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Opportunities and Challenges in the Logistics Sector in Cambodia

At present, however, there is a marked shortage of logistics facilities and services in Cambodia which could support rapid trade growth




Over recent years, Cambodia has benefited greatly from rising production costs in China and the resultant realignments in the supply chain.

Consequently, it has emerged as a competitive alternative manufacturing base for light manufacturing relocation within Southeast Asia. Cambodia’s garment and footwear industry, which accounts for over 70% of the country’s exports, is the country’s main user/driver of logistics activities, and it has a significant effect on the volume of freight shipments to and from Cambodia.

Over the past five years, Cambodia’s trade growth has been remarkable, with exports and imports increasing by an average of 16% and 11% respectively per year.

Chart: Growth in Merchandise Trade Volume, 2012-2016
Chart: Growth in Merchandise Trade Volume, 2012-2016

Moving forwards, it is expected that Cambodia’s trade levels will increase further still. Partly this is due to the aforementioned ongoing adjustments in regional supply chains. Additionally, the ASEAN region is becoming increasingly competitive, due to the trade bloc’s continued drive towards regional integration.

Following the establishment of the ASEAN Economic Community (AEC) in 2015, many ASEAN countries have actively responded to the visionary AEC Blueprint 2025 and this should have particular benefits for less developed countries such as Cambodia.

Consequently, it is predicted that cross-border commerce, including intra-bloc trading activities, will continue to grow. By way of example, Cambodia and Thailand have pledged to boost bilateral trade from US$5.6 billion in 2016 to US$15 billion by 2020. Together the two countries have agreed on an increase in the quota of buses and trucks crossing the Cambodian-Thai border from 40 per day to 500 per day by 2018.

At present, however, there is a marked shortage of logistics facilities and services in Cambodia which could support rapid trade growth. Cambodia’s existing transport infrastructure urgently needs to be improved, but it is also imperative to build a comprehensive logistics network which can handle an increasing amount of freight.

There is also a particular need to attract logistics professionals and qualified personnel who can supply modern, sophisticated logistics services. In this respect, Hong Kong logistics companies, which can claim years of experience in reforming the logistics market on the Chinese mainland, could play a constructive role in supporting the trade development of Cambodia.

Infrastructure Improving, yet More Work Needs to be Done

Needless to say, the infrastructure of Cambodia was severely damaged during the war years. At a national level, Cambodia also lacks a concrete strategic action plan on logistics development. This also helps to explain why Cambodia has fallen behind when competing with certain neighbouring countries in terms of infrastructure and logistics capabilities.

In 2016, Cambodia ranked 73th among 160 economies in the World Bank’s Logistics Performance Index (LPI), lagging behind Thailand (45th), Indonesia (63th) and neighbouring Vietnam (64th).

Specifically in terms of the quality of its infrastructure, Cambodia has a great deal of catching up to do, as it was ranked 99th as compared to Thailand (46th), Vietnam (70th) and Indonesia (73rd).

Chart: Logistics Performance Index and Quality of Infrastructure 2016
Chart: Logistics Performance Index and Quality of Infrastructure 2016

In order to address this issue, the Cambodian government is committed to setting up a National Logistics Council (NLC) by 2018. The NLC will be responsible for formulating the country’s first-ever national logistics blueprint, as well as coordinating government ministries, agencies, institutions and industry players.

A significant amount of investment is required to upgrade Cambodia’s transport infrastructure. A report from the Economic Research Institute for ASEAN and East Asia (ERIA) estimated that total investments of up to US$16 billion are required within Cambodia’s infrastructure sector between 2013 and 2022. The ERIA projection is largely in line with the trend highlighted by the Council for Development of Cambodia, with total committed infrastructure investment amounting to about US$7 billion between 2012 and 2016, or some 40% of the published total. Notably, the committed investment in infrastructure hit a five-year high at US$3.1 billion in 2015, representing 67% of published investment within Cambodia during that year.

