Can energy regime remain attractive for investments?
THE economic knock-on effects of the Covid-19 crisis, Ukraine conflict, trade and geopolitical friction among major powers, and a range of other global challenges are jeopardising Cambodia’s pursuit of an attractive electricity ecosystem for investors.
International oil prices have been exceptionally turbulent in the past couple of years, sending prices soaring across the world for fuel and electricity, which local observers emphasise must be kept comparatively low, as a chief motivator behind decisions to invest in any jurisdiction.
In a recent interview with The Post, Federation of Associations for Small and Medium Enterprises of Cambodia (FASMEC) president Te Taingpor commented that high fuel and electricity prices have significantly driven up production costs.
He claimed that Cambodia could appreciably improve its steady investment inflows, should it find a way to further reduce electricity prices.
Keeping fuel and electricity prices from rising will trim production costs, better enabling raw material processing, especially among small- and medium-sized enterprises (SME), as well as increases in domestic production capacity and exports, he added.
“When fuel prices – in addition to electricity rates – are stable and low, foreign investors will see opportunities,” he said, putting fuel and electricity prices among the main three expenses in the production process, along with raw materials and wages on labour.
On December 12, Prime Minister Hun Sen had signalled that a freeze on electricity rates may be extended indefinitely, amid elevated global fuel and coal prices, to keep costs down for businesses and ordinary Cambodians.
The premier was speaking at a meeting with overseas Cambodians in the Belgian capital of Brussels on the sidelines of the ASEAN-EU Commemorative Summit, which he would co-chair two days later along with European Council President Charles Michel.
Keo Mom, CEO of Ly Ly Food Industry Co Ltd, one of the Kingdom’s largest food processing enterprises, contended that Hun Sen’s proposition would inspire great confidence among investors and other electricity consumers.
She commented that the availability and cost of electricity tend to be among the first inquiries made by businesspeople interested in setting up an enterprise in a new jurisdiction.
“The lower the electricity rates, the lower the production costs, and that will help sharpen our competitive edge over other goods, made all around the world,” she said, adding that heightened fuel prices have adversely affected production in Cambodia.
In November, Keo Rottanak, director-general of power utility Electricite
du Cambodge, disclosed that the government disburses “about $120 million” a year in electricity subsidies to keep prices low and ensure ample domestic supply, which he said greatly improves people’s living standards.
And according to Minister of Mines and Energy Suy Sem, the government gives constant, careful consideration to the availability and provision of affordable, uninterrupted electricity supply to sustain people’s livelihoods.