Two-way trade between Cambodia and South Korea ballooned more than a quarter in the first four months of 2022 compared with the same period last year, in an uptrend observers say will pick up pace after a bilateral free trade agreement (FTA) takes effect, anticipated by the end of the year.
From January to April, trade between the two countries totalled $297.96 million, up by 28.0 per cent year-on-year from $232.75 million, according to the General Department of Customs and Excise of Cambodia (GDCE).
Cambodian exports amounted to $75.92 million, up by 20.2 per cent year-on-year, and imports were $222.04 million, up by 30.9 per cent.
In April alone, bilateral trade was $63.49 million, up by 51.65 per cent compared to the nearly $41.9 million logged in April 2021. Cambodian exports were $14.59 million, up by 12.5 per cent, and imports $48.90 million, up by 69.2 per cent.
Cambodia Chamber of Commerce vice-president Lim Heng told The Post that trade with South Korea, which he termed one of the Kingdom’s “main export markets”, had “steadily increased” and would accelerate when the bilateral Cambodia-Korea Free Trade Agreement (CKFTA) enters into force.
He said that Cambodian players were especially hopeful that the FTA would better enable the Kingdom’s agricultural products to reach Korean shores.
Heng listed Cambodia’s main exports to South Korea as garments, footwear, travel goods, beverages, electronic components, rubber, pharmaceuticals and agricultural products such as fresh mangoes, cashew nuts, corn and peppercorn.
Predominant imports from Asia’s fourth-largest economy include vehicles, kitchen appliances and electronics, beverages, pharmaceuticals and plastics, he added.
Heng also downplayed Cambodia’s trade deficit with South Korea for the January-April period – which expanded by more than 37 per cent year-on-year to over $146.1 million – saying that the bulk of Korean imports support domestic production and processing for export.
Royal Academy of Cambodia economist Hong Vanak, however, voiced concern over the Kingdom’s mounting trade deficit with South Korea.
He opined that this trend would require Cambodia to shift course and produce more goods geared towards the needs of the East Asian market, including by attracting more investors to open factories and processing businesses that churn out finished products for export to South Korea.
And once the CKFTA is in force, “I hope that many investors, especially those from Korea, will come to Cambodia to invest in production for export back to Korea”, Vanak said.
He also noted that both countries are signatories to the Regional Comprehensive Economic Partnership (RCEP) agreement, which entered into effect in Cambodia on January 1 – and exactly one month later in South Korea.
The CKFTA will provide more than 10,000 Cambodian goods duty-free access to South Korea, according to the commerce ministry.
Under the deal, coupled with the RCEP, the Kingdom will lift tariffs on 93.8 per cent of goods traded, with South Korea scrapping duties on 95.6 per cent, Yonhap News Agency reported, citing the South Korean trade ministry.
The CKFTA was signed on October 26 in a bid to boost bilateral trade and stimulate economic recovery from the Covid-19 crisis.
According to Ministry of Commerce spokesman Penn Sovicheat, the pact will come into effect 60 days after both countries have deposited their respective instrument of ratification (IoR), a document by which a country formally agrees to be bound by a treaty.
On February 3, Sovicheat noted that neither country had deposited their IoR, and predicted that the CKFTA would enter into effect no later than June 30. No updates were immediately available.
For reference, trade between the two countries last year amounted to $774.04 million, up by 5.4 per cent compared to 2020, according to the GDCE. Cambodian exports were $194.08 million, up by 4.7 per cent, and imports were $579.96 million, up by 5.6 per cent.