Cambodia - Industry

2009-10-17T20:47:00.000-07:00

Industrial activity has traditionally centered on the processing of agricultural and forestry products and on the small-scale manufacture of consumer goods. Rice milling has been the main food-processing industry. Industrial expansion came to a virtual halt in 1970 with the outbreak of war. A few sectors (such as textiles and beverages) enjoyed a short wartime boom due to military orders, but losses in territory and transport disruptions had caused a rapid decline in activity by 1973. The Pol Pot government placed all industries under state control in 1975. In the course of the next four years, some 100 industries were abolished or destroyed. When the PRK took over in 1979, industrial plants began to reopen. By late 1985 there were a reported 60 factories in the state sector producing household goods, textiles, soft drinks, pharmaceutical products, and other light consumer goods. Most plants operate below capacity because of poor management and shortages of electricity, raw materials, and spare parts. There is little information on the small Cambodian private sector. The overall value of local and handicrafts industries in 1984 was estimated at about 50% of the output value in state industry.

Efforts at recovery continued in the early 1990s, but were hampered by dilapidated equipment and shortages that continued to affect industrial production, principally textiles and rubber production. For instance, following the cutback of assistance from the former Soviet Union in 1990, Cambodia's primitive industrial sector suffered from raw material shortages; three of six government-owned textile mills shut down because of shortages of cotton. When major Soviet oil supplies were depleted local companies imported oil, but the cash-strapped state companies suffered electricity brownouts daily. Major industries include rice milling, fishing, wood and timber products, rubber (largely abandoned since 1975), cement, and gem mining. Cambodia has significant mineral deposits of gold, silver, iron, copper, marble, limestone and phosphate, and a gem industry. Construction in urban areas boomed with the signing of the Paris peace accords in 1991. After Cambodia opened oil fields to foreign investors in February 1991, sixteen companies expressed interest in oil exploration. In January 1994 it was reported that five oil companies were conducting offshore oil and gas exploration.

In 1996, clothing industry exports more than doubled. Some 36 factories employed around 20,000 people. The average annual industrial growth rate for 1988 through 1998 was 8.5%. Growth slumped to 7.7% in 1998 due to the effects of the Asian financial crisis, civil, drought, and political disruptions. However, recovery was rapid in the industrial sector as it posted growth output of 12%, 29%, and 12.5% for 1999 to 2001. The garment industry grew by 50% during this period. In 2000, industry constituted 20% of total GDP.