Initial scan of the Food Processing and Light Manufacturing Sectors. and Possible Sub-Sectors

Transcription

1 Initial scan of the Food Processing and Light Manufacturing Sectors and Possible Sub-Sectors

2 Outline Introduction Food Processing Light manufacturing Selection of priority products

3 GDP - composition by sector: GDP by sector 2013 GDP estimate $39.64 billion services (2013 est.) 40.70% industry 24.50% % by sector agriculture 34.80% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% (source: index mundi 2014)

4 Employment by Sector % Services Industry Agriculture Within the industry sector, employment spread: 50% garments; 25% construction; 10% food processing; and other 13% other manufacturing (ADB Country Diagnostic Study 2014)

5 Export and Import Exports Imports Exports - commodities Exports - partners $6.781 billion (2013 est.; 82% of goods textiles & footwear) $8.895 billion (2013 est.) clothing, timber, rubber, rice, fish, tobacco, footwear US 32.6%, UK 8.3%, Germany 7.7%, Canada 7.7%, Singapore 6.6%, Vietnam 5.7%, Japan 4.7% (2012)

6 Opportunities in Manufacturing Sector Cambodia remains attractive to source labour due to relatively low salaries and ASEAN geographical location Cambodia enjoys low tariff due to global policies on General System of Preferences (GSP)/ Duty free Quota Free (DFQF)/ Everything But Arms (EBA) Enabling Environment: impressive industry regulatory framework in place (CTIS and IDP ) Regional Developments: ASEAN Economic Community

7 Perceived constraints in manufacturing sector (WB_ICA 2014)

8 Priority Sectors (IDP ) New industries markets with high value-added products: machinery/mechanic/electronic/electric equipment/ transport assembly and natural resource processing Drugs and medical equipment production, construction materials, packaging equipment for export, furniture manufacturing and industrial equipment, etc. Agro-industrial products supporting industries serving regional production chains linked with either global markets

9 Food Processing Initial Scan

10 Sector Definition Manufacture of food products and beverages (food processing) is the transformation of raw ingredients, by physical or chemical means into food, or of food into other forms. Food processing combines raw food ingredients to produce marketable food products that can be easily prepared and served by the consumer (International Food Information Council Foundation).

11 Sector Outlook Over half the world s urban population will be in emerging economies. Demand for food in emerging markets expected to rise because of population and income growth and are likely to adopt a rich country diet more calories, protein, and processed foods (Goedde et al., 2015) Consumers are increasingly health conscious: governments are tightening standards for food production/more stringent quality and safety requirements. Exports of processed food are expected to make up 12 per cent of total exports by Asian food demand expected to outpace local food production, leading to higher imports of meat and processed foods rather than traditional staple grains. (A review of market data concerning Asian Food and beverage markets)

12 Overview of processed foods (exports) Composition of Recorded and Estimated Informal Cambodia Exports, $ million % share $ million % share Total Recorded Exports (goods + services) 4,509 7,335 Total Recorded and Informal Exports (goods + services) 4, , Composition of TotalRecorded and Estimated Informal Exports Garments Other sectors (including informal exports) Composition of Other Sectors Vehicles, mostly bicycles (recorded) Rubber (recorded) Milled Rice (recorded) Corn + Soybean (recorded) 6 4 Cassava (recorded) 2 Paddy rice (informal - estimated) Cassava (informal - estimated) Corn + Soybean (informal - estimated) Other recorded sectors (goods + services) Source: CTIS 2014

13 Share (%) Share of Manufacturing 20 Sector and Sub-Sectors in GDP (%) e (18.6) (17.3) (15.3) (14.4) (14.7) (14.8) Others Rubber Wood Products, Paper & Publishing Textile, Wearing Apparel & Footwear Food, Beverages & Tobacco Source: MIME

14 Source: MIME 2011 Database

15 No. of Employees No. of Employees in Manufacturing SMEs 140, , ,000 80,000 60,000 40,000 20, Other Manufacturing Industries 3,089 3,205 3,239 2,897 3,285 3,371 3,909 Fabricated Metal products, Machinery& Equipment 6,727 9,741 8,243 9,407 9,821 6,170 6,722 Basic Metal Industries & Coal Non Metallic Mineral products except products of Petroleum 6,702 8,505 8,932 9,298 11,615 10,737 11,570 Chemicals 1,018 1,393 1,448 1,542 1,678 1,810 2,000 Paper product, Printing & Publishing ,207 Wood & Wood product Textile, Wearing Apparel and Leather industry 8,118 7,073 6,347 10,580 12,104 12,173 14,569 Food, Beverages, Tobacco 49,383 57,557 58,512 60,262 57,496 90,148 93,704 Source: MIME

