Cambodian exporters are hopeful that a free trade agreement with South Korea will boost trade between the nations and attract more investment into the Kingdom.
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On Monday, South Korean and Cambodian officials agreed to conduct a feasibility study into the creation of an FTA between the nations.
Chang Hoon Lee, managing director of Korean exporter Hyundai Agro, said the move is a positive development. A free-trade pact will boost trade between the countries and bring more investments into Cambodia, he noted.
“Under an FTA, tariffs to export mangoes will likely decrease, which means customers can buy good quality mangoes at a cheaper price,” he told Khmer Times yesterday.
Cambodian mangoes exported to the East Asian nation are subject to a 30 percent tariff, but Mr Lee said he expects the tax will reach zero percent in the next five years.
“Cambodian mangoes need a more competitive price. This can be achieved by reducing customs duties,” he said, noting that Vietnamese mangoes are taxed less because the country has signed an FTA with South Korea.
He said the FTA between Vietnam and South Korea has had a big impact. “The trade volume between Vietnam and South Korea has increased rapidly in the last three years and now Korea is the biggest source of foreign direct investment in Vietnam,” he pointed out.
South Korea’s free trade deals with Singapore and Vietnam went into effect in 2006 and 2015, respectively.
Korea is the biggest investor in Cambodia’s agricultural sector, according to Mr Lee, who said the FTA will attract even more investors from the East Asian nation.
“This investment could expand into more sectors, such as heavy industries and the manufacturing of plastic, automobile parts, paper, and steel.”
In a statement yesterday, Cambodia’s Ministry of Commerce said the FTA with Korea will help expand and boost trade ties between the countries.
“We expected the agreement will further expand investments, especially from Korean investors, while increasing exports to that market. It would be a mutually beneficial agreement,” it said.
An FTA between Cambodia and China is also in the works. The first official consultation on the agreement between Phnom Penh and Beijing is scheduled for early next month.
The Kingdom is hoping to ink a similar agreement with the Eurasian Economic Union (EAEU), with negotiations currently underway.
Lim Heng, vice president of Cambodia Chamber of Commerce, praised the government’s efforts to expand export markets. Regarding the potential FTA with China, he said:
“Signing this FTA will be great. It will give us access to China’s population of 1.4 billion people,” he told Khmer Times last week.
On the FTA with EAEU, he commented, “This will benefit both parties. Cambodia will be able to export a wider range of products. About 4,000 to 5,000 types of Cambodian goods will be allowed duty-free in the EAEU if the FTA is signed. Most would be agricultural and textile products.”
“This is a good opportunity for the Cambodian economy. We would be able to attract more foreign investors to our country as well as export new products to the Union,” he said.