SCG plans to raise output in Cambodia

$200m set aside for cement subsidiary

NAREERAT WIRIYAPONG

PHNOM PENH : Siam Cement Group (SCG), Thailand's largest industrial conglomerate, is planning to invest $200 million to more than double the capacity of its cement factory in southern Cambodia.

Kampot Cement Co Ltd, a joint venture in which SCG holds 93% and a Cambodian partner the rest, aims to lift its annual capacity to three million tonnes by 2010 from the current one million, according to the Thai embassy in Phnom Penh.

So far, SCG has invested $127 million in the facility located 148 kilometres southwest of Phnom Penh and within driving distance of the Cambodia-Vietnam border.

''The increase is to purely serve the domestic Cambodian market where demand for cement has risen sharply from ongoing construction projects. The property sector is also booming here,'' a high-ranking embassy official said.

Cambodia still imports cement from neighbouring countries including Thailand. But given the current high oil prices that have pushed up transport costs, local cement producers would gain more competitive advantages.

''Consequently, the expansion at Kampot has become more feasible for the time being,'' the official said.

SCG's Thai headquarters declined to confirm the expansion plan, saying the project had been studied.

According to the embassy, construction materials are the main items Cambodia import from Thailand, along with sugar and farm and consumer products.

Thailand last year recorded a 70% rise in exports to Cambodia with a total value of $1.4 billion. The figure does not include about 30 billion baht in cross-border trade.

According to SCT Co Ltd, an international trading arm of SCG, Thailand ranks third among the trading partners of Cambodia after Vietnam and China.

On the investment side, Thailand has yet to play an active role in Cambodia with South Korea, China and Malaysia taking the lead. Apart from SCG, major Thai businesses operating in Cambodia are Charoen Pokphand (CP), as well as are Siam Commercial Bank and Krung Thai Bank.

The Cambodian government provides incentives for foreign investors such as tax-free machinery imports and corporate income tax holidays. It also promotes Special Economic Zones that comprises an export free zone, container yard area and other facilities for industrial zones.

The Thailand-funded road Number 48 in Koh Kong is expected to facilitate more business links between the two countries by strategically turning Koh Kong into the gateway to Phnom Penh.

Siam Cement shares (SCC) closed on Friday on the Stock Exchange of Thailand at 165 baht, up one baht, in trade worth 65 million baht.