The National Assembly’s 9th Committee on Monday unanimously approved the draft law on the ASEAN-Hong Kong Free Trade Agreement (AHKFTA).
This paves the way for the government to continue the ratification process of the free trade agreement (FTA) in a bid to secure a new regional export market.
The approval was made during a meeting between the National Assembly’s 9th Committee, chaired by Nin Saphon, and the Ministry of Commerce leadership, headed by minister Pan Sorasak, who defended the draft law.
The 9th Committee is officially named the Commission on Public Works, Transports, Posts, Telecommunications, Industry, Mines, Energy, Trade, Land Management, Urban Planning and Construction.
After reviewing the text of the AHKFTA, Saphon agreed to the formalities and procedures for requesting ratification of the deal.
Sorasak said the Kingdom will benefit greatly from the agreement when it enters into force.
He said: “The Ministry of Commerce has strived to boost exports by diversifying markets, taking full advantage of FTAs in which Cambodia is a member, as well as seeking additional markets through dialogue to initiate bilateral FTA negotiations with key trading partners.”
Cambodia Rice Federation president Song Saran acknowledged the potential that Hong Kong brings to the table as a regional fountainhead of cutting-edge food processing technologies and key financial hub that is set to underpin the Kingdom’s product diversification ambitions.
He said: “Once it [AHKFTA] comes into force, Cambodia will obtain a new high-potential market in the region and boost product recognition there, as we ramp up our diversification efforts.”
In a press release issued following the meeting, the ministry stressed that the AHKFTA will deepen economic ties between ASEAN and “Hong Kong of the People’s Republic of China”.
The deal will further liberalise trade in goods and services, improve customs procedures and measures, and promote economic and technical cooperation, it said.
The agreement will also make significant contributions to facilitating cross-border trade and investment, and reduce barriers to market access to encourage small- and medium-sized enterprises in ASEAN and Hong Kong, it added.
The AHKFTA came into effect on June 11, last year for Hong Kong and five of the 10 ASEAN member states – Laos, Myanmar, Singapore, Thailand and Vietnam.
Under the agreement, Hong Kong and Singapore will grant tariff free access and bind their customs duties at zero, the ASEAN Secretariat said the following day.
Thailand, Malaysia, Brunei and the Philippines and will scrap customs duties on 85 per cent of products traded with Hong Kong within 10 years and cut another 10 per cent of tariff lines within 14 years, it said.
Vietnam and Indonesia will remove customs duties on 75 per cent of their products within 10 years, and trim another 10 per cent of tariff lines within 14 years, it added.
Meanwhile, it said, Cambodia, Laos and Myanmar will eliminate customs duties on 65 per cent of their products within 15 years and abolish another 20 per cent of tariff lines within 20 years.
The AHKFTA and ASEAN-Hong Kong, China Investment Agreement (AHKIA) were signed by ASEAN economic ministers and the Secretary for Commerce and Economic Development of Hong Kong on November 12, 2017 in Pasay City, Philippines.
The AHKFTA contains 14 chapters covering broad areas of market access liberalisation, trade facilitation, rules to promote confidence in trade, and cooperation aimed at facilitating trade in goods and services in the region.
ASEAN was Hong Kong’s second largest trading partner in merchandise trade last year and the fourth largest in service trade in 2018, the Hong Kong Trade and Industry Department reported.
Total merchandise trade between ASEAN and Hong Kong was to the tune of HK$1.018 trillion (US$131 billion) last year and total services trade between the two sides hit HK$137 billion in 2018, it said.
As of the end of 2018, ASEAN ranked fourth in the list of Hong Kong’s outward direct investment destinations, with a stock of HK$480 billion. It ranked sixth among Hong Kong’s sources of inward direct investment, with a stock of HK$533 billion, the department added.