First Meeting on Automotive and Electronics Sector Development Advisory Council
- 04 August, 2022
- Posted by: EuroCham Cambodia
On the 2nd of August, Mr. James Zemke, EuroCham Automotive Committee Chairman and General Director of Mercedes Benz Cambodia, and Mr. Taing Zola, EuroCham Public-Private Dialogue Coordinator, joined the Automotive and Electronics Sector Development Advisory Council’s first meeting which was chaired by H.E. Sok Chenda Sophea, Minister attached to the Prime Minister and Secretary General of the Council for the Development of Cambodia (CDC).
EuroCham (a member of the Automotive and Electronics Sector Development Advisory Council under the CDC) participated in this first advisory meeting to discuss the sectorial outlook and key trends, as well as the key initiatives to address the biggest pain points for investors which are being prepared for Government’s Cabinet approval. We also took this opportunity to address the importance of the labour upskilling programme to continuously equip Cambodian workers with fundamental and technical skillsets for the market.
Sectorial Outlook and Key Trends (Cambodia context):
- Cambodia’s automotive sector production concentrated in simple, labour-intensive components.
- The compound annual growth rate (CAGR) for automotive components exports stands at around 36%. According to the 2019 data, 82% of the export are Wire Harness, while 10% are Powertrain.
- Cambodia has attracted some four-wheeler assembly but only for pickups as local demand is limited, including Ford, Kia, Hyundai, Daehan, and Isuzu.
- More than 80% of the two-wheeler market is locally assembled, but mainly via imported parts. The demand for two-wheelers could double in the next ten years.
- Electric Vehicles (EVs) are becoming cheaper and are expected to make up 18% of new cars by 2030. Cambodia could capture the rising demand for EVs component production.
- Wire harnesses, seats, simpler auto electronics, and two-wheeler backward linkages are identified as investment opportunities.
- Cambodia’s electronic export growth has been primarily driven by less complex components such as cable and motor.
- The CAGR for electronic components exports stands at around 27% from wire harnesses, lighting cables, motors, and LED, which are typically less complex products.
- Manufacturing is shifting out of China due to geopolitical tensions as well as the disruption caused by the pandemic. Cambodia could capitalize on this opportunity to capture new suppliers.
- Demand is growing fast due to the rise of the middle-class. Cambodia could capture high growth segments, e.g., mobile phones and air-conditioners.
Key initiatives to address investor pain points
The key initiatives have not been officially ratified by the Government, but it will be on, amongst others, strengthening investor outreach, identifying locations for SEZs, developing labour upskilling programmes, implementing trade agreements and laws on investment, reviewing electricity tariffs, and enhancing business matchmaking.
EuroCham is very grateful to be onboard as a member in this important advisory council and we would like to extend our appreciation and support to this initiative and dedication by the CDC to the private sector. We will continue to actively represent the voices of our members for a more efficient and fertile business and investment environment.
This summary of the workshop was compiled by the EuroCham team for informational purposes only and is subject to corrections by relevant authorities.