China’s Tianrui Group intends to break ground soon on a $2.1 billion special economic zone outside Phnom Penh that will be devoted to processing agricultural products for export.
The investment holding company, which plans to be exporting goods by year’s end, signed a memorandum of understanding with the government on Wednesday morning at the Ministry of Agriculture.
Shen Chen, CEO of the group’s local subsidiary, the Tianrui (Cambodia) Agriculture Corporation, said it would be the country’s first economic zone devoted to agricultural products. Most are home to garment factories and other manufacturing operations.
“Our team has studied the agricultural industry here and we found that Cambodia does not have such large-scale storage to serve the agriculture sector and, in particular, there is no company that can process agricultural products on a large scale for export,” he said in Chinese through a Khmer translation at the signing ceremony.
“We will also enter into contracts with local farmers to buy their products, like fruit, and bring them to the special economic zone, and attract other Chinese investors to set up factories here to process the agricultural products, like mangoes for making juice,” he said.
Agriculture Minister Veng Sokhon said Tianrui had at least 25 supermarkets across China lined up to buy the zone’s products and that the government would help in-country, for example, by connecting processing factories with farmers.
After the event, Ly Meisang, Mr. Shen’s assistant and translator, said the company was awaiting approval from the Ministry of Land Management to begin construction on a 300 hectare site in Kong Pisei district, about 30 km outside Phnom Penh, and expected to get it soon.
She said they hope to have the capacity to store 100,000 tons of product and export 500,000 tons annually, most of it to China, by the time the third and final phase is finished in two years’ time.
“I’m not sure whether the company has signed deals with other investors yet, but I know many companies in China are ready to come and open factories and storage facilities here because they want to invest in this area,” she said.
Ms. Meisang said she did not know how many jobs the economic zone was projected to create or how many local farmers might benefit from contracts with host factories.
The agriculture sector is one of the country’s largest, providing a living for more than half of the population, according to the World Bank. But there is little value added to exports through processing, and the sector has seen growth slow over the past few years.