Source: Khmer Times
A Chinese company will spend roughly $60 million to build a construction supply center on the outskirts of Phnom Penh after finalizing a land leasing agreement with the Phnom Penh Autonomous Port (PPAP) on Friday.
Yunnan Sengmao Investment will build the aptly named Construction Material Supplies Center on 9.3 hectares of land in Russey Keo district. It will supply imported construction materials from around the world to help fulfill the rising demand of Cambodia’s construction sector.
Hei Bavy, director-general of the PPAP, told Khmer Times yesterday that the deal was a new way for the Cambodia Securities Exchange-listed company to increase profit in addition to the port services it provides.
He said that while the construction sector in Cambodia is booming and has enjoyed strong growth over the past decade, the center would serve as the go-to location for customers who want well-known and high-quality construction products.
“We reached a long-term land leasing deal that will last for 40 years [2016-2056] with a Chinese firm late last year,” Mr. Bavy said.
“They are going to invest between $50 million to $60 million to build the Construction Material Supplies Center as they have observed the fast development and huge demand in the construction sector in our country and at the same time, they see that we still have a huge opportunity to grow.
“It is like a build-operate-transfer deal, meaning that once they finish the contract, they will transfer ownership of the building to us and if they want to pursue a contract, we will be happy to work with them.
“I think they will start building the center very soon as we have already received approval from the government. We will establish a joint committee to proceed with the work.”
Furthermore, he said, the center will have about 500 to 700 booths selling all kinds of imported construction products to meet the kingdom’s demand.
The company is experienced in the material supply business as it now operates a center in China with more than 2,000 booths.
“Once the project is online, we expect that they will have at least 20,000 TEUs using our port per year so that is good for our business, in addition to the fee we get from the lease,” Mr. Bavy said, using an acronym for twenty-foot equivalent unit, the industry standard reference for cargo capacity.
“This is new business for us and it will attract more investors to buy our shares on the stock market too.”
As of December, the PPAP recorded a 3.58 percent increase in cargo shipments to 150,000 TEU and an 8.41 percent increase in tonnage to 2,434,200 tons while revenue was about $17 million, up 7.78 percent.
Total investment in the construction sector was some $8.2 billion in the first 11 months of 2016, an increase of roughly 178 percent, according to data from the Ministry of Land Management, Urban Planning and Construction.
Lao Tip Seiha, deputy general-director of the ministry’s construction department, was quoted in local media recently as saying that at the end of December 2015, investment capital in the sector had reached about $2.9 billion, but in just 11 months of 2016, total investment rose to $8.2 billion with a construction area of 14 million square meters.
Construction projects that have been registered by provincial authorities are mostly large commercial buildings, office buildings, shopping malls, condominiums, apartments, factories and various enterprises, he added.
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Photo by Khmer Times