The central banks of Cambodia and Malaysia have entered into a memorandum of understanding (MoU) to enhance cooperation in financial innovation and payments, specifically aimed at facilitating cross-border trade and tourism activities between the two nations.

The document was signed by Chea Serey, governor of the National Bank of Cambodia (NBC), and Abdul Rasheed Ghaffour, governor of Bank Negara Malaysia (BNM), and witnessed by Prime Minister Hun Manet and his Malaysian counterpart Anwar Ibrahim, during Manet’s official visit to Malaysia on February 27, as per a joint press release.

The agreement marks a significant milestone in the ASEAN Regional Payment Connectivity initiative and aligns with the Group of 20 (G20) Roadmap for enhancing cross-border payment efficiency. 

It said the effort is expected to benefit up to 5 million merchants, including small businesses in both countries that currently accept QR payments.

“The MoU will promote closer cooperation between the NBC and BNM to drive financial innovation and foster more efficient and secure cross-border payments, benefiting individuals and businesses in both countries,” stated the release.

“This includes linking domestic payment systems in both countries to facilitate cross-border QR payments.

The cooperation also aims to promote the use of local currency settlements and support the creation of a cooperative oversight mechanism for more secure cross-border payments,” it added.

Ghaffour said the MoU exemplifies the commitment of both countries to enhancing cross-border payment and local currency settlement.

“The collaboration strengthens our longstanding cooperation with the NBC, bringing mutual benefits to individuals and businesses in both countries. It also provides the impetus to spur greater innovation and deeper financial integration, supporting regional economic development,” he stated. 

NBC chief Serey highlighted that the agreement represents an important step forward in the process.

“The MoU is a significant step towards enhancing cooperation between our central banks. Through this agreement, the NBC and BNM will work together to drive financial innovation, improve cross-border QR code payment systems, boost trade activities and promote financial inclusion and the use of local currencies in line with ASEAN objectives,” she said. 

Igor Zimarev, chief marketing officer of ABA Bank, expressed his support for the collaboration between the two central banks, believing it will stimulate greater interest in promoting local currency settlement while also enhancing business ties between the two nations.

“The signing of the MoU between the NBC and BNM is a welcome development. The collaboration offers opportunities to progress in financial innovation … and benefits individuals and businesses in both Cambodia and Malaysia,” stated Zimarev.

According to the General Department of Customs and Excise (GDCE), Malaysia rose from Cambodia’s 17th to 13th largest trading partner in 2023. 

Transaction value during the period reached over $632 million, a 2% increase compared to over $620 million in 2022.

Imports from Malaysia increased 3.69%, from $508.57 million to $527.38 million in 2023, while exports to the predominantly Muslim nation declined 6.12% from $111.85 million to $105 million, resulting in a trade deficit for Cambodia of approximately $422.38 million, as per the GDCE.

Data from the Ministry of Tourism indicates that Cambodia welcomed 5.5 million foreign tourists in 2023, a sharp increase of 139.5% compared to the previous year. 

Leading the influx were visitors from Thailand (1.82 million, up 113.3%), Vietnam (1.02 million, up 119.8%), China (550,000, up 412.6%), and Laos (370,000, up 302%). Other notable countries of origin included the US, South Korea, Indonesia, France, the UK and Malaysia.