Logo of Phnom Penh Post newspaper Phnom Penh Post - Free trade area touted

Free trade area touted

Free trade area touted

The Asean summit November 5-6 in Brunei, announced advances in forming an Asean free

trade area (AFTA) between the struggling regional body and China. It would be the

world's largest free trade area with a market of 1.7 billion people, but could take

ten years to implement.

Although some member countries were concerned about the impact of cheap Chinese imports

on their domestic markets, government spokesman Chem Widhya said that was unlikely

to hurt Cambodia. China's imminent accession to the World Trade Organization (WTO)

would also bring great benefits.

"Cambodia has not yet developed a modern heavy industry, so we are not concerned

[about any impact on that]. Also, China will provide a preferential tariff treatment

to Cambodia for the importation of our goods," said Widhya, "because Cambodia

is still poor [compared with] other Asean countries."

Minister of Commerce Cham Prasidh told the Post November 7 he welcomed China's accession

to the WTO as Cambodia would gain access to China's huge domestic market under a

bilateral agreement under discussion between the two countries.

"We will have a greater ability to export our goods to China, which is the biggest

market in the world," said Prasidh. He expected Cambodia would export mainly

agricultural products such as rice, soya beans, corn, and coconut oil.

"China will give us a preferential tariff, which will give us a better advantage

than other Asean countries," said Prasidh, although he cautioned that details

on the tariff deal needed to be discussed. Prasidh said he was not worried that cheap

Chinese goods would harm the domestic market.

Urooj Malik, resident representative of the Asian Development Bank, agreed the deal

would bring strong opportunities. Among these, he said, were that China might well

manufacture goods in Cambodia and export them back to its own market, which would

help with job creation.

"Cambodia is now part of AFTA, and in the future the country will be part of

the WTO," said Malik. "I think Cambodia is moving in the right direction."

Malik cautioned that cleaning up corruption would prove important: it was widespread

and the government needed to institute policies to combat that if it was to garner

the full benefits.

Sok Hach, senior economic advisor at the Cambodian Development Resource Institute,

stressed the importance of reform. Rampant corruption was a major factor in dissuading

investors to put their money here, and reduced the country's competitiveness.

"In theory AFTA means that we move out of the gate at our house so that others

can come to our house and we can go to other people's houses. The reality is that

we cannot go to other people's houses because we are not competitive," said

Sok Hach.

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