As the labour costs in Cambodia doubled in last four years along with the weakening of the Japanese Yen, Japanese manufacturers are reassessing their investments in Cambodia. “The zone’s investors have expressed concern over rising labour costs. Japanese manufacturers are squeezed by the economic conditions back home, and are re-evaluating the bottom line of their overseas investments,” shared Hiroshi Uematsu, CEO of Phnom Penh Special Economic Zone (PPSEZ) – a private industrial park with 77 companies, of which more than half are Japanese.
It was only back in 2011 that the first wave of Japanese manufacturers arrived in Cambodia to establish labourintensive production lines factories for commodities like apparels. Four years on, rising wages have pushed up operating costs by 50%, dampening investors’ interest. What seems to have fuelled the dampening of interest is that unlike China, Cambodia’s rising wages have not been accompanied by a corresponding increase in productivity. Nor have electricity charges and logistics costs come down to offset the additional expenses. The companies moving out of Cambodia are looking at continuing their operations in Vietnam.
