Cambodia banks on FTAs to boost economy
Cambodia banks on FTAs to boost economy
The Cambodia-China Free Trade Agreement is expected to be finalised next month.This comes as the Kingdom strives to develop a range of policies and strategies to boost international exports, and establish bilateral free trade agreements (FTAs) with countries around the world.
Minister of Commerce Pan Sorasak, who led a working group meeting on preparing policies and strategies to negotiate FTAs, on Wednesday said bilateral agreements with partner countries are central to the ministry’s efforts to improve competitiveness and trade diversification.
He said FTAs are necessary to integrate the country into the regional and global economy. “These deals are aimed at broadening and opening up access to markets for a wide range of exports.”
Ministry spokesman Long Kemvichet told The Post on Thursday that the establishment of bilateral FTAs between Cambodia and other countries would provide the Kingdom with many economic benefits.
The Kingdom only participates in FTAs through the ASEAN framework agreements with other countries in the bloc, he said. “This marks the first step toward preparing more permanent free trade agreements.”
Cambodia previously enjoyed trade preferences from partner countries, he said, but as they were not legally bound to their provisions, they were free to withdraw at their discretion.
“To avoid an abrupt withdrawal, we need to negotiate agreements with binding obligations with partner countries,” he said.
The ministry said there are currently eight working groups responsible for studying and negotiating FTAs as well as formulating the Kingdom’s FTA strategy.
China is the first country to negotiate an FTA with Cambodia. With the second round of talks closing last month, the deal is expected to be finalised next month.
Two other possible deals are in negotiations, South Korea and the Eurasian Economic Union which is made up of five member countries – Belarus, Armenia, Russia, Kazakhstan and Kyrgyzstan.
Vichet said the UK, the US, Japan, Mongolia and India have not started FTA talks.
Royal Academy of Cambodia economic researcher Ky Sereyvath said FTAs would provide the opportunity to export goods at a competitive advantage to the signatory countries without paying taxes.
He said the push for FTAs is needed in the context of today’s international trade.
“Creating a trade agreement gives the government the opportunity to boost its potential product export market to partner markets leading to greater competitiveness,” said Sereyvath.
While the Cambodian situation has huge potential for agricultural and agro-industrial products, he said, their quality must be in line with international food standards.
“Cambodia will need to boost production and improve the quality of its products as FTAs bolster trade with other countries,” he said.
The Kingdom’s total import and export volume was valued at $36.7 billion last year, data from the National Bank of Cambodia shows.
Exports amounted to $14.53 billion and imports $22.19 billion, a year-on-year increase of 12.7 per cent and 18.6 per cent, respectively.
However, the Kingdom’s trade deficit with the rest of the world continued to widen last year to $7.66 billion, a 31.6 per cent increase compared to 2018.
