Exports to Indonesia rise in first 7 months but trade deficit persists
Exports to Indonesia rise in first 7 months but trade deficit persists
Despite the slowdown in international trade due to the global economy, bilateral trade between Cambodia and Indonesia has grown 22 per cent in the first seven months of 2023 compared to last year.
According to the General Department of Customs and Excise of Cambodia (GDCE), trade between two countries rose to $671 million in the period from $549.7 million last year, with exports to Indonesia increasing 41.5 per cent year-on-year to $24.3 million.
From January to July 2023, imports from Indonesia grew 21.4 per cent to $646.7 million, resulting in a trade deficit for Cambodia of $622.4 million.
Hong Vanak, an economics researcher at the Royal Academy of Cambodia, told The Post on August 23 that the trade volume between the two countries indicated that the exports are meeting people’s needs in the respective countries.
Indonesia is a large economy with a large population size, therefore its production capacity is stronger and cheaper, he said.
Cambodia’s exports are comparatively smaller to Indonesia’s imports due to limited production capacity in Cambodia and low population factors, which translates to lower demand.
But bilateral trade between the two countries is expected to increase because both are ASEAN members and parties to the Regional Comprehensive Economic Partnership Agreement, in addition to increasing Indonesian investment in Cambodia.
“As ASEAN members, we share good diplomatic relations. I am optimistic that trade between the countries would increase further. At the same time, Cambodia must strive to diversify its products and ensure quality standards to increase exports,” Vanak said.
According to him, a large amount of goods imported from Indonesia are used as raw material or complementary ingredients for production or processing in Cambodia, which are later exported to international markets.
On August 7, a Memorandum of Understanding on financial services was signed in Phnom Penh by representatives of both countries to increase the trust and attractiveness of traders and investors.
The cooperation followed through in a virtual meeting between former Cambodian Prime Minister Hun Sen and Indonesian President Joko Widodo on August 11 where the latter confirmed that Indonesia would purchase milled rice from Cambodia to meet its domestic demand.
In 2022, bilateral trade rose 48.3 per cent to $948.5 million from $639.7 million a year ago, GDCE stated.
The breakdown revealed that imports from Indonesia expanded 50 per cent to $911.7 million, while Cambodian exports increased 16 per cent to $36.8 million.
Based on the data, Cambodia experienced a trade deficit of $874.9 million.
