[Cambodia] Local production still lagging

As the cost of imports rise, local producers could see an opportunity to increase their market share, but for most a lack of output and quality means potential is limited, industry observers said yesterday.

The Post reported last week that more stringent enforcement of import taxes at Cambodia’s borders has led to a hike in the price of many basic products.

Customs officers who had often undercut the official rate are now enforcing the correct rates, leading to price increases in the marketplace.

Meng Saktheara, director-general of the Industry and Secretariat of the Small and Medium Enterprise subcommittee, said hikes on imports may benefit local producers, but the majority of SMEs were not ready to step in to replace more expensive imports from neighbouring countries.

“The variety of our products is limited and production is still not enough [to feed the demand],†Saktheara told the Post, adding that the higher prices of imported goods was negatively affecting the living conditions of Cambodian people.

Saktheara said Cambodia has about 30,000 local producers, while regional countries have “millionsâ€.

An importer told the Post last Thursday that basic goods like food and beverages have increased by up to 20 per cent since new customs reforms were introduced earlier this month.

Srey Chanthy, president of the Cambodian Economic Association, said local producers would see little benefit from the rise in import costs as their production was not on the same scale as their international competitors.

“In the short term, I don’t think we have any local products that can substitute the imported products in the market,†he said, adding that Cambodian producers needed “more time†to develop in order to compete.

Sok Chea, marketing manager of Nguon Heng Ly Foodstuff Enterprise, a local producer of sauces and condiments, said there had been some price-sensitive consumers turning to locally produced products but that limited quality and variety still made it difficult to compete with imports.

“The majority [of local enterprises] are not ready to benefit from the rising price of imported products,†Chea said, adding that a lack of local capacity to produce at higher standards meant consumers still looked to foreign products.

Some pockets of production, however, have seen benefits.

Lin Thorn, general manager of the Men Sarun Flour Factory that produces both flour and noodles, said he had received more local orders for noodles recently, as Thai and Vietnamese imports had become more expensive.

Sarun said he was confident that his company had enough capacity to meet rising local demand.

“We need the support from our [local] consumers,†he said.