SCG to invest at least $200-$300m in Cambodia

The five-year investment plan includes adding a third production line to its cement plant in Kampot, southern Cambodia, where the Thai industrial giant just commenced the second production line a few months ago. SCG also plans to double its network of ready-mix concrete plants in the country.
SCG expects sales from its Cambodian operations to approach Bt5 billion this year. Including its exports to Cambodia, which are expected to reach Bt7 billion, SCG’s Cambodian revenues are targeted to total Bt12 billion in 2015.
“The growth is at a satisfactory rate of 5-10 per cent this year,” Aree said.
“We have seen a lot of opportunities, especially this year, as cement demand has increased remarkably. There are many new residential and commercial projects coming up in Phnom Penh.” Cambodia’s gross domestic product has expanded by about 7 per cent annually over the last couple of years.
About 80-90 per cent of SCG’s sales from its Cambodian operations are derived from cement business, about 10-15 per cent from ready-mix concrete, for which it currently has 14 plants operating in the country, and the rest from concrete roofing and other businesses.
SCG invested $120 million to install the second production line to nearly double the production capacity of its Cambodian cement factory, its first and only one outside Thailand so far. Located in a town about 130 kilometres south of Phnom Penh, the Kampot Cement factory, majority-owned by SCG, recently started the second production line, which has an annual capacity of 900,000 tonnes.
Its first production line commenced production in July 2007 and, after an upgrade in 2010, now has an annual capacity of 1.1 million tonnes.
Cement demand in Cambodia is estimated to total 4 million tonnes per year, so Kampot Cement’s total capacity of 2 million tonnes per year indicates the Thai conglomerate should control around half of the country’s cement market.
Somwang Manpimonchai, country director for Cambodia of SCG Cement-Building Materials, said competition had become more intense with the arrival of a Chinese-owned cement producer that has dumped its cement prices to be about 10 per cent lower than SCG’s.
SCG markets its cement in Cambodia under two main brands, K Cement and Elephant. The retail price of K Cement is currently about $100 a tonne, while Elephant is about $103-$105, compared with the Chinese producer’s $90 a tonne.
Somwang said SCG, like all other cement brands there, had lost some market share in Cambodia market to the Chinese company. The Cambodian construction-materials market is expected to grow by 10 per cent this year but SCG expects to grow at a lower rate.
Nevertheless, Somwang said SCG had maintained its leadership in all of the main products it is marketing in Cambodia, comprising cement, ready-mix concrete, pre-stressed concrete slabs, and concrete roofing.
The company expects its Kampot cement plant to achieve a full utilisation rate within three or four years. The new capacity will replace some cement that it has imported from Thailand.
Somwang said SCG would replace the Elephant brand with its SCG brand next year for its cement products after making a similar move for its building materials last year. Nonetheless, K Cement will continue to be the main brand, constituting more than half of its total cement sales in Cambodia.
“We have checked the brand-awareness scores and found we are quite in the mind of Cambodian consumers, most of whom already like products from Thailand. Cambodians perceive the quality of Thai products as the best, second only to Japan,” he said.
SCG is developing its distributor/dealer network in Cambodia. The company currently has 47 exclusive distributors for its cement and building materials there.
For the first half of 2015, SCG’s revenue from export of cement and building materials to Cambodia was 15 per cent of its total export revenue. The revenue from production based in Cambodia was 16 per cent of the total generated from all of SCG’s production bases in Asean outside Thailand.
Currently, SCG employs 31 international staff and 461 SCG staff in Cambodia.
SCG is expanding rapidly in Asean. The Thai company is opening its first cement plant in Indonesia this quarter, and will start its first cement plant in Myanmar next year, and in Laos in 2017.