Cambodian exports to the United States, the world’s largest economy, rose sharply during the first three months of the year following a marked increase in the shipments of travel goods after the US renewed its Generalized System of Preferences in March.
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A spokesman for the Ministry of Commerce told Khmer Times yesterday that recent political tensions between Cambodia and the US over the dismantling of the Cambodia National Rescue Party (CNRP), the main political opposition until its dissolution in November, have not affected the trade relation between the countries.
Numbers from the Office of the United States Trade Representative show that Cambodian exports were worth $903 million during the first quarter of the year, compared to $719 million during the same period in 2017 – an increase of more than 25.5 percent.
Seang Thay, ministry spokesman, said the bulk of that growth belongs to travel goods, a category that has attracted a large number of investors after Cambodia was granted duty-free benefits for travel goods exports under the US’s GSP programme in 2016.
“Since we got the GSP on travel goods with the United States there has been a lot of investment into this industry,” he said, adding that another major factor in the strong export growth is that “investors understand very well that the country is very stable.”
Mr Thay added that orders of garment and footwear products have remain stable.
On March, US President Donald Trump signed the Consolidated Appropriations Act, which extended the country’s GSP programme, a scheme established in 1974 to promote economic growth in the developing world by allowing access to duty-free privileges for least developed countries. The extension will expire in December 2020.
Earlier this month, Vongsey Vissoth, Secretary of State for the Ministry of Economy and Finance, said Cambodia is in an ideal position to benefit from the recent tax reform in the US and its ongoing trade dispute with China.
“The tax reform in the US will boost its economy and create many new opportunities for Cambodian exporters. It could help us grow our GDP by as much as 0.5 percent,” he said.
“A buoyant economy in the US multiplies opportunities for exporters in Cambodia.”
The ongoing US-China trade dispute also presents a tantalising opportunity to increase exports to the US, the biggest market for Cambodian garment and footwear products, he said.
“As barriers to export to the US increase in China, investors from the US will turn to other countries to invest and to set up factories from which they can import. Cambodia must take advantage of this situation.”
However, he said that in order to make the most of these situations, Cambodia needs to undergo deep structural reforms, including improving its competitiveness by reducing the cost of electricity and transportation, as well as streamlining and facilitating trade procedures and diversifying its industry.