16 Output (Million Riels) Outputs of Manufacturing SMEs (Million Riel) 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , Other Manufacturing Industries 24,331 21,533 21,690 65, , , ,501 Fabricated Metal products, Machinery& Equipment 30,354 35,942 38,186 91, ,318 80, ,965 Basic Metal Industries & Coal Non Metallic Mineral products except products of Petroleum 32,349 35,340 38, ,832 98, , ,525 Chemicals 19,766 23,193 24,266 23,534 56,713 62,623 68,632 Paper product, Printing & Publishing 1,879 2, ,513 4,031 4,173 5,211 Wood & Wood product Textile, Wearing Apparel and Leather industry 9,608 14,212 12,933 14,072 75,426 21,136 26,040 Food, Beverages, Tobacco 2,000,000 2,352,833 2,461,530 2,294,293 2,219,803 2,527,085 3,119,559 Source: MIME

17 No. of Factories Classification Change Wearing Apparel Shoes and Shoes part Textile, Embroidery & Printing Chemicals, Petroleum, Coal, Rubber & Plastic Products 11 Food Fabricated Metal Products Wood Products ( Including Furniture) Paper, Paper product, Printing & Publishing Beverage Non-metallic Mineral Products (except 9 12 petroleum and coal) 3 Tobacco Hat, Cap, Bag and Glove Leather Other Jeans and Washing

18 % Change % Employment Growth ( ) Garments, apparel Finance and Accommodation Construction Rubber and plastics Food and beverages and footwear insurance % Change Source: NEA Employer Skills Needs Survey, 2012

19 Strengths Abundant relatively cheap labor Enjoys some benefit from the market access to the US, EU, Canada and Japan through trade agreements Food, beverage and tobacco industries slightly increased due to the government policy of promoting export particularly rice products. Cambodia is centrally situated for easy access to major Asian economies Quick and easy business & investment licensing registrations

20 Issues raised Only 4 Food Processing firms out of 14 Firms located in SEZ (Ajinomoto, Liwayway, CamFood, AgriCom) Most industries are family-based with lack of entrepreneurship and limited use of technology limiting its competitiveness in the international markets. Lack of support from the government in human resources development, market information and market access, and technological innovation (CAMFEBA, 2013). Manufacturing operations are still significantly lagging behind its neighboring countries High logistics cost (RAIUS) Myanmar emerging as low cost rice exporter and competitor with duty-free status Manufacturing significantly lagging behind its neighboring countries High energy cost (CAMFEBA, 2013)

21 Patterns and Trends in Trade Destination of Processed Food exports: 58 countries Malaysia, Thailand China, EU_France, Poland, Africa) Very small % of total exports : rice export volume (2015): 0.46 M tons, $210 Million Very few rice millers exporters (14 firms);4 food processing firms in SEZ Informal Export of Rice: $512 Million (2.3 Million MT) to Thailand and Vietnam Strict SPS requirements

22 US$ Million Imports of Cambodia US$Million Imports of Cambodia US$Million Thailand Vietnam OECD Others China Source: Cambodia Trade Integration Strategy and Trade SWAp Road Map

23 US$ Thousand Agriculture, Food and Forestry Products Import 1,000, , , , , , , , , , Non-Food Products 2,400 2,253 5,739 Food & Live Animals 132, , ,339 Source: Cambodia Trade Integration Strategy and Trade SWAp Road Map

24 Non-Food Products Food & Live Animals Estimates of AFF Product Imports by Cambodia, US$ thousand, Sugar/sugar prep/honey 49, , ,634 Miscellaneous food products 19, , ,984 Animal feed ex un-milled cereals 1,501 59, ,400 Cereals/cereal preparation 22,403 61, ,353 Dairy products & eggs 16,726 48,943 73,128 Vegetables and fruit* 12,620 51,560 55,154 Live animals except fish ,526 52,109 Coffee/tea/cocoa/spices 1,358 11,488 32,757 Fish/shellfish/etc. 7,716 23,555 29,071 Meat & preparations 387 2,346 26,750 Natural rubber 1, ,572 Oil seeds ,010 Wood and wood products Nat. gum/ resin/ pharm. plants etc Source: Cambodia Trade Integration Strategy and Trade SWAp Road Map

