The Cambodian-Vietnamese commodity trade topped $5 billion in the first 10 months of 2022, surging by over one-fifth on-year, with a sobering $1.7 billion deficit in favour of Vietnam, according to Customs, an import-export gap expected to narrow in the coming months as local harvest seasons progress.
In the January-October period, the two-way commodity trade stood at $5.002 billion, up 20.54 per cent year-on-year, according to the General Department of Customs and Excise (GDCE), falling behind the pace needed to hit the $10-billion full-year goal proposed by the leaders of both countries
Cambodian exports to and imports from Vietnam amounted to $1.664 billion and $3.337 billion, respectively, up 2.77 per cent and 31.91 per cent year-on-year. The Kingdom’s trade deficit with its neighbour for the 10-month period expanded by 83.77 per cent on a yearly basis to $1.673 billion.
In October alone, the Cambodian-Vietnam commodity trade came to $368.20 million, up 4.51 per cent year-on-year but down 5.48 per cent month-on-month, while the Kingdom’s exports were to the tune of $104.45 million, down 2.41 per cent year-on-year but up 15.32 per cent month-on-month.
In terms of monthly trade deficits with Vietnam, October’s $159.3 million figure was a 23.56 per cent drop from September’s $208.4 million, which had been up 8.28 per cent from August’s $192.5 million.
Cambodia Chamber of Commerce (CCC) vice-president Lim Heng told The Post that the trade deficit with Vietnam would not pose significant risks to economic growth in the Kingdom, explaining that countries lower on the development ladder tend to require more raw material imports for production and processing for export.
Heng also contended that the deficit would shrink towards the end of the year as Cambodia harvests greater amounts of agricultural products to be sold to Vietnam, especially paddy rice, cassava and cashew nuts.
While the Kingdom mainly exports agricultural products to Vietnam, notable imports from its neighbour include steel and construction materials, oil, fruits and vegetables, fertilisers and agricultural machinery, he said.
“I am optimistic that the trade volume between the two countries will keep rising, underpinned by a suite of new strategies launched at a meeting between Cambodian Prime Minister [Hun Sen] and [his Vietnamese counterpart] Pham Minh Chinh to boost bilateral trade,” Heng added.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, ascribed the steadily increasing trade volume with Vietnam to improved relations between the two governments and private sectors, adding that membership in the Regional Comprehensive Economic Partnership (RCEP) will push up two-way imports and exports.
He also pinned the trade deficit on Vietnam’s larger production capacity. “It’s a matter of fact, because Vietnam has a large population and is equipped with strong production power, hence they always have an export advantage over Cambodia,” he said.
But, offering a silver lining, he predicted that the Kingdom’s commodity diversification efforts would gradually narrow the gap.
Cumulative foreign direct investment (FDI) inflows into Cambodia between August 5, 1994 and December 31, 2021 amounted to 168.8 trillion riel ($41.0 billion), rising by 11.2 per cent from the nearly 152 trillion riel recorded by end-2020, according to the National Bank of Cambodia (NBC).
Vietnam was the fourth largest investor in the Kingdom with $2.5 billion, or a 6.1 per cent market share, after the Greater China region ($18.0 billion; 43.9 per cent), South Korea ($4.9 billion; 11.9 per cent) and Singapore ($2.7 billion; 6.5 per cent). The Greater China region comprises mainland China, Hong Kong, Macau and Taiwan.
For reference, August 5, 1994 was the day when Royal Decree No 03/NS/94 promulgated the old Law on Investment and established the Council for the Development of Cambodia (CDC), the government’s highest decision-making body for large-scale investments.
In 2021, Cambodian-Vietnamese commodity trade clocked in at $5.129 billion, up 31.24 per cent over 2020. The Kingdom’s exports were worth $1.985 billion, up 58.56 per cent, and imports $3.144 billion, up 18.37 per cent, according to the GDCE. The trade deficit with Vietnam narrowed 17.48 per cent last year to $1.158 billion.
