Bilateral trade between Cambodia and Vietnam rose more than 37 percent last year, despite the two nations falling short of a value target of US$2 billion.

Figures from Vietnam Embassy’s Trade Promotion Office in Phnom Penh showed trade growth of 37.23 percent year on year, with the value of goods exchanged between the two countries reaching $1.828 billion in 2010, up from $1.332 billion in 2009.

Both governments had aimed for the value of bilateral trade to reach $2 billion last year, but officials said today the ramifications of the global economic crisis had led them to fall short.

“We did not meet the promise made by both governments last year because of slow progress after the global crisis,” said Tran Tu, commercial attache at the TPO.

“It takes time to improve [trade] between the two countries to meet the goal. However, I think we will attain our goal this year,” he said.

“We expect to increase trade by 20 percent this year by trying to promote more activities,” he said, adding that Vietnam holds four or five trade fairs in Cambodia each year.

Director General of Cambodia’s Ministry of Commerce Sok Sopheak, also recognised the improvement in trade, saying: “Both countries tried to implement our governments’ policies in order to promote exports – that’s why trade levels rose.”

On the target, he added: “We promised to attain this but sometimes we can not meet [such targets]. It is reliant on the economies of the countries and demand.”

Cambodia’s exports to Vietnam rose by nearly 50 percent in 2010 to $277 million, from $186 million in 2009, while Vietnam’s exports increased about 36 percent to $1.552 billion from $1.146 billion, according to the data.

Cambodia mostly exports unprocessed agricultural products – such as wood, rubber, cashew nuts, un-milled rice and types of corn – to Vietnam.

Vietnam’s exports to Cambodia spans a wide range of products including coffee, vegetables, fruits, cigarettes, consumer products, home appliances, construction materials, agricultural machines, fertilisers, pesticides and gas and oil.

Tran Tu noticed that Cambodia’s exports of agricultural products to Vietnam rose sharply last year, especially for crops such as rubber and cassava.

“Mostly, [Cambodia sells] rubber to Vietnam and last year its price was very high with good demand,” he said.

Sok Sopheak also hinted that political tension may play a factor in future trade.

Cambodia’s farmers are now trying to export more of their agricultural products to Vietnam rather than to Thailand, he said.

“The demand [for agricultural products] in Vietnam is high and at the same price as they sell to Thailand, but with lower transportation cost.

“So, people move to [trade with] Vietnam while we have got a problem with Thailand. I don’t mean that people don’t sell to Thailand [at all].”

But Vietnamese officials were enthusiastic about future regional cooperation, especially in light of a 55 percent annualised increase in the value of trade between Cambodia and Thailand last year.

“We are neighbouring countries so we can share the market. Vietnam and Thailand can buy Cambodia’s agricultural products to process for the development of our three countries,” said Tran Tu.

“We are all ASEAN members, so we have good cooperation,” he added.

Today, Vietnam’s central bank raised its reverse repurchase rate, the second increase in borrowing costs in less than a week,

The move came as Vietnamese Prime Minister Nguyen Tan Dung prepared to order tighter policies to tame inflation, insiders have said.

Vietnam is under pressure to curb inflation that is poised to accelerate from a 23-month high as electricity prices rise and four currency devaluations in 15 months spur its import costs. ADDITIONAL REPORTING BLOOMBERG