Newbustar (Cambodia) Tire Co Ltd, a member of the Chinese state-owned Doublestar Group, is investing some $138 million in a tyre factory in Kratie province’s southeast to tap into the domestic market.
The Council for the Development of Cambodia (CDC) disclosed in a June 23 notice that it had approved a final registration certificate for the company’s venture. The government body noted that the plant would be located in UBE Snuol Special Economic Zone of Trapaing Sre village, Pi Thnou commune, Snuol district and expected to generate around 975 jobs.
Cambodia Chamber of Commerce vice-president Lim Heng remarked that the Kingdom’s rubber sector could feed Newbustar Cambodia’s project once it starts production, projecting that the developing tyre industry will continue to bring in more foreign specialists and technologies.
“Recent years have seen a shift in investment flows away from traditional industries, like garments and textiles, and toward a wider spectrum of non-apparel goods such as tyres and electronics. This will not only deliver value to the economy but also encourage the domestic labour force’s upskilling,” he said.
According to Heng, Cambodia’s bilateral and multilateral free trade agreements (FTA) with regional countries and those further afield have increased the Kingdom’s thirst for luring new investors.
“Investors have begun to recognise the potential growth for their investments in our country as we implement FTAs, particularly regional ones as well as those with South Korea and China,” he said.
An FTA is an international treaty between two or more economies designed to reduce or eliminate certain barriers to imports and exports among them, generally while safeguarding safety, security, health and other legitimate regulatory objectives. Such a pact can also serve to facilitate and promote greater economic ties among signatories in areas such as investment and intellectual property protection.
Men Sopheak, director of rubber grower and exporter Sopheak Nika Investment Agro-Industrial Plants Co Ltd, told The Post in March that the expansion of local rubber sourcing by a growing roster of tyre factories would benefit Cambodian producers. He stated that the Kingdom has become a major international supplier of the commodity.
“I’ve already been contacted by [representatives of] a few plants, and we’ll be keeping an eye on what their requirements and standards are, to supply them,” he said.
In March, Doublestar Group unveiled plans to team up with local industrial park developer UBE Development Co Ltd to build the tyre factory in the latter’s special economic zone (SEZ) in southeastern Kratie. At the time, it was estimated that the project would require an investment of 1.4 billion yuan, or about $200 million.
Qingdao Doublestar Co Ltd, the group’s Shenzhen-listed subsidiary, earlier this year reported in a statement that the plant would have annual
production capacity of 8.5 million “high-performance” radial tyres – seven million semi-steel and 1.5 million all-steel. It said construction was planned to be completed in 15 months.
A ceremony formally marking the groundbreaking of the factory was held on May 9. Newbustar Cambodia was incorporated on April 10, according to the Ministry of Commerce.
Once fully operational, the factory is expected to generate average annual sales of 2.8 billion yuan ($390 million) and net profit of about 550 million yuan, the Qingdao Doublestar statement said, adding that the facility constitutes part of its “localisation” strategy and is to “actively respond” to international trade barriers, given the “high tariffs” imposed on Chinese goods.
Cambodia exported 107,938 tonnes of natural rubber latex to the tune of $145.843 million in the first five months of 2023, up 2,690 tonnes – or 2.6 per cent – year-on-year but down nearly 14 per cent in terms of value, according to statistics from the General Directorate of Rubber (GDR) under the Ministry of Agriculture, Forestry and Fisheries.
The Kingdom also exported 5,243 cubic metres of rubber wood in the January-May period, worth a total of $707,073, the GDR noted.
On the Shenzhen Stock Exchange, Qingdao Doublestar Co Ltd’s shares inched down 0.07 yuan or 1.70 per cent to close at 4.04 yuan on June 26 for a market cap of 3.36 billion yuan and 52-week range of 3.59-5.92 yuan, with 7.328 million shares traded or 100.00 per cent of the 65-day average of 7.327 million, according to the Wall Street Journal.
