February 20, 2023
PHNOM PENH – The International Financial Corporation (IFC) on February 16 announced that it had inked a new “collaboration agreement” with local WorldBridge Group and Singapore’s YCH Group for the development of the Phnom Penh Logistics Complex (PPLC) as a “smart logistics hub” in Southeast Asia, in a bid to “drive trade and connectivity, reducing costs”.
Plans show that PPLC will be located on a 98ha plot in Dangkor district’s Samrong Krom commune just west of Phnom Penh International Airport.
The complex “will be developed by PPLC Support and Industrial Co Ltd, a joint venture between Asia’s leading logistics conglomerate, YCH Group, and WorldBridge Group”, the IFC – a member of the Washington-based World Bank Group – said in a statement.
The PPLC’s “strategic location in Phnom Penh, the centre of the country and its economic hub, with connections to all modes of transportation, will enable it to become the country’s first fully multimodal logistics facility”, it said.
“As part of the agreement, IFC will support YCH Group and WorldBridge Group to strengthen the technical, commercial, legal, and environmental and social – E&S – aspects of the project to make it a bankable investment to attract financing from international lenders.
“IFC will also provide the developers with its expertise in working in similar markets globally, support for mitigation of project risks as well as work to strengthen E&S standards in line with IFC’s Performance Standards, which will help improve the project’s overall bankability and sustainability.
“As Cambodia is located in the centre of the Greater Mekong sub-region, the [PPLC] could serve as a regional transport and logistics hub, contributing to a shift in trade routes through Cambodia. This will help reduce overall logistics costs, improving supply chain efficiency to integrate into regional ones, and boosting Cambodia’s competitiveness,” it added.
Riccardo Puliti, the IFC Asia-Pacific regional vice-president, said in the statement: “Developing a multi-million-dollar world class super port will play a key role in expanding Cambodia’s economy and driving connectivity across Southeast Asia, delivering a faster and more efficient supply chain in the region, which ultimately benefits consumers.
“Logistics are the backbone of any economy, and this super port will also support the rapid growth of e-commerce and IFC will work with its partners to promote high-value manufacturing in the region while expanding its integration into global trade and supply chains,” he added.
Also speaking in the statement, YCH Group executive chairman Robert Yap said: “The signing ceremony is another major milestone to develop logistics and supply chain connectivity across [ASEAN].
“As part of [the] SGConnect initiative and its second project, [the PPLC] will raise the Kingdom’s competitiveness and attractiveness through a world class, multimodal logistics infrastructure to accelerate the growth of the economy.
“We are confident that [the complex] will be one of the key driving forces in boosting the supply chain and logistics connectivity for ASEAN and beyond, with the use of state-of-the-art technologies and best-in-class processes to improve cost of logistics and time to market as well as developing local talents to uplift the standards for the logistics industry in Cambodia,” he was quoted as saying.
WorldBridge Group chairman Rithy Sear added in the statement: “We are elated that IFC has chosen to support the [PPLC]. This facility will be a key contributor to the growth of Cambodia by providing the facilities for the next generation of manufacturing in the Kingdom.
“With YCH Group leading the project, we are confident that the capabilities of [the complex] as a logistics value added manufacturing hub will elevate Cambodia’s standing in the region and will be a major contributor to the economy of the Kingdom,” he said.
The statement underscored the importance of logistics in Cambodia’s quest to join the upper-middle income countries by 2030 and attain high income status by 2050.
“As the government of Cambodia is developing a master plan for Multi-modal Transport and Logistics Connectivity, the project will support the government in realising its vision to be a regional logistics hub and enhance the country’s logistics and supply chain connectivity,” it said.
The PPLC is the second IFC-YCH Group partnership, after the “ongoing collaboration” on the development of the Vinh Phuc inland container depot (ICD) logistics centre, or “Vietnam SuperPort”, it noted.
It added that the IFC works in “more than 100 countries” and that, in the 12-month period ended June 30, the corporation “committed a record $32.8 billion to private companies and financial institutions in developing countries”.
For reference, the World Bank recognises Cambodia as a “lower-middle income” country – one rank below the “upper-middle income” designation – with gross national income (GNI) per capita of $1,551 for fiscal year 2021 (FY21) – the 12-month period ended June 30, 2021 – in nominal terms as calculated by the bank’s Atlas method.
In the current fiscal year 2023, group classifications are based on these calculations of FY21 GNI per capita, as follows: “low income” $1,085 or less; “lower-middle income” $1,086-4,255; “upper-middle income” $4,256-13,205; and “high income” $13,206 or more. The World Bank updates these thresholds each year on July 1.