Table: Investment by Sector, 2012-2016 (US$ million)
Table: Investment by Sector, 2012-2016 (US$ million)

Additionally, Cambodia has received a substantial amount of foreign aid to fund its infrastructure development, which may not be reflected in the above investment statistics. For example, China has been a major donor to Cambodia, disbursing more than US$4 billion of aid in the form of grants and soft loans between 1992 and 2016. When Cambodian delegates attended the Belt and Road Summit held in Beijing in May 2017, it was announced that China will provide Cambodia with a new aid package worth nearly US$240 million, intended for infrastructure construction, alongside other areas. With more projects expected to be rolled out over the coming years, many business opportunities will arise for Hong Kong companies to participate in the construction and redevelopment of Cambodia’s roads, railways and ports.

Road Projects Drawing Investment

Road transport is the major logistics modality in Cambodia, accounting for more than 70% of freight traffic. Goods in larger quantities are mostly containerised and then transported in bigger trucks, a major share of which are then shipped out of the country as ocean freight. In contrast, local delivery of goods in smaller quantities, many of which are break-bulk items, is primarily handled by small trucks, vans or even motorcycles.

Cambodia’s road network extends over 54,000km. However, as of 2015, the percentage of the country’s total road length which was paved stood at around 10% – the lowest among all ASEAN countries, according to the ASEAN Secretariat.

Chart: Ratio of Paved Road to Total Road Length
Chart: Ratio of Paved Road to Total Road Length

The conditions of major national roads may have improved in recent years, but roads leading to the rural areas mostly remain unpaved, lacking any traffic lights or roadside assistance services. During the rainy season, roads in both urban and rural areas can be affected and some of them could deteriorate considerably.

Photo: Paved road within Phnom Penh’s city centre.
Paved road within Phnom Penh’s city centre.
Photo: Paved road within Phnom Penh’s city centre.
Paved road within Phnom Penh’s city centre.
Photo: Dilapidated roads just outside Phnom Penh’s city centre.
Dilapidated roads just outside Phnom Penh’s city centre.
Photo: Dilapidated roads just outside Phnom Penh’s city centre.
Dilapidated roads just outside Phnom Penh’s city centre.

In order to construct a modern road network system in Cambodia, the government is committed to building 850km of expressways by 2020, along with a long-term plan to establish a national expressway network of 2,230km by 2040. So far, significant progress has already been made. For example, the Cambodian government signed a Memorandum of Understanding (MoU) with China’s Henan Provincial Communication Planning, Survey, and the Design Institute Co. Ltd. in 2015 to construct a 190km-long, 25m-wide expressway linking Phnom Penh and Sihanoukville. Under the MoU, construction is expected to be completed by 2020 at a project total cost of about US$1.6 billion.

Apart from upgrading the inter-provincial traffic routes between the capital and other main cites in Cambodia, there are also plans to upgrade cross border roads links from Phnom Penh to Bangkok in Thailand and Ho Chi Minh City in Vietnam. A project to enhance the connectivity of the GMS road network, including the updating of road sections from Battambang to Siem Reap, is expected to commence in 2017.

Cambodian Railway Rehabilitation Plan

In terms of rail transport, the railway system in Cambodia consists of only two lines – the 264km Southern Line (SL) from Phnom Penh to Sihanoukville, and the 336km Northern Line (NL) from Phnom Penh to Poipet, near the Cambodian-Thai border. Both lines are reported to be in very poor condition, with trains operating at a speed of approximately 20km per hour.

In 2009, after many years of limited efforts and outright neglect, the Cambodian government finally resolved to launch a railway rehabilitation programme, though progress so far has been very slow. The SL freight train service was re-launched in 2012 but it took another four years before limited passenger service could be re-introduced in 2016. Meanwhile, rehabilitation works on the NL have also been delayed, with only parts of the line completed as of the end of 2016.

