The Kingdom’s top diplomat voiced optimism that the Cambodia-Korea Free Trade Agreement (CKFTA), which entered into force on December 1, will further enhance trade and investment between the two countries, according to the foreign ministry.
Minister of Foreign Affairs and International Cooperation Prak Sokhonn was speaking on December 7 during outgoing South Korean ambassador Park Heung-kyeong’s farewell call on him, the ministry noted in a statement.
A free trade agreement (FTA) is an international treaty between two or more economies designed to reduce or eliminate certain barriers to imports and exports among them, generally while safeguarding safety, security, health and other legitimate regulatory objectives. Such a pact can also serve to facilitate and promote greater economic ties among signatories in areas such as investment and intellectual property protection.
The statement said that, at the meeting, Sokhonn highlighted some of the results of the “good” economic cooperation between the two countries: an uptick in Cambodian mango exports to South Korea and other notable bilateral trade gains; the entry of recognised Korean firms into the local market as well as inbound Korean investment flows; and Korean assistance in the healthcare domain.
The ambassador offered his congratulations to Cambodia for its “successful” ASEAN chairmanship and hosting of ASEAN Foreign Ministers’ Meeting (AMM), dual summits, and related meetings, the statement noted.
At a bilateral meeting with Prime Minister Hun Sen on the sidelines of the dual ASEAN summits in Phnom Penh last month, South Korean President Yoon Suk Yeol also hailed the economic cooperation and increasing trade between the two countries.
Yoon predicted that the CKFTA would provide a further boost to trade, and in particular South Korean investment in Cambodia.
At the meeting, Hun Sen drew attention to the fact that soaring inbound investment from South Korea has placed it as Cambodia’s second-largest source market. The premier also asked Yoon to encourage more Korean investment in the Kingdom after the CKFTA takes effect.
National Bank of Cambodia (NBC) statistics confirm that South Korea accounted for 11.9 per cent of cumulative foreign direct investment (FDI) inflows into Cambodia between August 5, 1994 and December 31, 2021, second only to the 43.9 per cent recorded by the Greater China region – comprising mainland China, Hong Kong, Macau and Taiwan.
The CKFTA is largely seen as an initiative of Hun Sen, who brought up the idea during a state visit by former South Korean President Moon Jae-in in March 2019.
To recap, formal CKFTA negotiations were launched on July 9, 2020 by the two countries’ trade ministers, and after 12 rounds of talks, the agreement was signed on October 26, 2021.
The Cambodian National Assembly (NA) ratified the CKFTA on December 29, 2021, and the King on January 29, 2022 signed a Royal Code promulgating the bill that authorised the deal’s ratification.
Following numerous delays, the South Korean NA ratified the deal on September 27, 2022, and after completing its final internal procedures, Seoul on October 2 deposited its instrument of ratification – a document by which a country formally agrees to be bound by a treaty – initiating the 60-day countdown for the CKFTA to come into effect, on December 1.
Under the CKFTA, coupled with the Regional Comprehensive Economic Partnership (RCEP), the Kingdom will lift tariffs on 93.8 per cent of goods traded, with South Korea scrapping duties on 95.6 per cent, Yonhap News Agency recently reported citing the South Korean trade ministry.
Ministry of Commerce undersecretary of state Penn Sovicheat has also noted that the CKFTA will provide more than 10,000 Cambodian items duty-free access to South Korea.
Speaking at a workshop late last month, commerce minister Pan Sorasak stressed that the CKFTA would complement the RCEP and ASEAN-Korea Free Trade Agreement (AKFTA), and expressed confidence that the trade deals would give a substantial leg-up for Cambodia-South Korea trade and the creation of additional export opportunities.
The Cambodia-South Korea merchandise trade stood at $658.898 million in the first 10 months of 2022, up 3.25 per cent year-on-year, according to the General Department of Customs and Excise (GDCE).
Cambodian exports to South Korea amounted to $190.529 million, up 21.57 per cent year-on-year, and imports $468.369 million, down 2.72 per cent. The Kingdom’s trade deficit with the East Asian nation for the 10-month period shrank by 14.44 per cent on a yearly basis to $277.840 million.
The Cambodian-South Korean commodity trade was relatively slow in October, reaching $58.46 million, up 2.0 per cent year-on-year and 16 per cent month-on-month, while the Kingdom’s exports were to the tune of $15.74 million, up 23.7 per cent year-on-year but down 13 per cent month-on-month.