This impressive growth has caught the attention of the International Monetary Fund (IMF), which has revised its forecast for Cambodia’s economic expansion in 2024 to a strong 5.5%. The IMF attributes this upward revision to the buoyant performance of the export sector, particularly in garments and agriculture, as well as the ongoing recovery in the tourism industry.

The IMF’s mission chief to Cambodia, Kenichiro Kashiwase, emphasized the positive impact of free trade agreements with China and South Korea, as well as the Regional Comprehensive Economic Partnership (RCEP), on Cambodia’s economic growth. These agreements have provided the country with valuable market access and preferential trade terms.

However, Mr. Kashiwase also highlighted the importance of diversifying Cambodia’s trading partners to mitigate risks and capture additional opportunities. By expanding its export markets beyond major economies like the United States, China, and Europe, Cambodia can further strengthen its economic resilience.

Report also showed the Kingdom imported some US$21 billion worth of goods from foreign markets, a year-on-year increase of 15.9 percent, the source pointed out, while Cambodia’s total trade volume reached over US$40.9 billion, up 16 percent from US$35 billion during the same period in 2023.

China, Vietnam, and the U.S. were Cambodia’s biggest partners during the period, with a two-way trade volume of US$11.14 billion, US$7.8 billion, and US$5.8 billion, respectively.

However, the U.S. is the biggest market for Cambodia’s products with a total value of US$7.6 billion, sharing about 38 percent of the Kingdom’s total exports, read the report, adding that Vietnam ranked second with import of Cambodian goods reaching US$2.7 billion, a year-on-year increase of 33.8 percent, while the exports to China were valued at US$1.27 billion, up 20 percent.

Cambodia’s main export products are garments, machinery, electrical equipment, footwear products, leather goods, grain, furniture, rubber, fruits, vegetables, pearls, toys and textiles. The Kingdom’s major imports include medicines and supplements, consumables and food and beverages.

Overall, Cambodia’s strong export performance and favorable economic outlook position the country for continued growth and prosperity in the coming years. The IMF’s positive forecast underscores the nation’s ability to capitalize on its economic strengths and seize opportunities presented by regional and global trade agreements.

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“Thanks to peace, political stability, adult population and human capital combined with strong economic growth, Cambodia has been able to attract many investors from Europe, the United States and Asia,” he said in his speech at the ASEAN-China (Shanxi) Trade and Investment Promotion Seminar, held in Changzhi, China’s Shanxi province this afternoon under the theme “New Opportunities, New Momentum, New Cooperation, and New Development,” as part of the ASEAN-China Week 2024.

As of 2023, foreign direct investment (FDI) in Cambodia amounted to a total of US$48.4 billion, an increase by 7.9 percent compared to a year earlier, he pointed out, attributing this growth to the favourable investment environment, incentives policies for new investments, and large-scale free trade agreements (FTAs) between Cambodia and her strategic trading partners, including the Cambodia-China FTA, Regional Comprehensive Economic Partnership (RCEP) Agreement, Cambodia-Korea FTA, and Cambodia-UAE Comprehensive Economic Partnership Agreement.

According to the minister, last year, China remained the largest investor in Cambodia, with a total investment of up to US$3.7 billion. “Cambodia will provide many opportunities for Chinese companies and investors, especially from Shanxi and ASEAN countries, to invest in the Kingdom,” he stressed.

Cambodia-made products are exported and supplied to a total of 250 million people in the Mekong sub-region, about 630 million consumers in the ASEAN market, and 2.2 billion people in the RCEP countries.

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Experts point to the strong relationship between Cambodia and China as a key factor. Keo Piseth, a social observer and political science Ph.D. candidate, highlights the “steel friend” partnership and Cambodia’s strategic location in Southeast Asia as attractive to Chinese investors. Additionally, the Cambodia-China Free Trade Agreement (CCFTA) is seen as a significant boost.

“Through good relations between China and Cambodia, China has acted as a contributor, an essential element in driving Cambodia’s economic growth,” said Piseth. He views this assistance from a friendly nation positively.

China is also Cambodia’s leading trade partner, with a volume exceeding $12 billion in 2023. However, Piseth raises a concern about the trade balance, with Cambodia exporting significantly less than it imports from China. He hopes China will help Cambodia increase its exports.

Economist Dr. Ky Sereyvath, President of the Chinese Studies Institute of the Royal Academy of Cambodia, emphasizes the “diamond-hexagon” cooperation model, signifying collaboration in six key areas. This partnership, he believes, has created jobs in manufacturing and tourism, contributing to Cambodia’s economic growth.

The Council for the Development of Cambodia (CDC) confirmed that Chinese investment accounted for nearly 50% of the total capital in May 2024. This investment, along with domestic investment, has created over 15,000 jobs through new and expanded projects.

Cambodia’s economic landscape is increasingly shaped by Chinese investment. With strong political ties and trade partnerships, this trend is likely to continue. However, experts highlight the need to address the trade imbalance and ensure long-term benefits for both nations. (CAMCCJA)

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Cambodia is a member of the RCEP agreement that engaged with 15 Asia-Pacific countries, and the kingdom also has bilateral FTAs with China, South Korea and the United Arab Emirates.