Over the years, Hong Kong rail-related companies have earned a reputation as being amongst the most successful railway operators and consultants in Asia. Hong Kong companies may not be able to contribute directly in the construction of Cambodia’s railroads, but there are certain opportunities available for them in offering consultancy and contracting services covering railway planning, system integration and project management.

Ambitious Port Expansion to Add New Container Terminal

Maritime transportation is a key element in enabling Cambodia’s growing participation within global trade. However, its port capacity is a very major constraint. At present, only two main ports in Cambodia are able to handle international shipment – a deep-seaport in Sihanoukville and a river port in Phnom Penh.

The Sihanoukville Autonomous Port (SAP) is the largest seaport in Cambodia and the main trade gateway for seaborne cargo entering or leaving the country. The SAP handles about 70% of all containerised trade by volume, with a throughput of more than 400,000 TEUs in 2016. Outbound merchandise consists mostly of garments and rice, with the main markets being Europe and the US. In contrast, inbound merchandise primarily comprises raw materials for garment factories, construction materials and machinery.

Chart: Container Throughput
Chart: Container Throughput
Photo: Trucks queuing outside the SAP.
Trucks queuing outside the SAP.

The SAP has a limited draft of 8.5m at its entrance, which restricts the size of vessels calling at the port to a maximum 1,000 TEU. At best it can accommodate feeder vessels, with freight destined for long-haul markets loaded onto mother vessels at transhipment hubs such as Singapore.

On the bright side, the SAP is now the subject of an ambitious development plan designed to improve its capacity for handling international shipments. The construction of a new container terminal is expected to be completed by 2022, at a total cost of US$300 million. The new terminal will extend over 350m in length with a draft of 14.5m, thereby enabling the SAP to handle larger container ships. According to SAP management, the new container berths and storage yards will add 1 million TEU to the overall container throughput capacity.

International Logistics Services in Demand

Located between Thailand and Vietnam, two of the main production hubs in the GMS region, Cambodia has enormous potential to play a more important role in regional supply chains and logistics networks. However, most of the local logistics companies based in Cambodia are relatively small in scale and there is a notable lack of professionals and management staff with the relevant international experience. This in turn limits the ability of local companies to offer higher value-added services such as track-and-trace and inventory management

Photo: Trucks driving down a street in Phnom Penh.
Trucks driving down a street in Phnom Penh.

As such, foreign logistics companies have a clear advantage when it comes to providing international logistics services targeting those manufacturers engaged in export-oriented industries. Nevertheless, they may find it more challenging to compete directly with their local counterparts, who are able to supply low-end services in serving the domestic market.

In the light of this situation, a number of international logistics players such as APL Logistics, DSV, Panalpina and Yusen Logistics have established operations in Cambodia to target export-oriented manufacturers. They intend to provide a range of services such as cross-dock, in-land transportation, warehousing and distribution management and customs clearance. More recently, in a show of confidence in this emerging market, Thai logistics player SCG Logistics also announced plans to expand its business into Cambodia.

When entering Cambodia’s logistics market, it is recommended that Hong Kong businesses make the most of their own advantages and seek win-win cooperation arrangements with local companies. By forming a business partnership or joint venture, Hong Kong companies can avail themselves of their local partners’ connections for business development, while the local operators can build up their capacity to handle international freight.

Warehousing Business Opportunit

Photo: Warehouse for rent along National Road No.4.
Warehouse for rent along National Road No.4.

Broadly speaking, warehouses in Cambodia can be divided into two categories: small-scale warehouses with a floor area less than 1,000 sq m, and those with a floor area over 1,000 sq m. Many of these small warehouses tend to be concentrated within Phnom Penh or on the outskirts of the city, in areas such as Chamkar Doung and Stung Meanchey. For the most part, the larger warehouses are found along National Roads No. 3 and No.4.

