Local conglomerate Royal Group signed a memorandum of understanding (MoU) on Friday to form a new joint venture with South Korea’s largest retailer, E-Mart Inc, to build a hypermarket – a massive retail outlet that combines a supermarket with a department store – in Cambodia.

The MoU was signed in Phnom Penh between Royal Group Chairman Kith Meng and Lee Gab-soo, CEO of E-Mart Inc, with participation from Commerce Minister Pan Sorasak and Korean Ambassador to Cambodia, Kim Weon-jin.

Rami Sharaf, senior vice president of Royal Group, said the two firms would hold further discussions of the joint venture structure, with him expecting that a finalised agreement would be signed later this year. If all goes as planned, he said “E-Mart Royal” could be operational as soon as the first quarter of 2019.

“For us, in Royal Group, it is strategic to have a retail business, keeping in mind the steady growth of Cambodia and the young age of the population,” he said. “We believe that with E-Mart we have the best options to differentiate us from all the other players in the market.”

Sharaf said the two companies would invest up to $120 million in the joint venture, though declined to disclose the shareholding arrangement, noting that the details of the agreement were still under discussion.

The location for the hypermarket has yet to be determined, but sources said it would occupy 3 hectares of land, most likely in the capital’s Sen Sok district.

South Korean Ambassador Kim Weon-jin said the collaboration between E-Mart and Royal Group should boost confidence in Cambodia’s retail sector and increase foreign investment from Korea.

“It is my sincere hope that this joint investment project will be a huge success and become a symbolic case for the success of economic cooperation between our two countries,” he said.

E-Mart is the largest retailer in South Korea with 160 stores across the country as of the end of last year. The company was the first South Korean retailer to invest heavily in the Chinese market, reaching 26 stores in 2011, but has since scaled back its presence due to mounting losses and souring relations between the two countries. In June it announced it would close its six remaining stores in China.