Khmer Times (05/08/2020) - The Cambodia-China free-trade agreement expected to be inked later this month will send a powerful message to friends near and far that the Kingdom has expanded its greater market to the more than 1.3 billion-strong Chinese market. It has great potential but just a legal framework alone is not enough to maximise the benefits of the deal, given Cambodia’s resources are limited in terms of human resources, technical and financial aspects, in addition to our infrastructure and logistic areas.
Cambodia and foreign investments must join hands to translate this opportunity into reality for mutual benefit. Foreign investors may look to the transfer of technologies and know-how when implementing the deal. This will help Cambodia to improve its productivity, its value-added products, improve efficiency in manufacturing, services and agriculture, among other factors.
Even with the trade deal, it is not going to be a bed of roses for tens of hundreds of small and medium enterprises (SMEs) in Cambodia. They have to be recognised and get qualifications before securing financial support from different sources.
The country currently has nearly 38,000 registered companies and nearly 10,000 enterprises both local and foreign. I hope they are ready, or preparing, to take advantage of the trade deal; otherwise they must do so soon because the agreement is expected to be implemented by early 2021.
Companies operating in Cambodia need to improve in many ways, especially in the areas of human resources, to deal with digital business operations as the government shifts to the digital economy. The country’s Industrial Development Policy (2015-2025) was designed to address the coming challenges, promote productivity and find markets for its products.
The World Bank, Asian Development Bank, Education and Labour Ministries must play their parts in developing Cambodia’s human capital and help companies achieve their goals and objectives in global trade.
The coming trade deal is another plus to the existing legal framework of the Asean-China Free-Trade Area (ACFTA), established in 2010, paved the way to the export of tens of hundreds of goods to China.
Cambodia has benefited from the ACFTA but not to a great extent because its resources are limited. That explains the Cambodia-China trade value of $8 billion, of which Cambodia’s exports were $1 billion a year.
Cambodia needs more seeds, silos and better-equipped rice mills for rice processing, good quality, packaging, logistics, know-how, technology and so forth. Although Chinese experts have recognised more Cambodian rice processing mills, Cambodia’s Rice Federation needs to be more oriented towards working as a cluster to boost exports to China.
Let us keep our fingers crossed, although we cannot achieve everything overnight. The government took measures to provide loans and supporting other technical and legal assistance for local companies, SMEs, so that they can take advantage of exporting 340 items to China, of which 95 percent are now tariff-exempt. The remaining 5 percent will be exempted over the next 10 years.
The government allocated $500 million in loans and, of that, $300 million will be provided for financing support and $200 million will go for credit guarantee projects.
Cambodia can export more than 10,000 items to China while China can export 8,000 items to Cambodia. Cambodia exported more than 300,000 tonnes of milled rice to China, less than its target of 1 million tonnes for 2019- 2021. The bilateral trade value was more than $8 billion in 2019 from $7 billion in 2018. It expects to reach $10 billion by 2023.
Cambodia hopes to increase exports to China by as much as 25 percent a year. But, this is just a calculation alone and the reality will depend on the actual efforts with the strong commitment of Cambodia, China and others.
The two commerce ministers expect to sign the trade deal that will be presided over by each country’s leaders, Premier Hun Sen and Chinese President Xi Jinping.
The trend also reaffirms the two nation’s commitment diplomatic ties since 1958. They reached a comprehensive strategic partnership in 2010 and nine years later inked a 2019-2023 action plan to build the two-country’s shared future that covers a number of measures in the areas of economies, people-to-people relations, politics, security and mutual cooperation.
Cambodia has made it clear that it wants to make friends near and far for mutual interest based on equal treatment and respect for each other’s independence, sovereignty. It has said repeatedly that the US, China, Korea, Japan, the European Union, Arab Emirate bloc and others are Cambodia’s friends.
Read more at https://www.khmertimeskh.com/50751845/benefits-of-cambodia-china-free-trade-deal-need-concerted-effort-to-bear-fruit/