China-Cambodia economic ties are entering a new paradigm with the signing of the Kingdom’s first free trade agreement (FTA) this year with the Asian economic powerhouse.
Economic compatibility, a cordial friendship and common ideals have contributed to a healthy trading environment, with China’s mega investments driving vital infrastructure projects in Cambodia over the decades.
Two-way trade hit $9.43 billion last year compared to $7.4 billion in 2018 – a 27.7 per cent jump.
“Cambodia should take advantage of the FTA with China in areas that could be complementary to China. Eventually Cambodia’s agricultural produce can be exported directly to China, not through third countries,” said HE Nguon Mengtech, director-general of the Cambodia Chamber of Commerce.
Chinese companies – both state-owned and private – have contributed immensely to the Kingdom’s infrastructure, and to the energy, real estate and agriculture sectors.
The FTA could be a game changer. While tariffs will fall, the trade pact will also allow Cambodian exporters to enjoy more market access for their products – which is crucial at this juncture after Covid-19 clipped trade flows.
Once the FTA kicks in, around 340 commodities from Cambodia will be exempt from tariffs, including pepper, garlic, dried chilis, cashew nuts, honey and seafood products.
This will inject a big boost into the rural economy, where 80 per cent of the population rely on farming.
The deal covers goods and services, investment cooperation, e-commerce, economic and technical cooperation, and also includes the Belt and Road Initiative.
The two parties completed their FTA negotiations on July 20.
“Cambodia remains attractive to Chinese investors and entrepreneurs. Economic relations between both countries have been promoted and improved, and the FTA agreement would attract even more Chinese business activities.
“Bilateral trade has been progressing well. This year both countries have entered into the FTA, and this can boost two-way business and investment.
Total bilateral trade reached $9.4 billion last year.
“Both state-owned and private-owned enterprises have contributed to the domestic economy, in terms of the transfer of technology, upgrading the skills of Cambodian workers and job creation,” Mengtech said.