Cambodian merchandise exports to South Korea rose by 20.3 per cent on a yearly basis in the January-November period to $207.117 million, Customs reported, as analysts foresee a significant pick-up driven by a bilateral free trade agreement (FTA) that took effect on December 1.
In the first 11 months of the year, the Cambodian-South Korean merchandise trade totalled $711.042 million, up 1.01 per cent year-on-year, of which imports into the Kingdom accounted for 70.87 per cent at $503.925 million, down 5.23 per cent from the year-ago period, according to the General Department of Customs and Excise (GDCE).
The Kingdom’s trade deficit with South Korea for the 11-month period narrowed by 17.43 per cent to $296.808 million.
Last month alone, the two-way trade came to $52.14 million, down 20.7 per cent from November 2021 and down 10.8 per cent from October 2022.
Similarly, Cambodian exports to South Korea were to the tune of $16.59 million, up nearly seven per cent year-on-year and up 5.4 per cent month-on-month, and imports $35.56 million, down 29.3 per cent year-on-year and down 16.8 per cent month-on-month.
Cambodia Chamber of Commerce vice-president Lim Heng suggested reorganising cultivation and processing management to effectively capitalise on South Korean demand for high-quality agricultural products.
He argued that the FTA struck by Cambodia with the developed East Asian economy would further consolidate the Kingdom’s export presence on Korean markets.
“Korea is a high-income country with high food standards, so Cambodia must strive to make high-quality products to meet demand there. Cambodian agricultural products will have a larger market in Korea,” he said.
Heng also chalked up Cambodia’s trade deficit with South Korea to the large volume of inputs imported for the production of exportable goods.
The Kingdom predominantly exports garments, footwear and travel goods, beverages, electronics, rubber, pharmaceuticals and agricultural products to South Korea, he said, listing some notable imports as: vehicles, electronics, kitchen appliances, beverages, pharmaceuticals and plastics.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, pointed out that the merchandise trade between the two countries had not seen significant on-year changes overall, nearly a year on since the Regional Comprehensive Economic Partnership (RCEP) took effect on January 1.
On the other hand, the Kingdom’s exports to South Korea grew by more than a fifth on a yearly basis, he said, expressing optimism that this uptrend would remain intact, fuelled by the bilateral Cambodia-Korea Free Trade Agreement (CKFTA) that entered into force on December 1.
“Under the CKFTA umbrella, export volumes will expand on either side,” he told The Post on December 18.
Regardless, Vanak underscored the importance of determining a set of “strategic items” to boost Cambodia’s exports and thereby shrink the trade deficit, arguing that a negative trade balance could result in the Kingdom facing net outflows of foreign currency and related losses in favour of South Korea.
“Given Cambodia’s offerings, I think agricultural products will help reduce the Cambodian-Korean trade imbalance to a certain extent, since many of them feature on the CKFTA’s duty-free or low-tariff lists,” he said.
Besides, remittances from Cambodian workers in South Korea will remain a major foreign-currency source from the East Asian nation, Vanak said in jest.
GDCE statistics indicate that the Cambodian-South Korean merchandise trade totalled $774.046 million last year, up 5.39 per cent over the 2020 figure.
Cambodian imports and exports amounted to $579.959 million and $194.087 million, respectively, up 5.62 per cent and 4.72 per cent, widening the Kingdom’s trade deficit with South Korea by 6.07 per cent to $385.871 million.