• Economics

Set-up Deal Signed for Sihanoukville Logistics Hub

• By Phoung Vantha
• April 19, 2023 6:47 PM

PHNOM PENH — International Finance Corporation (IFC), a member of the World Bank Group, has signed a deal with the Ministry of Public Works and Transport to set up a public-private partnership (PPP) for a logistics complex in Sihanoukville province.

The aim is to help Cambodia deliver on its aim to become a logistics hub in Southeast Asia.

The agreement will see IFC — as the exclusive lead advisor — structure the PPP transaction and support the government to conduct an international competitive tender to select a private developer.

The project is expected to be developed in phases, with a capital cost of about $200 million.

“The Sihanoukville Logistics Complex is one of the two priority logistics hubs to be developed in Cambodia,” said Sun Chanthol, Minister of Public Works and Transport.

“By working with IFC, we can leverage their global expertise as we explore best options to leverage private sector engagement in the development of this critical logistics infrastructure in the country.”

With its strategic location in Cambodia's coastal south-west and well connected to roads, railways and an airport, the complex will be able to supplement the Sihanoukville port.

This is Cambodia's only international and commercial deep-sea port, handling two-thirds of the container throughput in the country.

A modern and transport-integrated logistics complex supporting the port will help accelerate movement of exports and imports and reduce port congestion.

The project will improve efficiency and lower logistics costs in Cambodia, which are among the highest in East Asia and one of the key bottlenecks to competitiveness and diversification.

The developer is expected to finance, develop, and operate the infrastructure, facilities, and systems within the complex under a long-term PPP contract with the government.

The winning tender is likely to be accepted by late 2024, with the hub to be constructed over three years.

Asad Yaqub, IFC resident representative for Cambodia, said, "Large-scale investments in infrastructure are vital to support Cambodia's export-oriented manufacturing industries and boost the country's supply chain and logistics connectivity with the region.

“With IFC's support, this is a project which will be structured in line with global best practices to create a competitive market and draw qualified investors.

“Bringing in private sector financing will help reduce the burden on the country's finances and also set a precedent for developing transport and logistics PPP transactions in the country.”

IFC is the largest global development institution focused on the private sector in emerging markets.

In fiscal year 2022, it committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost prosperity.