GIZ scout opportunities for EU investors in Cambodia
GIZ scout opportunities for EU investors in Cambodia
A German business scout recently provided a detailed analysis of the Cambodian food and beverage procurement market for the benefit of potential European investors, during an event organized by the German Society for International Cooperation (GIZ), the German Agency for Economy and Development and local business chamber, German Business Cambodia (GBC).
Christoph Janensch, a business scout and representative of GlZ, highlighted the significant growth potential of Cambodian-based agribusiness sectors as of 2024; such as food processing and procurement, cold chain storage, organic segment development and domestic supply opportunities.
“Food processing still has a lot of growth potential,” said Janensch, noting that agriculture plays a very important role in Cambodia’s current and future economy.
He explained that outside of the Kingdom’s agricultural industries main products, namely rice, rubber and other industrial crops, the market also hosts a wide variety of other products that are relevant for export to the European market, including permanent crops such as bananas, cashews, coconuts, durian, mangoes and other fresh fruit.
Some of these food products have the potential to increase international exports considerably, said Janensch. For example, he explained that bananas were not exported from Cambodia until 2018, despite a considerable national yield.
However, this has increased more than tenfold since then, he said, with most of the exported products going to Chinese markets.
No fresh fruit is exported to Europe yet, he said, “Partly because there are no cold chains here, no storage that would do justice to this.”
However, opportunities for procurement by European Union (EU) buyers are not limited to bananas, noted Janensch; there are likewise favourable growing conditions for mangoes and cashews, for example, as well as the potential to expand exports of dried fruits such as mango and pineapple.
He also noted that many fruit products from Cambodia are potentially suitable for organic certification, increasing their value in international markets.
For example, he noted some mango and cashew nut exports have already gained such certification.
Cambodia has a low pesticide load in the soil and traditionally land tends to be used extensively with little fertilizer, meaning the soil is hardly contaminated.
“This makes the country very suitable for organic products,” he said. However, post-harvest processing also remains an underdeveloped sector industry-wide, ripe with opportunities for investors.
Janensch highlighted that while the country is characterized by a variety of beautiful, high-quality products, these raw products from the agricultural sector are hardly ever processed in the country itself.
Instead, processing often takes place in neighbouring countries.
“For example,” he explained, “Vietnam processes around 85 percent of Cambodian cashew nuts.”
He suggested that most Europeans have likely already eaten cashew nuts from Cambodia without realizing it because they came to the European market via Vietnam.
For this reason, food processing has huge growth potential in Cambodia for incoming investors, given that food processing companies can overcome some current obstacles.
The main obstacle is access to finance to grow, he said.
“We have high electricity and logistics costs, and customs clearance in Cambodia is still relatively slow,” he explained, “And, of course, the EU’s requirements are very high.”
There are also high post-harvest losses in Cambodia due to a lack of refrigeration and proper storage.
For these various reasons, Cambodia offers a largely untapped market for incoming investments.
“There is no competition at all for processing,” he stated, citing that only ten percent of agricultural products are processed within the country, which means that there is great potential for increased food processing industries.
Offering a nearby comparison, Janensch noted that Thailand processes 80 percent of its agricultural products in-country.
Janensch also underlined the potential for food processors to supply the domestic Cambodian food and beverage (F&B) market.
“We also have a lot of large supermarket chains here, at least in the capital, where food is very expensive. We have a lot of imports from Europe and the packaged food that you buy in supermarkets here is significantly more expensive than in Germany,” he said.
He explained that given this current situation, more products will naturally be produced locally, often by small to medium-sized enterprises (SMEs), which are significantly cheaper than imported foods.
This development should effectively supply the local market with cheaper, locally-produced products, and reduce the economy’s reliance on imported goods.
Janensch concluded that despite some obstacles, Cambodia is very business-friendly, regardless of the sector. It offers a high dollarisation rate and holds its status as one of the least developed countries, allowing Cambodian exports preferential market access to the EU.
Importantly, exports to the EU are expected to be duty-free until 2029, he concluded.
