POIPET, BANTEAY MEANCHEY, CAMBODIA -- Changes in local customs laws have prompted Sumitomo commit roughly $180 million to establish an EMS subsidiary here, the company announced.

Sumitronics Manufacturing (Cambodia) Co., will provide contract electronics manufacturing services in Poipet, on the Cambodian-Thailand border, in collaboration with affiliate Alpine Technology Manufacturing (Thailand) Co., and Sumitronics Thailand.

Sumitronics expects to hire 50 workers to launch operations.

SMC is the company's effort to provide low-cost, reliable EMS to Japanese automotive and consumer electronics makers engaged in manufacturing in Thailand. Company registration will be completed in April, with manufacturing scheduled to begin in October. The project will cost a total of 2 billion yen ($177.5 million), with the aim of producing revenue worth 4 billion yen in five years.

In a statement, Sumitomo said the establishment of the ASEAN Economic Community at the end of 2015 led to the removal of customs duties. "[With] further economic integration planned between now and 2025, especially in the area of liberalization ... the Greater Mekong Subregion is expecting to experience an ongoing ripple effect from economic development centered on manufacturing in Thailand. 

"Cambodia enjoys a geographical advantage, possessing logistical infrastructure and a plentiful supply of young, low-cost labor. It benefits from companies seeking to safeguard their Thai operations through a 'Thailand-Plus-One' strategy, with the result that many foreign-owned companies have already entered the market, creating a cross-border economic zone."

Thailand-Plus-One refers to a business model whereby Japanese businesses concentrated in Thailand’s industrial cluster transfer the labor-intensive aspect of their work to special economic zones close to the border in neighboring countries.

Poipet is located in the Southern Economic Corridor close to the Thai border and is mainly expected to develop as a manufacturing site targeting Thailand. 

In announcing the plan, Sumitomo said AOTH is a "leading EMS business in Thailand," with high-level manufacturing technology and "meticulous" quality control. "By combining AOTH’s strength in manufacturing technology with the business management and marketing expertise of Sumitomo, SMC will be able to quickly establish its business foundation in Cambodia." Financial details were not disclosed. Sumitomo owns a 43% stake in AOTH, which employs 850 workers in Thailand.

Sumitronics has been an EMS provider since the 1990s and operations in eight countries including Japan. It ranked no. 30 on the CIRCUITS ASSEMBLY EMS Top 50 in 2014 with sales over $600 million. 

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