Brick prices climb to towering highs on demand from Sihanoukville
Brick prices climb to towering highs on demand from Sihanoukville
Brick prices in Cambodia have risen sharply in the last year, a trend that has accelerated over the first two months of this year due to growing demand from the rapidly developing coastal town of Sihanoukville.
The price of 10,000 bricks hovered around $180 early last year, but that price has more than doubled and now stands closer to $400 according to Chheang Suyheang, the president of two brick kiln associations representing more than 100 factories in Kandal province.
“The demand for bricks this year is increasing strongly compared to years before, and especially there are many buyers from Preah Sihanouk province,” he said.
While he declined to give the number of bricks his member factories had sold, he noted that it was becoming difficult to meet demand.
“In the past, we always have bricks left at the factory to sell, but now . . . every time the bricks are completed, buyers come to buy them all.”
The cost of a pallet of 10,000 bricks has jumped more than $100 in the last two months alone, according to Suyheang, who said it is now at the highest level since a brief spike in 2008 caused prices to exceed $700.
Poun Kry, an owner of a brick factory in Kandal province’s Ksach Kandal district, also credited the boom in demand to developers in Sihanoukville. The coastal beach town has seen a surge of Chinese investment in the last year, resulting in a number of new development projects while also raising tensions between Chinese and Cambodian businesses in the city.
But while higher prices and greater demand usually means bigger profits, it’s not all good news for Cambodia’s brick makers.
The cost of raw materials used to make bricks has also been rising, according to Kry, and finding a consistent labour force has been a struggle.
“Brick production is a kind of business that needs a lot of workers, and we always have trouble to deal with the big turnover of workers when there are bigger orders from clients,” he said. “Our challenge now is we don’t have enough workers to help us produce enough bricks to meet the demand.”
In December 2016, local rights group Licadho released a report alleging widespread illegal use of debt bondage and child labour at brick factories, based on interviews with more than 50 workers at sites around Phnom Penh and in Tbong Khmum province.
The report, entitled Built on Slavery, found that “debt bondage is widely used by factory owners as a way of guaranteeing themselves a long-term, cheap and compliant workforce”.
Small-scale construction companies could be hurt by the recent rise in brick prices, but a boom in the construction sector may be enough to offset the increased costs.
Net Sothea, owner of Thea Srun Construction Materials Supply in Phnom Penh, sells mostly to retail users and only clears about 50,000 bricks per month – much less than the larger brick operations operating around the capital.
Reached yesterday, Sothea said that he was selling bricks at $510 per 10,000, up more than $200 over last year, and each week the price continued to rise by about $30. He added that it wasn’t just brick prices that were affecting his clients, most of whom were working for small-scale construction outfits.
“If it was only the brick price alone that increased, it should not be a big issue,” he said. “But I have observed that other construction material [prices] are also higher.”
If a sub-contractor agreed to take on a project at a set price last year, they could now be faced with higher costs and thus a smaller profit margin, or even a loss, due to the rise in prices, he said.
But the harm of an increase in material prices was offset by the growing demand for contractors, according to Chiv Sivpheng, the secretariat of the Cambodia Constructors Association.
“I think the economy is growing stably and people have more income to afford houses, driving the increase in construction,” Sivpheng said. “Even though the price of a house keeps increasing a little bit, people still dare to buy them because they have higher income and have options, like paying through installments.”
The Credit Bureau of Cambodia reported a 62 percent increase in mortgage applications across the country during the fourth quarter of last year. About 49 percent of the $4.54 billion in total consumer debt held by Cambodians at the end of last year was in the form of mortgages, according to the bureau’s report.