25 Methodology Cooperation with NIS and NEA, reviewed 2011 and 2014 data Elimination of other sub-sectors - garments including footware products and other sub-sectors activities, e.g. repair and printing etc.. Identification of variables as criteria to select products using Cambodia Standard Industrial Classification (CSIC) survey and Export value of the products Scoring of top ten products in each criteria (Top (1)=10; Last =1) Weighing of variables significant to STED (1=low; 2=medium; 3=high) Selection of top ten products using the sum of the final value of each criteria

26 Number of Establishments in Food Processing (FP) Manufacture of grain mill products Manufacture of sugar Distilling, rectifying and blending of Manufacture of macaroni, noodles, Manufacture of bakery products Processing of meat Manufacture of wines Manufacture of starches and starch Manufacture of soft drinks Manufacturing of fish and molluscks Establishment

27 Registration of FP establishments Registered Not registered Manufacture of cocoa, chocolate and Manufacture of soft drinks Processing and preserving of fruit and Manufacture of bakery products Processing of meat Manufacturing of fish and molluscks Manufacture of starches and starch Manufacture of wines Manufacture of grain mill products Manufacture of macaroni, noodles, 0% 20% 40% 60% 80% 100% Registered Enterprise

28 FP Total Persons Engaged Manufacture of grain mill products Manufacture of sugar Distilling, rectifying and blending of Manufacture of macaroni, noodles, Manufacture of bakery products Manufacture of soft drinks Manufacture of malt liquors and malt Manufacture of starches and starch Processing of meat Manufacturing of fish and molluscks 0 10,000 20,000 30,000 40,000 Regular Employee

29 FP Annual Sale (million US$) Group Manufacture of soft drinks 52,922 Manufacture of grain mill products 13,442 Manufacture of macaroni, noodles, couscous and similar farinaceous products 10,302 Processing of food and vegetables 3,955 Manufacture of malt liquors and malt 3,765 Distilling, rectifying and blending of spirits 764 Manufacture of wines 764 Manufacture of vegetable oils and fats (except palm oil, coconut oil and corn oil) 696 Processing of dairy products 370 Processing of meat 357 Sale

30 FP Export Value Manufacture of grain mill products Manufacture of starches and starch Manufacture of sugar Manufacture of wines Processing of food and vegetables Processing of fish and molluscks Manufacture of vegetable oils and fats Manufacture of malt liquors and malt Manufacture of macaroni, noodles, Manufacture of bakery products $0 $50 $100 $150 $200 $250 $300 Export Value (Million)

31 Top FP Products based on weighted criteria Product Estab# Regtrd Person Engage Annual Sale Export Value Emergi ng Total Manufacture of grain mill products Manufacture of sugar Manufacture of soft drinks Manufacture of starches and starch products Distilling, rectifying and blending of spirits Processing of food and vegetables Manufacture of wines Manufacture of malt liquors and malt Manufacture of macaroni, noodles, couscous and similar farinaceous products Processing of fish and molluscks

32 Light Manufacturing Initial Scan

33 Definition Enterprises whose production uses partially processed materials to produce items of relatively high value for end-users or intermediates for use by other industries; mainly small consumer goods(clothes, shoes, consumer electronics and home appliances) Source: Sheffrin (2003) Economics, Principle and Action

34 Share of Manufacturing in Exports Total value of exports (FoB 2013): $9,248 million New exports :bicycles (0.39% of total FOB) and waste & scraps of precious metals (0.33% of total FOB). Value of bicycle exports : $413 million or 4.2% of global sales (2014); electrical and electrical equipment ( $2.3 million in 2012); pulp and paper: $ 67 million (2013)

35 Business Environment Growing sub-sectors in global trade: furniture, leather products, cereals, vehicles, plastics, electrical equipments Cambodia seen as location for new production bases: China+ 1 policy by Chinese, Japan, Korea, Taiwan companies; preferred choice by proximity to key industrial areas, e.g. Thailand, Singapore, and established industrial zones (EPZ) vs. Myanmar Sector growth : very fast sector growth 20-25% yearly High FDI due to liberal rules for foreign investors ; proximity to manufacturers in neighboring countries ; lower cost and difficulty of cross-border investment Developing and growing local consumer markets (source : ITC trade statistics 2014)

