Cambodia and South Korea have signed a joint feasibility study agreement on a potential free trade agreement (FTA) aiming to expand bilateral investment volume between the two countries, the Ministry of Commerce said on Monday.
The agreement was signed by Cambodian Minister of Commerce Pan Sorasak and South Korean Minister for Trade Yoo Myung-hee during the two-day Asean-Republic of Korea Commemorative Summit, which kicked off on Monday in the South Korean port city of Busan.
“The Cambodia-Korea bilateral FTA is expected to not only strengthen relations and promote bilateral trade between the two countries, but it will also create further employment and investment opportunities, and promote service exports that will contribute more to economic growth and bring greater benefits to the people of both nations,” a press release said.
Last year, trade volume between the two counties grew noticeably to around $756 million, a 14.69 per cent increase compared to 2017, it added.
However, South Korea’s Business Post, the Korea JoongAng Daily and local Korean-language News Briefing Cambodia put the figure at $970 million, whereas Yonhap News Agency cited $660 million.
The ministry said Cambodia’s main exports to South Korea include T-shirts, men’s clothing, electronics, shoes, luggage, aluminium, beverages, medical supplies, tents and natural rubber.
Imports from South Korea include trucks, clothes, mineral water, quilts, electronics, bulldozers, sheep leather, dyed cloth and beauty products, it said.
Yoo told Yonhap News Agency on Monday that Seoul and Phnom Penh will carry out the joint study on the FTA for one year.
“The FTA will be crucial in helping Korean firms penetrate deeper into Southeast Asian nations with prominent growth potential,” she said.
The move comes with Cambodia poised to sign an FTA with Beijing in the coming months.
Cambodia Chamber of Commerce vice-president Lim Heng said the Kingdom would greatly benefit from entering into an FTA with South Korea.
“The FTA will attract more foreign investors to Cambodia. I hope . . . investors will build agricultural processing factories for exports,” he said.
Earlier this month, Cambodia and China announced that they will sign an FTA next month that would enable Cambodia to send more agricultural products to the Asian giant.
Last week, Centre for Policy Studies director Chan Sophal said via Facebook that while free trade generally means no tariff barriers, countries can use non-tariff measures to protect local products.
The most plausible way is to use sanitary and phytosanitary (SPS) standards and sluggish administrative procedures to their advantage in issuing SPS certificates.
“These are reportedly obstacles for Cambodia in exporting agricultural commodities to China. I hope the new FTA with China will adequately deal with the issue,” Sophal said.