June 20, 2011

Cambodia launches labour push


The Phnom Penh Special Economic Zone is scouring the country for workers for its multinational factories.
Workers move boxes in a factory in the Phnom Penh Special Economic Zone.

The Phnom Penh Special Economic Zone has announced a Cambodia-wide recruitment drive amid a shortage of skilled labour in the country as the PPSEZ looks to position itself as a leading destination for investment in Southeast Asia.

One of only a handful of 20 Cambodian special economic zones that has proven a success so far, the PPSEZ has already attracted large multinationals from East Asia including Ajinomoto, Yamaha and Mineaba as well as Sumitomo Electric Industries, a Fortune 500 company. But PPSEZ managing director Hiroshi Uematsu said a lack of suitable workers threatens to hold back the project amid rising interest from foreign firms as the global economy continues to recover.

"Demand for investment in Cambodia is in fact so high that our partners often have a hard time finding a large number of workers at all skill levels," he said, announcing the recruitment drive on May 19.

Mr Uematsu told the Bangkok Post that the PPSEZ has already created 5,000 jobs for Cambodians during phase one of the project and estimates a further 5,000 new jobs will be made available over the next 12 months as more companies come to it and those already present expand further.

He said talks are continuing with about 10 new multinational investors, without naming the companies, following the start of phase two of the project ahead of schedule this past February.

"An increasing number are approaching us day by day," said Mr Uematsu.

Companies that have decided to invest in the PPSEZ have seen smaller supply companies join them, given the market opportunities in Cambodia's underdeveloped industrial sector. Ajinomoto previously sourced its packaging from Singapore, but after opening a new packaging plant in the zone last October, a Chinese company, Xishan, has come in to fill the void.

Similarly, the Japanese machine parts manufacturer Minebea is starting to attract a host of supply companies to the PPSEZ, said Mr Uematsu, since confirming last December the launch of a US$61-million investment from this year.

"Due to the 'Minebea impact', several big names who are customers of Minebea are considering investment in the PPSEZ," he said.

Minebea announced it alone would employ up to 5,000 people in the longer term in the PPSEZ.

The zone offers tax exemptions on imported raw materials, construction materials and equipment, while Cambodia also enjoys zero tariffs on exports to the EU as a least-developed country under the "Everything but Arms" programme.

Similarly, Asean is looking to move towards zero tariffs on trade in most goods by 2015 and as a bloc has agreed bilateral free-trade agreements with South Korea, China, Japan, Australia and New Zealand in recent years, meaning investors in Cambodia increasingly enjoy tax exemptions on exports to a host of major economies.

Analysts say this has helped the country attract foreign investment despite risk factors including the available pool of workers. In terms of people risk, the US-based multinational reinsurance and recruitment firm Aeon Hewitt last November ranked Phnom Penh second to last out of 32 cities in the Asia-Pacific due to low levels of education and skills in Cambodia. Only Dhaka scored lower.

"High-ranked management staff were very difficult to find," said Kosal Sim, human resources manager at Ajinomoto in the PPSEZ, the highest-level Cambodian at the company's Phnom Penh plant.

Of the 160 or so employees at the factory, only seven are foreign including President Ichiro Nishimura of Japan, but all of these fill managerial positions, said Kosal Sim, including six Thais brought over from Ajinomoto's factories in Thailand. Almost all the Cambodian employees work in the firm's packaging plant in the PPSEZ, with the lowest paid receiving $73 a month, about the same as the average salary of a Cambodian working in the garment sector, the country's biggest export industry.

Although Cambodia registered unemployment of just 2% last year, the International Labour Organisation (ILO) found 80% were in low-paid, vulnerable work. This has prompted many Cambodians to seek better-paid low-skilled work in Thailand, Malaysia and South Korea among other countries.

The ILO said that from 2007-10, some 100,000 Cambodians registered to work in Thailand, but many more are thought to be working illegally in the country.

Following a series of scandals involving recruitment agencies in Phnom Penh that place Cambodians in jobs abroad, Cambodian Prime Minister Hun Sen in March appealed to citizens to stay in the country to seek work.

"We've had a lack of labourers recently," he said in a speech in Phnom Penh, warning there would be a clampdown on human traffickers taking workers illegally to countries including Thailand.

In a bid to develop skills to help supply the necessary labour to investors, Mr Uematsu said the PPSEZ plans to set up a vocational training school with the government and companies operating in the zone.

"By getting cooperation of investing companies, we can provide more practical training programmes that meet investors' needs," he said.

"We will do a continuous campaign throughout Cambodia to encourage young Cambodians to work in the PPSEZ, not abroad."

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