Cambodia gets rolling

6 May 2013
Bangkok Post
Economy and commerce / Investment / Trade
Angkor Car / assembly plant / automotive sector / BMW cars / Business Research Institute for Cambodia / Business Research Institute for Cambodia chief economist Hiroshi Suzuki / Cambodia Automotive Industry Federation / Ford automobiles / Ford cars / Hung Hiep (Cambodia) Co Ltd / Hung Hiep (Cambodia) Co Ltd CEO Pily Wong / Hyundai / import duties / import taxes / Infrastructure / Koh Kong / Koh Kong’s special economic zone / Mercedes-Benz cars / minimum wage / Phnom Penh / Preah Sihanouk Province / RMA Cambodia / RMA Cambodia chief executive Rami Sharaf / road accidents / road infrastructure / roads / Special Economic Zones / tariff on imports / Taxes / traffic congestion / traffic laws / used car market / vehicles

The small but sleek Angkor Car can easily navigate the narrow streets of Cambodia, while with an electric engine saves on expensive fuel costs. It may cost $10,000 per vehicle, a bit steep for most local people, but the vehicle is a welcome testimony to Cambodian ingenuity. And it is well timed as well, as Cambodia’s automotive sector is just beginning to make some noise. The number of cars that are registered with the government more than doubled since 2006 to 231,352 at the end of last year, according to data from the Ministry of Public Works and Transport. The tendency to buy high-end automobiles is also on the rise, growing 27% in 2011 compared to the year before, according to the World Bank. … In fact, a number of distributors recorded growth in 2012 as Toyota Cambodia reportedly sold 800 units, up from 500 in 2011, while Ford recorded 15% growth in sales. … Cambodia charges some of the highest import taxes on vehicles in the world. Whether you are a car distributor or somebody looking to ship in a vehicle from home, you will be will have to pay a 45% excise tax, a 35% import duty and a 10% added value tax on the value of any vehicle brought into the country. Those taxes compounded with logistics fees and other “informal costs” can bring the total cost of importing a car well over its original cost, making it almost impossible for some distributors of imported cars to turn a profit. … Where the auto market has many dark corners, there is some light as high wage costs abroad have resulted in some manufactures establishing assembly plants in the country. Hyundai opened its $62-million assembly plant in Koh Kong’s special economic zone in January 2011, while Ford opened an assembly plant in Preah Sihanouk province last year able to produce 6,000 vehicles a year. “When you look at China, the wages are far higher than they once were and if you look at neighbouring Thailand, the minimum wage is also higher, so in Cambodia, you are saving on wages between 75% and 80%, and those savings will go right into your bottom line,” Sharaf said.

http://www.bangkokpost.com/business/marketing/348783/cambodia-gets-rolling