As the regional supply chains become more integrated, the demand for warehousing facilities in Cambodia will continue to increase. While some modern warehouses have been built in recent years, mostly by foreign-invested logistics companies, the majority of older facilities remain sub-standard, as there has been no benchmark or standard for either the warehouse facilities or the services that they offer. Indeed, service quality tends to vary with operators of warehouses of different sizes and in different locations. In this regard, Hong Kong companies could seize opportunities by entering the Cambodian market to help raise or even set the standards for warehousing in the country.

Customs Bonded Warehouse

In 2017, with the prospect of Cambodia becoming a logistics point for goods destined for Vietnam and Thailand, Kerry Worldbridge Logistics Ltd – a joint venture between the Hong Kong-based Kerry Logistics and local logistics and property development firm Worldbridge International (Cambodia) – launched its first Cambodian customs bonded warehouse.

Located in the Kandal province, 17km south of Phnom Penh, the bonded warehouse is part of the Kerry Worldbridge Special Economic Zone (KWB SEZ), which covers a total land area of 63 hectares. The plan is for the US$100 million project to be built in three phases, with Phase I dovetailed with the construction of a customs bonded warehouse zone on 17 hectares of land. According to KWB SEZ management, importers will be allowed to bring in goods duty-free for local assembly or transhipment. An arrangement such as this would benefit manufacturers and traders, as they would not be required to pay duties upfront when storing their products in the warehouse, thereby gaining greater flexibility in organising their activities and cash flow.

Informal Payments Still an Issue

On balance, positive developments in Cambodia’s infrastructure and trade sectors should provide greater impetus to the renovation of the country’s logistics industry. Institutionally, though, a critical issue overshadowing the logistics industry is the widespread practice of unstructured payments, with unofficial charges often collected at weighbridge stations, border gates and checkpoints on main roads. Cambodia’s media also report that traffic regulations are selectively enforced in order to extract informal fees, and facilitation fees are often paid to avoid inspection on truck axle-weight and length issues.

In 2016, Cambodia ranked 156th among 176 countries in the Transparency International’s Corruption Perceptions Index, far behind the country’s three CLMV neighbours, namely Vietnam, Laos and Myanmar, which ranked 113th, 123th and 136th respectively.

As part of the measures to digitise customs procedures in Cambodia and to eradicate unofficial payments, the ASYCUDA computerised system for customs clearing was introduced in 2015, but it may well take a good deal of time to weed out this level of corruption. Hong Kong companies in both the manufacturing and logistics sectors should therefore be mindful of those corruption practices when operating within Cambodia.

Ultimately, if not tackled effectively, issues including a lack of logistics professionals and the prevalence of informal payments within the logistics sector could seriously hamper Cambodia’s hopes of taking on much more substantial role within regional supply chains.

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COVID-19 Vaccine Roll Outs in ASEAN Live Updates by Country

Thailand is currently expecting vaccines to be delivered in mid-2021. The doses would cover 13 million people in a population of about 69 million. Thailand’s National Vaccine Institute signed a non-refundable advance market commitment contract worth 2.38 billion baht (US$79 million) with AstraZeneca to reserve the supplies




ASEAN coronavirus Covid-19 live updates by country


Brunei has joined the global Covax scheme and is expecting to have the COVID-19 vaccine in Q1 2021, having sourced enough supplies to cover 50% of the population. Discussions are on-going with other suppliers.   

  • Brunei recorded one new case on May 8, bringing the total to 330 cases amid three deaths.
  • Brunei saw one new case on May 7, taking the total to 229 cases amid three deaths.
  • Brunei recorded one new case on May 4, taking the total to 228 amid three deaths.


Cambodia is expected to import vaccines from both China and Russia. China’s vaccines are still undergoing clinical trials while Russia has already commenced production. Australia has offered financial support to aid vaccine coverage in several southeast Asia countries including Cambodia.  

  • Cambodia recorded 538 new cases on May 8, bringing the total to 18,717 cases amid 114 deaths.
  • Cambodia recorded 558 new cases on May 7, taking the total to 18,179 cases and 114 deaths.
  • Cambodia reported 650 new cases and four deaths on May 6, bringing the tallies to 17,621 cases and 114 deaths.


