Auto parts makers steer toward Poipet

For nearly two decades, Poipet was a one-trick pony, relying on the casinos huddled around its Thai border crossing for its economic fortune. But now a different type of cluster is emerging on the frontier town’s outskirts, where industrial parks are attracting predominantly Japanese manufacturers with a vision for a vast Southeast Asian supply chain network that spreads risk and capitalises on the region’s economic diversity.

Investors have chosen the location carefully. Factories in Poipet’s special economic zones (SEZs) can plug into cheap, stable energy from Thailand while tapping Cambodia’s ready supply of low-cost labour and durable tax incentives. And at 50 metres above sea level, the area is safe from the devastating flooding that ravaged Thailand’s low-lying industrial heartland in 2011.

The floods, which put factories out of production for weeks, convinced many Japanese manufacturers operating in Thailand to spread their investments across the Mekong region to mitigate risks and take advantage of varying cost formulas.

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