“On the back of the implementation of the RCEP agreement and other bilateral FTAs, Cambodia is expected to attract more FDI inflows and expand its exports to the region,” she said in a speech during the opening ceremony of a seminar on Cambodia’s financial stability.

These trade pacts will help boost Cambodia’s productivity and promote its economic diversification, Serey said, adding that the kingdom’s economy is forecast to grow 6 percent in 2024, up from 5 percent in 2023, driven by a rise in exports, recovery in tourism, robust growth in transport and communication, and flat growth in agriculture.

Cambodia approved the fixed asset investment of 2.5 billion U.S. dollars in the first four months of 2024, which will create approximately 130,000 jobs, said a government’s report.

On the trade side, the Southeast Asian country exported products worth 8 billion dollars during the January-April period this year, up 15.2 percent from 6.94 billion dollars over the same period last year.

The Cambodian Ministry of Commerce’s Secretary of State and Spokesperson Penn Sovicheat said the RCEP agreement and bilateral FTAs will help Cambodia realize its ambitious goals of becoming an upper-middle income country by 2030 and a high-income nation by 2050.

“These trade pacts have not only given a boost to Cambodia’s sustainable trade growth in the long run, but also become a magnet to attract more FDIs to the kingdom,” he told Xinhua.

RCEP comprises 15 Asia-Pacific countries including the 10 ASEAN (the Association of Southeast Asian Nations) member states of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, and their five trading partners, namely China, Japan, South Korea, Australia and New Zealand.

Kin Phea, director general of the International Relations Institute of Cambodia, a think tank under the Royal Academy of Cambodia, said besides these free trade agreements, China’s Belt and Road Initiative has laid a solid foundation for Cambodia’s socioeconomic development in the long term.

“Under the BRI framework, China has heavily invested in infrastructure projects such as highways, bridges, expressways, hydropower plants, special economic zones, seaports, and airports,” he told Xinhua. “These BRI flagship projects have significantly impacted Cambodia’s development agenda, brought opportunities for Cambodia to get rid of poverty, and promoted mutual benefit and win-win results, which are deeply rooted in the hearts of the people.”

Phea said these large-scale projects have greatly contributed to promoting connectivity, securing the sustainable source of electricity supply, enhancing economic competitiveness, diversifying sources of growth, and reducing logistics costs in Cambodia.

“Among flagship projects in Cambodia under the BRI, I have been impressed by the Sihanoukville Special Economy Zone, the Phnom Penh-Sihanoukville Expressway and the Siem Reap Angkor International Airport,” he said. ■ Xinhua

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The forum, held on the afternoon of May 16, 2024, was attended by 300 dignitaries, including Deputy Prime Ministers, Ministers, and business leaders from both countries.

HE Ahn Duk-geun, Minister of Commerce, Industry and Energy of the Republic of Korea, also participated in the forum. The event aimed to promote business and investment opportunities between Cambodia and Korea, strengthen bilateral business ties, and explore potential areas for joint cooperation. Six memoranda of understanding were exchanged during the forum.

The Republic of Korea is a significant trade and investment partner for Cambodia. In 2023, bilateral trade volume reached approximately $751 million, ranking Korea as Cambodia’s 11th largest trading partner. Additionally, direct investment from Korea (FDI) surpassed $5 billion in 2023, placing it ninth among Cambodia’s investment sources.

Cambodia and Korea signed the Cambodia-Korea Free Trade Agreement (CKFTA) in December 2022. The CKFTA is expected to streamline investment and trade between the two countries, offering Korean investors access to numerous local opportunities and the benefits of investment concessions provided by the Cambodian government.

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The meeting, co-chaired by H.E Mrs. Cham Nimul, Minister of Commerce of the Kingdom of Cambodia and H.E. Inkyo Cheong, Minister for Trade of RoK, was held in Seoul on May 13.

In the meeting, both sides expressed positive progress of trade cooperation between the two nations, as well as the remarkable results of the CKFTA implementation.

H.E, Mrs. Cham Nimul expressed her optimism that the CKFTA will become an important mechanism to promote more trade and investment cooperation.

The 1st CKFTA JC was organised to discuss and follow up the progress of trade relations between Cambodia and the RoK after the entry into force of the Free Trade Agreement between the Royal Government of the Kingdom of Cambodia and the RoK Government on Dec. 1, 2022.

Figures from the General Department of Customs and Excise of Cambodia show that the bilateral trade between Cambodia and RoK rose by 7.4 percent to US$256 million in the first four months of this year.

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The meeting was co-chaired by H.E. SEANG Thay, Secretary of State at the Cambodian Ministry of Commerce Commerce and Co-Chairman of the Cambodia-China Joint Industrial Park Construction Committee, and H.E. Liao Pinhu, Vice Governor of China’s Guangxi Zhuang Autonomous Region.

According to the Ministry of Commerce, the purpose of this first meeting is to introduce the members of the working group and to discuss the cooperation to promote the construction of the Cambodia-China Industrial Park both in the Guangxi Zhuang Autonomous Region and the Kingdom of Cambodia.