Indonesia has commenced vaccinations with just over nine million doses being given to front line workers from last month. China’s Sinovac is in discussions with Indonesia to provide supplies, however, the Government faces difficulties with a large population of 268 million and price sensitivity at Sinovac’s estimated costs at 200,000 rupiah (US$20) a dose.

Indonesia’s Health Ministry’s Disease Control and Prevention Director-General Achmad Yurianto said that vaccinations would only be provided to citizens aged 18-59. The vaccine has also been required to pass halal certification prior to use and it is uncertain how the country can source enough vaccines to reach a sizeable part of its population.  Australia has stated it will also provide financial support to solve these issues.  

  • Indonesia recorded 6,130 new cases and 179 deaths on May 8, bringing the totals to 1,709,762 cases and 46,842 deaths.
  • Indonesia saw 6,327 new cases and 167 deaths on May 7, bringing the tallies to 1,703,632 cases and 46,663 deaths.
  • Indonesia reported 5,647 new cases and 147 deaths on May 6, bringing the totals to 1,697,305 cases and 46,496 deaths.


Laos has been trialing the Russian Sputnik V vaccine and is also in discussions with China about acquiring supplies. 

  • Laos recorded 28 new cases on May 8, bringing the total to 1,233.
  • Laos saw 28 new cases on May 7, taking the total to 1,205.
  • Laos saw 105 new cases on May 6, taking the total to 1,177.


Malaysia is to provide vaccines free of charge to its nationals, but foreigners will need to pay for the treatment, according to the Malaysian Minister of Health, Tan Sri Muhyiddin Yassin, who has signed a deal with Pfizer for 12.8 million doses.

These will be administered in two stages of 6.4 million people each, with the program to commence in Q1 2021. The country aims to inoculate between 80-100% of its citizens. 

  • Malaysia reported 4,519 new cases and 25 deaths on May 8, taking the tallies to 436,944 cases and 1,657 deaths.
  • Malaysia saw 4,498 new cases and 22 deaths on May 7, bringing the tallies to 432,425 cases and 1,632 deaths.
  • Malaysia recorded 3,551 new cases and 19 deaths on May 6, taking the totals to 427,927 cases and 1,610 deaths.


Myanmar is seeking assistance from the Gavi and Covax programs to acquire vaccines, while Australia is also providing financial relief. At present, the Government aims to treat 20 percent of the ‘most at risk’ in the country with vaccines. The Government is struggling with finances and logistics and is also under US sanctions, while cases are surging. The Government has banned the celebration of Christmas and other seasonal celebrations.   

  • Myanmar recorded 31 new cases on May 8, taking the total to 142,934 amid 3,210 deaths.
  • Myanmar saw 29 new cases on May 7, taking the total to 142,903 amid 3,210 deaths.
  • Myanmar recorded 16 new cases and one death on May 5, bringing the total to 142,874 amid 3,210 deaths.


The Philippines aims to commence vaccinations from June 2021 and expects to inoculate about 25 million people (about 25 percent of its population) over the course of the year. The country has been badly affected by the virus and has the second-highest rate in Southeast Asia.

The business community has reacted, more than 30 local companies signed an agreement to purchase at least 2.6 million vaccine doses from AstraZeneca in the country’s first such deal to secure coronavirus vaccines, ten days ago. They plan to donate a large part of the doses to the government for its planned vaccination program and use the rest to inoculate their employees. 

  • The country saw 6,979 new cases and 170 deaths on May 8, taking the totals to 1,094,849 cases and 18,269 deaths.
  • The Philippines reported 7,733 new cases and 108 deaths on May 7, bringing the tallies to 1,087,885 cases and 18,099 deaths.
  • The Philippines saw 6,637 new cases and 191 deaths on May 6, bringing the totals to 1,080,172 cases and 17,991 deaths.


