Cambodia and the World Bank’s International Finance Corporation (IFC) have signed an agreement to establish a new Logistics Complex in Preah Sihanouk province in a bid to promote regional connectivity and integration.

The Financial Advisory Service Agreement was signed on April 19 by Minister of Public Works and Transport Sun Chanthol and IFC resident representative Asad Yaqub to forge a public-private partnership (PPP) for the project, with the IFC acting as the exclusive lead adviser.

An IFC press release said this will help Cambodia achieve its aim of becoming a regional logistics hub in Southeast Asia.

The deal will see IFC structure the PPP transaction and support the government as it issues an international tender to select a private developer, in accordance with the Kingdom’s PPP laws.

The press release added that the project is expected to be developed in phases, with an overall capital cost estimate of about $200 million.

The new logistics centre will be connected to roads, railways and an airport, and will supplement the Sihanoukville Autonomous Port – Cambodia’s primary commercial deep-sea port – which handles two-thirds of the total container throughput in the country.

“The Sihanoukville Logistics Complex is one of two priority logistics hubs to be developed in Cambodia. Our objective is to position Cambodia as a regional logistics transfer hub in Southeast Asia,” said Chanthol.

“By working with the IFC, we can leverage their global expertise as we explore best options to leverage private sector engagement in the development of this critical logistics infrastructure in the country,” he added.

Yaqub said large-scale investments in infrastructure are vital to support the Kingdom’s export-oriented manufacturing industries and boost the country’s supply chain and logistics connectivity with the region.

“With IFC’s support, this project will be structured in line with global best practices to create a competitive market and draw qualified investors. Bringing in private sector financing will help reduce the burden on the country’s finances and also set a precedent for developing transport and logistics PPP transactions in the country,” he said.

The press release stated that a modern and transport-integrated logistics complex supporting the port will help accelerate movement of exports and imports and reduce port congestion. The project will improve efficiency and lower logistics costs in Cambodia, which are now “among the highest” in East Asia and one of the key bottlenecks to competitiveness and diversification.

It explained that the developer is expected to finance, develop and operate the infrastructure, facilities and systems within the complex under a long-term PPP contract with the government. The tender award to the winning bidder is likely to be granted by late 2024, with the hub to be constructed over three years.