China is a major investor in Cambodia. Last year, Cambodia approved 268 investment projects and investment expansion projects with a total investment capital of US$4.9 billion. Investment from China ranked first, accounting for two thirds of the total investment capital, while domestic investment ranked second with 24 percent.

Vice-President of the Cambodia Chamber of Commerce Mr. Lim Heng attributed the increase in investment project to the country’s potential under the new investment law, free trade agreements, mega-regional pact, and trade preferences.

“The new investment law, along with free trade agreements – Cambodia-China FTA and Cambodia-Korea FTA, RCEP – are factors that attracted investment from China to Cambodia as part of production for exports to foreign markets,” he said.

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The United States and Vietnam are the Kingdom’s top exporting destinations with shipment amount at US$1,985 million and US$1,392 million, up 8.9 percent and 53 percent, respectively, read the report.

The Regional Comprehensive Economic Partnership (RCEP) agreement and the free trade agreements with China and Korea have played important roles in promoting Cambodia-made products and contributed to attracting new foreign investment, said H.E. Penn Sovicheat, Secretary of State and Spokesperson at the Ministry of Commerce.

“Cambodia’s exports to the international market, particularly RCEP member states, have remarkably increased, making Cambodian products attractive in the long term,” he underlined. RCEP, Cambodia-China FTA, and Cambodia-Korea FTA came into force in 2022.

Mr. Lim Heng, Vice President of the Cambodia Chamber of Commerce, attributed the country’s export growth to huge potential of markets under the trade pacts and trade preference schemes.

“Free trade agreements, mega-regional pact, and trade preference schemes in the EU and US are potential for Cambodia’s products and are catalysts in attracting new investment for manufacturing products for exports,” he added.

The garment, footwear and travel goods industry is the largest foreign exchange earner for Cambodia. The sector consists of roughly 1,133 factories and branches, employing approximately 840,000 workers, mostly female.

Meanwhile, Cambodia’s total imports rose by 6.4 percent to US$6,234 million, the report pointed out. The country primarily imports raw and construction materials, automobiles, pharmaceuticals, electronic equipment, fertilisers and pesticides.

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The total investment capital of the approved projects in the first quarter rose by 649 percent year-on-year to US$2.2 billion, pointed out a CDC’s press release made public this morning.

The same source stated that the newly endorsed investment projects are expected to generate some 107,000 jobs for local people.

Breaking down by sectors, it underlined, investment in industrial sector got the largest share with 90.57 percent, while agriculture and agro-industry, infrastructure, and tourism accounted for 3.77 percent, 3.77 percent, and 1.89 percent, respectively.

About 58 percent of the total investment capital was from local investors, 35.34 percent from China, 3.16 percent from Singapore, 2.23 percent from Vietnam, and the rest from South Korea, the U.S. and Malaysia, the press release showed.

Vice-President of the Cambodia Chamber of Commerce Mr. Lim Heng attributed the increase in investment project to the country’s potential under the new investment law, free trade agreements, mega-regional pact, and trade preferences.

“The new investment law, along with free trade agreements – Cambodia-China FTA and Cambodia-Korea FTA, RCEP – are factors that attracted investment from China to Cambodia as part of production for exports to foreign markets,” he said.

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This was the topic of discussion in Hong Kong on Mar. 19 between H.E. SOK Sopheak, Secretary of State at the Ministry of Commerce, and Ms. Agnes CHAN, Deputy Chairman of Hong Kong General Chamber of Commerce (HKGCC), with participation of leaders of private enterprises of Hong Kong, according to the Cambodian Ministry of Commerce.

In the meeting, H.E. Secretary of State briefed Ms. Agnes CHAN on the achievements of the Royal Government of Cambodia, especially the entry into force of Cambodia New Investment Law and related regulations, the signings of bilateral and multilateral FTAs, various policies tailored for promoting digitalisation including the National Single Window project, as well as the recent Special Programme for Promoting Investments in Preah Sihanouk Province launched by Samdech Prime Minister in January this year.

Besides, both parties discussed the possibility of forging closer relation between the HKGCC and Cambodia Chamber of Commerce via any specific platform on realistic basis.

Earlier, on Mar. 18, H.E. SOK Sopheak also met with Dr. Stephen Wong, Head of Chief Executive’s Policy Unit (CEPU), to comprehend the crucial contributions of think tanks in the development of Hong Kong SAR’s public policy.

On the occasion, both counterparts discussed the benefits that Cambodia and Hong Kong SAR have reaped under the Belt and Road Initiative (BRI), the promotion of startups via research and development (R&D), as well as the success story of Hong Kong SAR’s theoretical transformation of ‘Made in Hong Kong’ into ‘Made by Hong Kong’.

After that, H.E. Secretary of State proceeded to another meeting with Mr. Desmond HOU, Deputy Government Economist of the Office of Government Economist (OGE) of Hong Kong SAR, where he emphasised the newly launched Pentagonal Strategy-Phase I and other legal and policy reforms embraced by the RGC in promoting Cambodia’s trade and investment growth and resilience, both pre and during the global crises instigated by the pandemic and geopolitical standoffs.

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