Cambodia is aiming to persuade all of the World Trade Organization’s (WTO) least developed country members to propose a further suspension of the opening of their service sectors to the WTO’s rich members as the 2013 deadline for the proposal draws nearer.
The least developed countries (LDCs), which benefit greatly from quota and duty-free exports from the WTO’s rich member countries, will have to open their service industries to those countries by 2013.
However, Cambodia’s commerce minister claim that most LDC members are not ready, and further postponement is needed.
The UN has listed 49 of the world’s countries – including Cambodia – under the “least developed” classification. Thirty-three of these nations are WTO members.
“Starting from 2013, we LDCs are expected to open our service industries to all of the WTO’s rich members,” said the Minister of Trade and Commerce Cham Prasidh.
“So, we [Cambodia] will be an initiator in gathering all LDCs to request the WTO further suspend this obligation,” he added.
He said he has already discussed the issue with the director general of the WTO, Pascal Lamy, during the 21st ASEAN Summit in Phnom Penh last week.
According to Cham Prasidh, Lamy gave him the green light to start working with the other LDCs to request the postponement.
“In the near future, we’re going to open it for the rich members. So, the LDCs will propose a further suspension on the issue,” said Cham Prasidh.
Hiroshi Suzuki, CEO and chief economist of the Business Research Institute for Cambodia, said Cambodia will not be affected by the postponement as the country has already opened its service sector to the WTO’s rich countries through foreign direct investment (FDI).
However, some LDCs have not opened their service sectors to the rich countries, and this will be an issue, he added.
“Cambodia has already opened their economy,” said Suzuki.
“Cambodia allows 100 per cent foreign investment to almost all of its sectors, including services. It has had great success in inviting FDI to its service sector,” he said. Suzuki added that FDI has positively affected Cambodia by helping it become more competitive and strengthening its economy.
“Many foreign banks enjoy high profits,” he said. “Japan’s AEON will open their first flagship complex in Phnom Penh. FDI such as this helps the growth of the Cambodian economy and also strengthens Cambodia’s competitiveness,” said Suzuki.
The reason other LDCs have not opened their services sector up for FDI is to protect domestic companies, said Suzuki.
“Other least developed countries have not allowed FDI into their services sectors in order to protect domestic companies. If there are some weak domestic companies in the services sector, they will lose with strong FDI intrusion,” he said.
To contact the reporter on this story: May Kunmakara at [email protected]