Singapore has been working on producing its own ‘Lunar’ vaccine, in a joint venture between the US company Arcturus together with the Duke-NUS medical school. It is a single dose, mRNA shot, developed from genetically engineering COVID-19 genes into an otherwise harmless virus. This technique is marginally safer than other vaccines which rely on dead Covid-19 material to provoke an immune response. The vaccine is expected to be available from Q1 2021. High-risk personnel will receive the vaccine first in a process to be determined by the government.     

  • Singapore recorded 20 new cases on May 8, taking the total to 61,331 cases amid 31 deaths.
  • Singapore saw 25 new cases on May 7, taking the total to 61,311 cases amid 31 deaths.
  • Singapore saw 18 new cases on May 6, bringing the total to 61,286 cases amid 31 deaths.


Thailand is currently expecting vaccines to be delivered in mid-2021. The doses would cover 13 million people in a population of about 69 million.

Thailand’s National Vaccine Institute signed a non-refundable advance market commitment contract worth 2.38 billion baht (US$79 million) with AstraZeneca to reserve the supplies. Discussions are also on-going with Oxford University in the UK to secure a vaccine that could be available in Q1 if trials are completed in time.   

  • Thailand reported 2,419 new cases and 19 deaths on May 8, taking the tallies to 81,274 cases and 382 deaths.
  • Thailand recorded 2,044 new cases and 27 deaths on May 7, taking the totals to 78,855 cases and 363 deaths.
  • Thailand reported 1,911 new cases and 18 deaths on May 6, taking the tallies to 76,811 cases and 336 deaths.


Vietnam’s National Institute of Hygiene and Epidemiology (NIHE), a division of Vietnam’s Ministry of Health, has signed an agreement with Medigen Vaccine, a Taipei, Taiwan-based vaccine company to secure the supply of 3 million to 10 million COVID-19 vaccine doses in 2021. Medigen is currently conducting Phase II studies of the vaccine, co-developed with the USA’s National Institutes of Health (NIH), in Taiwan and Vietnam with a view to a Q1 2021 rollout.  

Vietnam is also working on producing its own vaccine, with the Institute of Vaccines and Medical Biologicals (IVAC) in Nha Trang City, partnering with New York City-based Icahn School of Medicine and the global health non-profit organization PATH. Phase 1 trials are already underway in Vietnam, while Phases 2 & 3 will be conducted at the beginning of 2021. The institute plans to submit documents for approval to the health ministry as early as April next year and claims to be capable of producing 30 million doses a year, expecting that a national vaccine could be distributed to the general population in October 2021.

  • Vietnam saw 15 new cases on May 8, taking the total to 3,152 cases amid 35 deaths.
  • As of May 7, 2021, Vietnam’s Ministry of Health confirmed a total of 3,091 cases of COVID-19. However, 2,560 of the affected patients have recovered and been discharged from hospitals. Vietnam has also recorded 35 deaths due to the pandemic. The latest community transmission cases have been reported from Hanoi, Vinh Phuc, Thai Binh, Bac Ninh, and Da Nang among others. 16 local cases are linked to the National Hospital of Tropical Diseases in Hanoi’s Dong Anh district.
  • As of May 6, 2021, Vietnam’s Ministry of Health confirmed a total of 3,030 cases of COVID-19. However, 2,560 of the affected patients have recovered and been discharged from hospitals. Vietnam has also recorded 35 deaths due to the pandemic. The latest community transmission cases have been reported from Hanoi’s outskirts district of Dong Anh.

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In a global first, Singapore and Thailand have linked their real-time payment systems, PayNow and PromptPay allowing international fund transfers between the two countries within minutes.


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Digital Revolution and Repression in Myanmar and Thailand

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By Karen Lee


Following the February 1 coup, Myanmar’s netizens became the latest to join the #MilkTeaAlliance, an online collective of pro-democracy youth across Asia.


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