A report by Asia-Pacific business transformation consultancy TMX suggests Cambodia has the lowest operating costs in Asia, however, it did not rank as well in competitiveness.
TMX report (actually released in November 2021) states that Singapore is the most expensive country in Asia, while Cambodia and Myanmar are among the lowest-ranked for operational costs. Singapore was the top choice for companies with higher-value-added manufacturing with complex processes and automation requirements, however.
The report, entitled ‘The Great Supply Chain Migration – Breaking down the cost of Doing Business in Asia’ included the average costs of doing business in Asia and the corresponding country competitiveness across nine popular potential manufacturing locations were then classified into at least one of three stages of the manufacturing value chain – ‘basic assembly lines’, ‘developing supply chains’ and ‘early automation’.
The report looked at the following: labour, lease, logistics, utilities, and telecommunication costs and labour costs are the major components of total costs (up to 55% of average monthly operating costs.)
Cambodia and Myanmar were classified as being part of the first stage – ‘basic assembly lines’.
The Phnom Penh Post added that the average total operating costs for a manufacturing firm in Cambodia ranges from $65,313-220,125 per month (compared to Singapore at $366,561-853,450 and second-ranked Thailand at USD $142,344-291,730). Cambodia and Myanmar also offer the most affordable warehouse rental rates, at USD $2.5 and $3.4 per sqm per month.
Areas for Cambodia to Improve
TMX also classified Cambodia as “dormant countries” when it comes to logistics. A number of logistics infrastructure projects have been announced the in Kingdom however including the recent AEON hub being developed in Sihanoukville).
Myanmar and Cambodia also have the highest internet costs said the report, and both offer the lowest cost of labour, however, a large percentage of the labour force remains low-skilled, which may be more suited for basic assembly lines.
Megan Benger, Director – Supply Chain at TMX, who also co-authored the report added “Beyond direct operating costs, it is also imperative that businesses look at qualitative factors like business environment to have a clearer perspective of the market they are looking to set up or expand in.
Our findings show that while the markets in Asia are mostly on equal footing when it comes to the qualitative aspects, there remain significant differences between the markets.”