Cambodia is studying the possibility of establishing a bilateral free trade agreement (FTA) with India to open a new market with the second-largest regional economy.
This comes as an FTA with China is scheduled to be signed next month while similar negotiations with South Korea have also started.
The subject of an FTA with India was made during a working lunch meeting between Minister of Commerce Pan Sorasak and Indian ambassador to Cambodia Manika Jain on Wednesday.
“I discussed with ambassador Jain the possibility of establishing a Cambodia-India bilateral FTA to increase trade volume and bilateral benefits between our countries.
“We also discussed the trade volume of our countries, which is constantly progressing,” he said.
During the meeting, Jain agreed to strengthen bilateral trade relations by establishing the Cambodia-India Joint Trade and Investment Working Group to facilitate trade and investment between the two countries.
Ministry of Commerce spokesman Seang Thay told The Post on Thursday that the ministry’s FTA negotiation group will meet with the Indian side to discuss the possibility of developing an agreement.
“We have already set up a negotiating team and they will discuss with India the possibility of a trade agreement and whether it will be profitable.
“They will report the findings to the minister. If we see the benefits, both sides will start negotiating, but we do not know when that will happen,” he said.
He said Cambodia wants an agreement with India because it has a very large market that is “greatly beneficial” to the Cambodian economy.
Cambodian Chamber of Commerce vice-president Lim Heng told The Post that if Cambodia could reach an FTA with India, the Kingdom would become a more attractive destination for foreign investors.
“If we have this agreement, Indian enterprises will look to Cambodia to set up processing factories to export to India and other destinations,” he said.
Data from the Indian embassy in Cambodia said the trade volume between the two countries reached $249.92 million in 2019, up 10.24 per cent compared to 2018’s $226.69 million.
Cambodia exported goods to India worth $82.09 million last year, up 69.43 per cent from 2018, while imports amounted to $167.83 million, down 5.8 per cent.
Indian investment is worth $19.8 million. The country is among the top 10 foreign investors in Cambodia. India’s main investments are in machinery, agriculture, energy, construction and mining.
Separately, Cambodia began FTA negotiations with South Korea on Thursday, Thay said.
And before August 12, Prime Minister Hun Sen is due to visit Beijing to witness the signing of the bilateral trade agreement with China.