Following the EU’s announcement this week that they had formally launched procedures in preparation for the withdrawal of Cambodia’s Everything But Arms (EBA) trade preferences, Prime Minister Hun Sen remained defiant in the face of looming economic uncertainty on Thursday, declaring that Cambodia “will not die even if the EBA disappears”.
“Whether the EBA will be suspended will be known in 18 months. Either way we will not die and we will not become rich [even if the EBA is not withdrawn],” he said at the closing of a Ministry of Interior convention reviewing 2018.
“We need to jointly work for economic growth in order to strengthen our independence. We should not exchange our sovereignty for [economic] assistance."
“The EBA will be gone, it is just [a case of] sooner or later. Therefore, in trade we pay tariffs to them and they will pay tariffs to us – this is inevitable. We therefore need to find all the ways to make our economy more competitive,” he said.
Hun Sen appealed to all Cambodians, particularly workers, not to worry about other people’s opinions as long as they have jobs, careers and incomes, adding that “dogs keeps barking, but people keep walking”.
He also suggested that European companies continue running their businesses in Cambodia despite the decision, adding that Cambodia will not bow to international pressure calling for internal reform.
“I have confirmed already that having EBA or not . . . we do not want anyone to use trade preferences to control us as they want to. If you do not withdraw, I become stronger; if you withdraw, I will not die,” he told the crowd.
Addressing potential investors in Cambodia, he said the government is in the process of undertaking reforms to promote the country’s economic competitiveness and trade coordination, as well as to eliminate payments and bureaucracy that slows business being done.
The prime minister suggested the Council for the Development of Cambodia (CDC) host a forum between the government and private sectors in March this year to discuss reforms and the promotion of economic growth in Cambodia.
Political analyst Ok Serei Sopheak said Cambodia lived without EBA preferences in the past and can do so again, but he added that it is very likely to hit the economy hard, predicting inflation will increase.
“Cambodia needs to promote investment and we need significant cooperation in order for our economy to have a chance to take off after this decision."
“Cambodia’s economic growth is currently seven per cent. If we do not take measures this will decline, and we will not only lose economic interests but might also lose diplomatic interests and weaken our foreign policy on the international stage,” he said.
He also added that if Cambodia loses its access to EBA, relations with the EU will likely decline.
Economic analyst Khoun Bunny agreed with the prime minister’s assessment of the EBA withdrawal as providing an opportunity for economic growth.
“Workers have jobs and factories keep operating – everything is normal. We can see that we have reached the point where Cambodia can live independently and try to build on our annual economic growth of seven per cent."
“We will continue our economic cooperation and extend our economic relations to other countries [outside the EU],” he said.
However, there is no clear study confirming that Cambodia will lose its competitiveness if it needs to pay tax for exports to the EU.