a production hub [with advantages generated by] free trade agreements [FTA] with a number of countries,” he said.
An FTA is an international treaty between two or more economies designed to reduce or eliminate certain barriers to imports and exports among them, generally while safeguarding safety, security, health and other legitimate regulatory objectives. Such a pact can also serve to facilitate and promote greater economic ties among signatories in areas such as investment and intellectual property protection.
Meanwhile, the World Bank on April 21 released its 2023 Logistics Performance Index (LPI) report, giving Cambodia an LPI score of 2.4 – where 1 is the lowest and 5 the highest – down from 2.58 in 2018 and 2.80 in 2016. The Kingdom ranked 117 out of 140, compared to 98 out of 160 in 2018 and 73 out of 160 in 2016.
Broken down by category, the Kingdom scored 2.2 in Customs versus 2.37 in 2018 and 2.62 in 2016; 2.1 in Infrastructure (vs 2.14, 2.36); 2.3 in International Shipments (vs 2.79, 3.11); 2.4 in Logistics Competence and Quality (vs 2.41, 2.60); 2.7 in Timeliness (vs 3.16, 3.30); and 2.8 in Tracking and Tracing (vs 2.52, 2.70).