Trade with Japan increased significantly in 2018, with exports soaring 27.3 percent and imports growing by 17.8 percent, according to the latest figures from the Japan External Trade Organization (JETRO).
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From January to December last year, more than $1.6 billion worth of shipments were sent to Japan, while Cambodia bought about $421 million in Japanese goods.
In December alone, exports to Japan rose by 19.9 percent compared to the same month last year, while imports grew by 19.2 percent. During that month, exports were valued at $119.8 million, while imports were $45.6 million.
Most Cambodian exports were garments, footwear products and, to a lesser degree, electronic components such as mobile phone batteries. Japan mostly exported machinery, cars and electronics to the Kingdom, as well as beef, steel and pharmaceuticals, according to the Cambodian Ministry of Commerce.
During a meeting last week with Cham Prasidh, the Cambodian Industry Minister, Fumio Yamada, director of the Japan Cambodia Interactive Association (JCIA), announced that a Japanese company is planning to build a pump factory in the Kingdom in the near future.
Mr Yamada also said that a Japanese conglomerate made up of 400 different companies expressed an interest in training local engineers.
Ho Sivyong, director of the Export and Import Department of the Ministry of Commerce, told Khmer Times that trade between Cambodia and Japan continues to grow every year.
“Currently, the Ministry of Commerce is really pushing our products to the Japanese and the Japanese people are showing a lot of interest in goods made in Cambodia.
“The goal is also to attract Japanese investors to come to the Kingdom and set up processing and packaging plants, which would help us diversify beyond garments and footwear,” Mr Sivyong said.
Mey Kalyan, senior advisor to the Supreme National Economic Council, said that the growth in exports to Japan was impressive.
He said it is particularly important to nurture the Kingdom’s trade relation with Japan, as it is key to diversifying Cambodia’s export markets, which continue to be dominated by the European Union and the US.
“Now, more and more Japanese investors are coming to invest in the Kingdom, particularly in Banteay Meanchey’s Poipet Special Economic Zone,” Mr Kalyan said.
He explained that most of those Japanese investors were previously based in Thailand, but decided to set up their plants in the Kingdom because it has lower labour costs and is politically stable.
He said Cambodia is also attracting Japanese investment due to its investor-friendly policies, which includes plenty of tax breaks for large investments. Moreover, Mr Kalyan said Japanese investors “know that the Cambodian economy will continue growing strongly in years to come.”
According to an annual report from the Central Bank, the manufacturing sector plays a crucial role in the Kingdom’s economy, employing more than one million Cambodians.
Exports of garment and footwear last year equalled $10 billion (73.7 percent of total exports), a jump of 24.7 percent year-on-year. Exports of electronic and auto parts increased threefold while shipments of bicycles grew by 12 percent.
The growth in garment and footwear exports follows improving conditions in the global economy, particularly in North America, the European Union and Japan, the Kingdom’s main export markets.