Industry minister Cham Prasidh (back row, seventh left) poses with ministry officials and representatives of South Korea’s Yura Group, including Yura Harness Korea chairman Chu Kwon-sik (back row, sixth left) and Yura Harness Cambodia managing director Lee Doo-yeun (back row, fifth left). MISTI
South Korean-owned Yura Harness (Cambodia) Co Ltd is looking at additional investment opportunities in the Cambodian automotive sector and plans to set up a research and development (R&D) centre at an as-yet undetermined location, as the Kingdom’s economic road to recovery continues on a smooth trajectory, according to an industry ministry statement.
This was disclosed by Ohm Dae-yeol, CEO of Yura Harness Cambodia – the local affiliate of Seongnam-based Yura Corp, at an April 27 meeting with Minister of Industry, Science, Technology and Innovation Cham Prasidh at the ministry, the statement noted.
The meeting comes a day after the company formally inaugurated a $15 million automotive wiring harness factory that is reportedly set to employ 1,100 workers and supply the South Korean assembly lines of Hyundai and Kia, thereby boosting Cambodian exports of “electrical, electronic equipment” – or items under Chapter 85 of the Harmonised System (HS).
The plant is located on a 1.75ha site in Tuol Thnong village, Rokar Thom commune, Chbar Mon town, Kampong Speu province at GPS Coordinates (11.481N, 104.511E).
Following an assessment of the economic and resource potential of the area, as well as the work ethic of the locals, the firm chose Tuol Thnong village to house what would become Yura Group’s 71st factory, its first in the Kingdom, and its 14th in Southeast Asia, counting 12 in Vietnam and one in Indonesia, Ohm recounted at the meeting, as noted by the statement.
The proposed R&D centre aims to harness the talents of Cambodian students and complement government efforts in scientific and technological development, he said, commenting that the new factory – and potentially any future installations in the Kingdom – will require qualified engineers.
Prasidh in turn asked the company to compile a list of the specific engineering and technical skills required to run the plant, affirming that the ministry will work with subordinate units and relevant agencies to identify capable individuals who could feasibly be trained in these competencies, as required by the firm.
The minister went on to say that the government regards the auto parts industry as a priority for investment, taking into account its recognised importance as a potential economic growth driver.
He expressed his “full support” for the proposed R&D centre, which he said would be a “good cooperation mechanism” with the government, noting that a pertinent sub-decree on R&D is on the way.
Prasidh issued a general invitation for Korean experts in the field to work with ministry specialists, exchanging experiences and strategies to pave the way for the creation of productive public and private R&D institutions, which he hailed as an “important tool to help promote human resource development and strengthen institutional capacity”, according to the statement.
‘We’d like to see more’
Speaking to The Post on April 30, Hong Vanak, director of International Economics at the Royal Academy of Cambodia, remarked that direct investment has a positive impact on economic growth on the whole, creating jobs and incomes for workers as well as reducing migration, in addition to trimming imports and increasing exports.
Yura Harness Cambodia’s new factory has the additional benefit of being in auto-parts, a heavy industry-based sector, making it a major step forward in the Kingdom’s economic diversification pursuits, he said.
He underscored that significant advances in diversification, along with the construction of more heavy industry facilities, could meaningfully fortify the economy.
“We’d certainly like to see more such investments in Cambodia – those that require skilled workers, advanced technologies and modern methods,” Vanak said, adding that the planned R&D centre could be particularly helpful in “strengthening human resources in Cambodia”.
The Ministry of Commerce’s business registry indicates that Yura Harness Cambodia was incorporated on August 26, 2022, and lists just one officer for the company, “Lee Doo-yeun” with a postal registered office address in South Korea’s Hwaseong city some 40km south of Seoul.
In a September 30 notice, the Council for the Development of Cambodia (CDC) – the government’s highest decision-making body for large-scale investments – announced that it had greenlit the Tuol Thnong village factory, with initial capital commitment of $6.8 million and plans to create 514 new jobs – at the time of approval.
Shocking boost
The plant is anticipated to provide a sizeable boost to the Kingdom’s Chapter 85 exports (“electrical, electronic equipment”), which clocked in at $736.776 million in the first quarter of 2023, up 101.70 per cent year-on-year from $365.279 million and up 2.6 per cent quarter-on-quarter from $718.21 million, according to provisional Customs (GDCE) figures.
This category of items accounted for 13.66 per cent of the $5.392 billion value of the Kingdom’s total exports over the January-March period – compared to 6.39 per cent and $5.717 billion a year earlier, and 13.75 per cent and $5.225 billion in the October-December period.
In March alone, Chapter 85 exports were $279.672 million, up 107.51 per cent from $134.775 million in the same month of 2022. For comparison, the January and February figures were $232.824 million and $224.280 million, respectively, up 114.6 per cent and up 83.82 per cent, from $108.495 million and $122.009 million in the corresponding months of 2022.
Meanwhile, GDCE statistics show that South Korea was Cambodia’s 14th largest trading partner in 2022, with the two-way merchandise trade amounting to $778.924 million, up 0.63 per cent over 2021, but still down 11.66 per cent from the record $881.761 million logged in 2019.
Cambodia’s exports to and imports from South Korea came in at $233.638 million and $545.286 million, respectively, up 20.38 per cent and down 5.98 per cent year-on-year, narrowing the Kingdom’s trade deficit with the East Asian country by 19.2 per cent, from $385.871 million in 2021 to $311.648 million in 2022.
The March 2023 iTrade Bulletin of the Ministry of Commerce’s Trade Training and Research Institute (TTRI) noted that South Korea was the Kingdom’s third largest investor in 2021, with an FDI (foreign direct investment) stock of $283.5 million, which constituted an 8.1 per cent market share of the approximate $3.5 billion total for the year.
These figures were sourced from the National Bank of Cambodia’s Financial Stability Review 2021, the bulletin noted.
Citing the GDCE, it said Cambodia’s top exports to South Korea in 2022 were “footwear, gaiters and the like” ($54 million), “articles of apparel, knit or crocheted” ($52 million), “electrical, electronic equipment” ($45 million), “articles of apparel, not knit or crocheted” ($35 million) and “aluminium” ($12 million) – respectively corresponding to chapters 64, 61, 85, 62 and 76 of the HS.
The Kingdom’s top imports from the fourth-largest Asian economy last year were “vehicles other than railway, tramway” ($132 million), “raw hides and skins – other than furskins – and leather” ($55 million), “beverages, spirits and vinegar” ($52 million), “knitted or crocheted fabric” ($34 million) and “electrical, electronic equipment” ($31 million) – or chapters 87, 41, 22, 60 and 85 of the HS.
