The private sector is optimistic that Cambodian agricultural exports to China and South Korea will gain even more steam after the respective bilateral free trade agreements (FTA) enter into force soon, particularly 10 items identified as holding considerable untapped potential.
The consensus was reached at a virtual discussion between the Ministry of Commerce and the private sector that touched on the content of a strategic document designed to maximise the benefits of the new FTAs.
The talks were presided over by Minister of Commerce Pan Sorasak and attended by officials from multiple ministries and other government agencies, as well as traders and investors from the private sector.
Sorasak recounted that that the FTA with China was signed on October 12, 2020 and its South Korean counterpart on October 26, this year. He stressed that the Kingdom intends to forge ahead with negotiations on similar deals with Russia, Japan, Mongolia, India, the EU, UK, US, among others.
He said the commerce ministry “has set up a working group to study and collect input from stakeholders and the private sector to develop strategies to maximise the benefits from the implementation of FTAs in which Cambodia is a signatory”.
The team identified milled and paddy rice, cassava, bananas, longan, mangoes, cashew nuts, meats, natural rubber latex, pineapples and peppercorn as products with significant production and export potential, he added.
Cambodia Chamber of Commerce vice-president and rubber investor Lim Heng told The Post on November 8 that the Kingdom would one day no longer receive preferential tariff treatment or other market access arrangements from developed countries.
The Kingdom has set an ambitious vision of becoming an “upper-middle income” country by 2030 and a “high-income” economy by 2050, as defined by the World Bank. Official designation as either status generally results in the removal from generalised systems of preferences and similar preferential arrangements granted by trade partners.
When the time comes, Heng said, bilateral and multilateral FTAs will help maintain export growth and create new markets.
“We will only be able to depend on FTAs, to replace existing markets and attract more investors to Cambodia, as well as to increase production for export.
“That is why the commerce minister is brainstorming on how the private sector could take advantage of the FTAs that we have already struck, such as those with China and Korea,” he said.
He said the two latest trade deals present a good opportunity for Cambodia, while the ongoing Sino-US trade spat could allow the Kingdom to lure in more investors from the US who would then have the option to export duty free to China.
“The important thing is that we still need raw materials from South Korea and China, to import into Cambodia to produce and process for export.
“Therefore, through these FTAs, we can also lure more investment from China, [South] Korea and the US to our country. But a more important thing is to make sure we have a sustainable supply,” he said.
Garment Manufacturers Association in Cambodia deputy secretary-general Kaing Monika similarly told The Post on November 8 that the trade deals would help to diversify the Kingdom’s export destinations, uplift the agricultural sector and draw more investment.
“The garment sector has enjoyed duty-free export to China for many years already under the ASEAN-China FTA, which came into force in 2003.
“This bilateral trade agreement would additionally support export product diversification, with agriculture and food processing as priority sectors.
“Of course, there are non-tariff barriers that Cambodia must overcome. Quality standards, price and delivery all are important interconnected factors of consideration. This will require deeper and more effective collaboration among relevant ministries and private sector players,” he said.
Citing the National Phytosanitary Database, Minister of Agriculture, Forestry and Fisheries Veng Sakhon recently said Cambodia shipped out 6,364,607.24 tonnes of agricultural products in January-October, up by 87.53 per cent year-on-year from 3,393,915.64 tonnes, valued at $4,071,571,098.37 to 68 countries and territories.
These exclude animal and forestry products, fisheries and rubber wood, the minister noted.
Last year, Cambodia exported $4.37 billion worth of agricultural products, up $500 million from 2019, the agriculture ministry reported.