Cambodia to Build a One-stop Building Material Mall

• Proeksa Meas
• 31 December 2015
• Construction Focus
• 2068 Views

A Chinese building group is working on a construction venture in Cambodia to develop a huge building material mall in Phnom Penh where buyers can source any construction-related materials they need from manufacturers worldwide.

Construction on the 30,000 sqm two-floor mall is expected to start soon, according to Onkha Hann Khieng, Vice President of Cambodia Constructors Association (CCA) who recently represented Cambodia at the signing of the MoU with the China-ASEAN Construction Industry Cooperation Committee in May. The 5-year MoU was signed on the sidelines of the establishment of the China-ASEAN Committee in Nantong City.

The proposed market will only feature middle to high-end materials, given the current demands of the Cambodian construction sector. “Now, the Chinese side wants us to propose the location and design of the mall for them to consider,” Onkha Hann exclusively told Construction & Property Magazine.

With the Chinese preference for a downtown location to attract both retail and wholesale buyers, Okhna Hann indicated that one location being considered was in the Chroy Changvar Satellite City and that there were three options for the establishment of the mall. First, the Cambodian side (CCA) builds the market and operates it by itself. Second, the CCA builds the market and rents it to the Chinese, and third, the CCA establishes a joint venture with the Chinese to build and run the market.

“We will hold a meeting with our CCA members about this business and will see who can afford to join as shareholders and the approach of how to establish this joint venture because it is a golden opportunity for them,” he said. “However, if no CCA members are able to join, I and Onkha Pung Kheav Se, CCA Chairman, will co-invest in this market business.”

Once the market is open, Okhna Hann believes it can bring down the prices of construction materials in the Cambodian market since they will import materials in bulk amounts that will not only benefit contractors and end-users, but the economy in general.

“If you go to developed countries, you will see that they don’t outsource construction materials from many places like here in Cambodia. They just go to one market and buy everything they need and deliver those materials to their construction sites at one time”, he stressed. “So, it will help construction companies in term of sourcing materials as they don’t have to survey the prices from a range of suppliers unlike today.”

“When contractors get cheaper materials they can quote cheaper costs from developers which means end-users also get cheaper property prices,” he added.

However, despite seeing the benefits of these kinds of markets in developing countries, Okhna Hann believed there will be some slightly negative impacts on the kingdom’s existing material suppliers regarding price competition.

“Now society and the world are following this trend, and we can’t stop it since we have applied the free-market economic system,” he said. “However, I believe local businesses related to concrete, cement, iron, and steel won’t be strongly affected by this new market.”

The MoU also opens the gate for China to absorb back Cambodian-made building materials like luxury wooden doors and handicraft products, and sell them worldwide. This will boost local building and handicraft-related businesses and also create more jobs for local people that align with the Cambodian government’s efforts.

But Varheng Dawuth, managing director of Camcona Trading (Cambodia) Co., Ltd, an active CCA member, said whether he is able to join as a shareholder for this mall depended on how the business, marketing, and strategic plans, along with the shareholder conditions, are defined. “If the plans are good and show potential, I will consider joining,” he said.

However, he recommended that the market should invite all the local and international brands that are already present in the kingdom to join as well so that the market can provide more options for buyers. “If we welcome local and international brands that already exist here, they will automatically join this market, and the market will surely be successful.”

Andre de Jong, managing director of Bosch in Cambodia and an active member of CCA, said: “This business concept is interesting. It is happening at the right time when the construction industry in Cambodia is experiencing a robust growth. Bosch is looking forward to working with potential partners to extend the distribution of our products to such markets.” Bosch is one of the world’s leading suppliers of power tools.