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Bilateral Vietnam trade up with increasing imports

Bilateral Vietnam trade up with increasing imports

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Vietnamese goods are displayed at a trade fair in Phnom Penh earlier this year. Bilateral trade has increased this year. Photo by: Marisa Reichert

CAMBODIA’S bilateral trade with Vietnam has increased by 41 percent to the end of May compared to the period last year, according to figures from the Vietnam Trade Office in Phnom Penh.

The growth comes due to the increased presence of Vietnamese investors in the Kingdom, said Tran Tu, a trade attaché at the trade office.

“Now they are carrying out their investments, so they need to import raw materials and machinery in order to do business here. That’s why our exports to Cambodia rose dramatically,” he said.

Total bilateral trade for the first five months reached just over US$1 billion, a jump from $718 million in the same period last year, according to the Vietnam Trade Office in Phnom Penh.

Vietnam’s exports to Cambodia soared 139 percent in that time to $891 million, up from $598 million. However, the Kingdom’s shipments to Vietnam rose just 3 percent to $124 million, an increase of $4 million year-on-year, according to the data.

Minister of Commerce Cham Prasidh yesterday pointed to the commitment by both countries to reach $2 billion in total trade by the end of 2011 as a reason for the increase.

“What is important is that we continue to facilitate trade at the borders to allow for the flow of products between countries,” he said.

Tran Tu said the global financial crisis had slowed the flow of Vietnamese money to Cambodia, but added it has since returned.

He also credited the regular promotion of trade between the two countries, such as through trade fairs, for the growth.

He claimed 330 Vietnamese companies presently operate in the Kingdom, with a large presence among the rubber, manufacturing, agri-business and hospital industries, among others.

Approved investment from neighbouring Vietnam dropped last year to $115 million from $210 million in 2009, according to figures provided by the Council for the Development of Cambodia.

Tran Tu said steel, food and chemical products were among the top exports from Vietnam, while Cambodia shipped tobacco, rubber and seafood.

At the same time, ministry officials claimed rising prices in Vietnam weighed on Cambodia’s exports to the country.

“Vietnam has a very high inflationary rate, so this can impact the demand there,” said Kong Putheara, director of the statistics department at the Commerce Ministry.

Vietnamese inflation reached 19.78 percent in May, the highest since December 2008.

Earlier this month, the World Bank said Vietnam’s government should maintain a tight monetary and fiscal policy, including higher interest rates and tougher credit, until the currently “intolerable” inflation rate is less than 10 percent, the World Bank said.

Officials will target reducing inflation to less than 10 percent by 2012, Deputy Prime Minister Nguyen Sinh Hung said on June 9. ADDITIONAL REPORTING BY BLOOMBERG

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