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Chinese-owned solar panel plant approved

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Workers install solar panels at SGC. SUPPLIED

Chinese-owned solar panel plant approved

The government has approved L-Q New Energy Co Ltd’s application to build a solar panel factory with a capital investment of $84 million for export to international markets, namely the US.

The Council for the Development of Cambodia (CDC) on July 18, which issued a final certificate of registration to L-Q New Energy, said the factory to be located in the UBE Snoul Special Economic Zone in Trapaing Sre village, Pi Thnou commune, Snuol district, Kratie province would create some 1,000 new jobs.

The approval follows US President Joe Biden’s June announcement on tariff exemptions on solar cell and module imports from Cambodia, Malaysia, Thailand and Vietnam.

The tax exemption is aimed at ensuring that the US has access to sufficient supply of solar cells and modules to meet electricity demand as energy demand continues to grow.

According to the Ministry of Commerce, L-Q New Energy was incorporated on January 19, with investors from neighbouring Jiangsu and Shandong provinces in eastern China.

Cambodia Chamber of Commerce (CCC) vice-president Lim Heng told The Post on July 19 that investment in solar panels had been gradually rising on the back of the US-China trade dispute.

The investment trend in solar panel production in Cambodia has been rising ever since the US announced tariff exemptions, he said.

“Rising global fuel prices and environmental considerations will encourage more solar panel production in Cambodia, which has favourable investment conditions for all sectors,” Heng added.

He pointed out that solar panels were not only used for electricity generation for buildings but also the automotive industry.

Hong Vanak, director of International Economics at the Royal Academy of Cambodia, said the expanding global demand for energy coincided with the increased attention on environmental protection and the shortage of energy supplies due to the Ukraine conflict. This has only spurred more investment in renewable energy, especially solar.

He said the removal of import tariffs by the US is an opportunity for Cambodia to attract companies to invest in the solar production plants to take advantage of the US market from here.

“The solar panels will not only enhance Cambodia’s capacity to export to international markets, but would also steer it towards greater use of renewable energy,” Vanak said.

In a previous interview, commerce ministry secretary of state Seang Thay told The Post that the tax breaks for the production of solar cells and modules is another chance for Cambodia to expand into the area of manufacturing.

This, he said, is because Cambodia’s investment environment and the ease of doing business is good, thanks to the new Law on Investment.

“As long as there is a good market, investors will expand their production. In the past, the US provided exemptions on bags and travel goods, which has led to significant growth in production in this sector in Cambodia,” Thay said.

Ministry of Mines and Energy director-general for energy Heng Kunleang said the government has drawn up a policy to encourage the production of solar panels and electrical equipment spare parts for domestic use and export.

“The US is not the only one promoting green energy or renewable energy and taking part in the fight against climate change.

“Cambodia too continues to urge producers and consumers to make the transition to use 50 per cent of renewable energy out of the total consumption by 2040, from 12 per cent solar consumption in 2021,” he said.

In 2021, Cambodia exported 54,319.83 tonnes of solar panels valued at $273.87 million, an increase of more than 27 per cent in terms of tonnage compared to 2020.

A large chunk of the exports, around 53,188.19 tonnes or $256.88 million, was to the US alone, according to a report by the General Department of Customs and Excise.

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