36 Recent investments in key LM Sectors Sub-sector of Industry Gems& Jewelry Pulp and Paper Electronics and Electrical products Automobile industry Name of new company Intertekset laboratory (Poipet) and Tiffany & Co (PP) Oji Paper Co., Ltd. and Ojitex Harta Packaging 2 factories Minebea Co.with 5,000 workforce ; Sumitomo Wiring and Yazaki (KK); Autoparts maker Denso factory (PP) Hyundai Motor and Ford

37 Light Manufacturing in SEZ (excluding garments & footwear)

38 Global/Asian demand for manufactured goods New global middle class will grow mainly from the Asia Pacific region with stronger demand for cars, better healthcare and more complex equipment, such as automobiles, mobile devices and technologies, and computers (Singapore Economic Devt Board) ASEAN could be the 5th largest automobile market with volume forecast at 4,710,000 units by Sales of home appliance in ASEAN growing: 11.5 million units (1 st 6 mos where volume spiked by 20% vs (Frost & Sullivan) Asia's future growth powered by increased infrastructure spending, and rising domestic demand. (ADB). Estimated $8 trillion for telecom, transport, water and sanitation (McKinsey)

39 SWOT/KEY ISSUES Strengths: low labor costs and training development of workers; government fiscal incentives; easy access to intermediate imports (proximity to suppliers); good links to foreign firms Weaknesses: low labor productivity; poor infrastructure (roads, internet, electricity, water supply), lack of domestic manufacturing base & linkages; weak labor regulations; poor regulatory institutions; high reliance on imported immediate inputs Opportunities: training of workers; ASEAN integration and production value-chain; proactive government and business-friendly policies; strong outlook for foreign investors Threat: lack of strong regulations (labor); emerging production bases (e.g. Myanmar)

40 Light Manufacturing (LM) No. of Establishments Structural metal Manufacture of jewellery and related Manufacture of articles of lime, Manufacture of furniture Manufacture of other products of Manufacture of clay building materials Manufacture of cutlery, hand tools and Manufacture of glass and glass products Manufacture of other fabricated metal Manufacture of other transport Establishments

41 Light Manufacturing (LM) Registration Registered Not registered Manufacture of clay building materials Manufacture of corrugated paper and Manufacture of plastic products Manufacture of pulp, paper and Manufacture of plastics and synthetic Manufacture of glass and glass products Structural metal Manufacture of furniture Manufacture of articles of lime, Manufacture of jewellery and related 0% 20% 40% 60% 80% 100% Registered Enterprise

42 Number of persons engaged Manufacture of clay building materials Structural metal Manufacture of plastics and synthetic Manufacture of articles of lime, Manufacture of furniture Manufacture of jewellery and related Manufacture of other products of Manufacture of cutlery, hand tools Manufacture of bicycles and invalid Manufacture of plastic products 0 2,000 4,000 6,000 8,000 10,00012,000 Total persons engage

43 LM Annual Sale (million US$) Group Manufacture of other electrical equipment 669,969 Structural metal 427,322 Manufacture of bicycles and invalid carriages 333,023 Manufacture of furniture 123,918 Manufacture of pulp, paper and paperboard 30,744 Manufacture of other fabricated metal products n.e.c. 9,342 Manufacture of plastic products 8,321 Manufacture of cutlery, hand tools and general hardware 4,526 Manufacture of clay building materials 4,211 Manufacture of paints, varnishes and similar coatings, printing ink and mastics 3,213 Sale

44 LM Export Value (million US$) Manufacture of corrugated paper and Manufacture of bicycles and invalid Manufacture of plastics and synthetic Manufacture of other products of Manufacture of metal forming Manufacture of other electrical Mnaufacture of electric motors Manufacture of pulp, paper and Manufacture of plastic products Manufacture of jewellery and related $0 $200 $400 $600 $800 $1,000$1,200 Annual Sale (million)

45 Top Ten LM Products Products Estab# Regtrd Person Engage Annual Sale Export Value Emergi ng Structural metal Manufacture of plastics and synthetic rubber in primary forms Manufacture of bicycles and invalid carriages Manufacture of clay building materials Manufacture of furniture Manufacture of other products of wood; manufacture of articles of cork, straw and plaiting materials Manufacture of other electrical equipment Manufacture of articles of lime, cement and plaster Manufacture of jewellery and related articles made of precious and semi-precious materials Manufacture of corrugated paper and paperboard and of containers of paper and paperboard Total

46 Thank you!!!