The Ministry of Public Works and Transport and Singapore-based YCH Group on March 4 signed a Framework of Agreement (FA) to develop the highly-anticipated Phnom Penh Logistics Complex (PPLC) in a move to integrate Cambodia’s logistics system into regional and global supply chains and propel the Kingdom towards long-term economic growth.
The materialisation of the FA comes a little over a year since the government early last January green-lit the draft of the Interim Master Plan on Intermodal Transport and Logistics Connectivity (IMP-ITLC), which serves as a roadmap for the development of the country’s logistics sector.
The interim master plan had been in the works by the ministry in collaboration with the Japan International Cooperation Agency (JICA) since September 2018.
And on September 10, the ministry and YCH kicked off discussions on the PPLC, which will be located on 98ha in Dangkor district’s Samrong Krom commune, an area lying just west of Phnom Penh International Airport.
Minister Sun Chanthol penned the FA virtually with YCH executive chairman Robert Yap. Under the terms of the pact, YCH will design, develop and operate the logistics hub.
The agreement comes with three stipulations – agreement on a potential site for the logistics hub two months after signing; a nine-month-long business study; and a three-month period for government approval, Chantol said.
“Covid-19 only slowed us down a bit but it could not impede us from achieving our objective,” he said.
“The PPLC is a strategic logistics project located in the centre of the country and is to support the distribution network and serve as an intermodal connecting point, with all modes of transportation – such as roads, rails, even waterways and air transport – within 10km from the city centre.
“The PPLC could also serve as a sub-regional transport and logistics hub seeing that Cambodia located in the centre of the Greater Mekong Sub-region.
“Development of the PPLC could tremendously help the logistic sector in Cambodia – reducing logistics cost, improving supply-chain efficiency to integrate into regional ones, and enhancing Cambodia’s competiveness.”
Speaking at the signing, Singaporean Second Minister for National Development Indranee Rajah said development of the PPLC is very timely and will provide critical infrastructure that will enhance Cambodia’s supply-chain resilience and increase exports.
She said: “It will contribute towards enhancing the region’s logistics and supply chain connectivity.
“I hope that the PPLC project will also strengthen our people-to-people and business-to-business ties and create good downstream opportunity for Cambodian- and Singaporean-based companies and good jobs for our people.
“Amid this challenging time, fostering regional partnerships like the PPLC project is important – it will not only contribute to the development of Cambodia’s logistics sector, but will also be an avenue for Cambodia and Singapore to exchange knowledge and share the best practices to collaborate and enhance resilience in the logistics sector.
“I congratulate the Royal Government of Cambodia and the YCH for marking this significant milestone,” she added.
YCH’s Yap said that since its September 10 inauguration, the PPLC has been trailblazing the Kingdom’s supply-chain and logistics industry, bringing the advantages of a multi-module transportation solution to the fore.
“I would like to thank to the Royal Government of Cambodia for placing trust and responsibility for us to deliver this very significant infrastructure that could truly help with Cambodia’s growth and embed it into the global value chain,” he said.
Chanthol said the partnership will support Cambodia to realise its vision to become a sub-regional logistics hub, as outlined in the IMP-ITLC.
“Logistics is a key component for Cambodia to achieve our target of becoming an upper middle-income country by 2030 and a high-income country by 2050. We look forward to working with YCH to incorporate international best practices into PPLC and maximise its potential,” he said.
The PPLC will be part of the ASEAN Business Advisory Council’s Smart Growth Connect Initiative and is the second project under the ASEAN Smart Logistics Network, according to Singapore’s Business Times.
This is after the Vinh Phuc inland container depot and logistics centre in the eponymous northern Vietnamese province, which according to Viet Nam News is also developed by YCH, in collaboration with Vietnam’s T&T Group.
Cambodia’s weak logistics infrastructure has long impeded its trade sector, with a 2014 World Bank report showing that the Kingdom’s export costs were 30 per cent higher than those of neighbouring countries.
In 2016, JICA estimated that Cambodia charges its exporters $540 per twenty-foot equivalent units (TEU), compared to $200 in Thailand and $250 in Vietnam.
A TEU is an inexact unit of cargo capacity used in the shipping industry roughly equivalent to a container with internal dimensions measuring about 20 feet long, eight feet wide and 8.5 feet tall, or a volume roughly 38.5 cubic metres.