The Cambodia Business Association is optimistic that the South Korean market will absorb more Cambodian products after a free trade agreement (FTA) is established, as officials from both countries prepare for the first round of negotiations next month.
The two countries signed a joint feasibility study agreement on a potential FTA in November aiming to expand bilateral investment volume.
It was signed by Cambodian Minister of Commerce Pan Sorasak and South Korean Minister of Trade, Industry and Energy Yoo Myung-hee during the two-day Asean-Republic of Korea Commemorative Summit in the South Korean port city of Busan.
Cambodia Rice Federation secretary-general Lun Yeng told The Post on Tuesday that although the Kingdom has yet to export rice to South Korea, the start of FTA negotiations will pave the way for a new market for the Kingdom’s rice sector.
“I think our milled rice will have a new destination if both sides are open to the free market, and if Korea provides a special quota for Cambodian rice exports – somewhere in the range of 30,000 to 50,000 tonnes, given how large the Korean market is.
“Even if the Koreans don’t consume our rice, some 50,000-60,000 Cambodian workers [there] will,” he said.
Cambodia Chamber of Commerce vice-president Lim Heng told The Post that the start of FTA negotiations was part of the government’s strategy to invigorate the Kingdom’s economic growth.
“This is a promising omen. If we clinch an FTA with Korea, we will draw in more Korean investors to set up factories in Cambodia to produce goods for export,” he said.
Ministry of Commerce spokesman Seang Thai told The Post that the two countries had completed the joint feasibility study and had agreed to go through with the internal procedures to start negotiations next month.
The talks will be held via video conferencing due to the Covid-19 pandemic, he said.
Cambodia has the potential to export garments, footwear and leather goods as well as agricultural products to the Korean market, while it would import products such as machinery, computers and electronic devices, he said.
In addition, the FTA will encourage further investment between the two countries, he said.
“The study found that there are mutual benefits – we have our own respective economic potential. If we agree a bilateral FTA, the strengths of each country will be driving catalysts for mutual economic growth,” said Thai.
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 third round of talks closing earlier this month, the deal is expected to be finalised by the end of this year.
Another working group is in preliminary negotiations with the Eurasian Economic Union which is made up of five member countries – Belarus, Armenia, Russia, Kazakhstan and Kyrgyzstan.
It released a report on the results of its assessment of the potential FTA deal in December.
The remaining five working groups target FTAs with the UK, the US, Japan, Mongolia and India. All are currently in preliminary engineering phases.
During a visit to South Korea in February, Prime Minister Hun Sen said bilateral trade between Cambodia and South Korea reached over $1 billion last year, up more than 36 per cent from $756 million in 2018.
The Kingdom exported $335 million in goods and imported $696 million last year, he said, noting that exports to South Korea mostly comprised of clothes, shoes, travel goods products, beverage, components for electronic equipment, rubber, medical and agricultural products.
Meanwhile, he said, Cambodia mainly imports vehicles, beverages, electronic equipment, home appliances, medical and plastic products.