The National Assembly on Monday approved the First Protocol to Amend the Agreement on Comprehensive Economic Partnership among Japan and Member States of the Association of Southeast Asian Nations (AJCEP – 1st Protocol).
Cambodia expects to expand its market to Japan and woo more investors from the economic powerhouse of the Pacific through the perks provided by the protocol.
On August 3, the Japanese Ministry of Foreign Affairs explained that the protocol “adds provisions concerning trade in services, movement of natural persons and investment to the [AJCEP], which entered into force in 2008.
“[It] includes the rules and liberalisation commitments from ASEAN member states which are not included in the bilateral EPAs [economic partnership agreements] and related agreements concluded between Japan and each ASEAN member state.”
Leading a delegation to defend the protocol, Pan Sorasak, Minister of Commerce and ASEAN Economic Minister for Cambodia, said the law would improve ASEAN-Japan trade in tandem with the evolution of the global economy by liberalising trade, services, movement of natural persons and investment.
He said it will also provide substantial benefits to the whole of Cambodian society by promoting national economic growth, technological exchange, the transfer of knowledge, reskilling and upskilling, while adding more tax revenue to state coffers.
“After the protocol comes into force [in the Kingdom], it will attract more Japanese investors and businesses to invest in Cambodia and improve the inflow of techniques and technology, providing the Kingdom with more opportunities,” Sorasak said.
The Japanese foreign ministry said the protocol entered into force on August 1 in Japan and five of ASEAN’s 10 member states – Laos, Myanmar, Singapore, Thailand and Vietnam.
Royal Academy of Cambodia economics researcher Hong Vanak told The Post on Tuesday that its agricultural base, diversity of skilled and affordable labour and a favourable geographical location at the heart of the ASEAN region with a convenient transportation system will play into the hands of the Kingdom.
“If the protocol officially takes shape, I believe Cambodia will have a shot to entice more Japanese people to invest here, given that the Kingdom is a member of ASEAN, which is known for the magnitude of its market and its high purchasing power,” he said.
But Vanak pointed out that the Kingdom must work to spruce up its investment law and make it more alluring.
Keo Mom, the CEO of Ly Ly Food Industry Co Ltd, one of the Kingdom’s largest packaged food processing enterprises, which recently partnered with Japan-based Kameda Seika Co Ltd, noted that the protocol opens the door for more Cambodian products to the Japanese market.
Cambodian-Japanese cooperation and trade volume also stand to benefit from the agreement, she said, adding that her company plans to add Japan to its export destinations in due course.
According to commerce ministry spokesman Seang Thay, the protocol would be effective only if all ASEAN member states agree to formally approve it.
Enforced in December 2008, the AJCEP agreement covers economic cooperation, trade in goods and services and investment, according to the ASEAN Secretariat.
It said: “Under the AJCEP agreement, tariff elimination for ‘Normal Track’ products should be completed within 10 years from the entry into force of the agreement for Japan, ASEAN-6 [Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand] and Vietnam.
“Flexibility is afforded to Cambodia, Laos and Myanmar with a longer timeframe of 13 years.
“Trade facilitating rules of origin [ROO] have been established under the AJCEP agreement, which provides flexibility for cross-border traders in choosing the rule to apply to avail of the preferential tariff treatment.
“ASEAN and Japan have also initiated several economic cooperation projects including capacity building and technical assistance in areas of mutual interest.
“These include, among others, trade-related procedures, the business environment, intellectual property rights, energy, information and communications technology, human resources development, small and medium enterprises, tourism and hospitality, transportation and logistics, standards and conformance.”
Bilateral trade between Cambodia and Japan reached more than $1.346 billion in the first eight months of this year, down 7.42 per cent year-on-year, according to data from the Japan External Trade Organisation (Jetro).
Goods exported from Cambodia to Japan were worth $1.045 billion during the period, down 5.3 per cent from $1.103 billion in the same period last year, Jetro figures show.
Imports from Japan were worth more than $300.89 million, down 14.2 per cent from $350 million in the year-ago period.