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Much needs to be done to reap the benefits of Cambodia-China Free Trade Agreement

Ek Tha / Share:
Visiting Chinese State Councilor and Foreign Minister Wang Yi (3rd L) meets with Cambodian Deputy Prime Minister Hor Namhong (3rd R) in Phnom Penh, Cambodia, Oct. 11, 2020. (Xinhua/Mao Pengfei)

Both governments and their peoples see the new Cambodia-China trade deal as a golden opportunity and the need to make the most out of it. We can be sure the world is watching how two of Asia’s closest allies will translate the deal into actual implementation for mutual interest.

Each country sees the other as a good complement to their own: Cambodia has investment potential, thanks to the country’s agricultural crops with vast arable land and young labour force. China has finance, technical expertise, and a large market. However, one must bear in mind that this trade deal would have not come about without the ironclad ties forged since the Cold War.

It also reaffirms the two nation’s joint commitment to put diplomatic ties in place 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. Their ties cover a number of measures in the areas of economy, people-to-people relations, politics, security and mutual cooperation.

The new deal is another plus to the existing legal framework of the ASEAN-China Free Trade Area (ACFTA) established in 2010, which paved the way for the export of thousands of different goods to China.

The world is watching us. Some wrongly interpret that, with the CCFTA, Cambodia has put aside its valuable ties with the EU, US and instead embraced China. But, Cambodia has made it clear: She wants to make friends with all for mutual interests based on equal treatment and respect for each other’s independence and sovereignty.

Despite the world still facing COVID-19, which has killed more than 1 million out of more than 38 million confirmed cases, storm clouds have also covered the skies of these two Asian nations, nothing prevented them from reaching this golden deal as part of China Belt and Road Initiative (BRI) launched in 2010 by China’s President Xi Jinping.

PM Hun Sen instructed his officials to arrange quickly the signing ceremony through video conferencing, ahead of the arrival of China’s foreign minister Wang Yi, so that both commerce ministers can see each other as he and Wang Yi witnessed the signing.

The deal, inked on 12th October 2020, sends a powerful message to Cambodia’s friends that she has gained entry into a strong Chinese market of more than 1.3 billion consumers. Two-way trade value was $8 billion in 2019 from more than $7 billion in 2018, thanks to ACFTA, and with the new trade deal, there are hopes exports to China will increase by as much as 25 per cent a year, and reach $10 billion by 2023.

Cambodia’s Industrial Development Policy (2015–2025) has been put in place to address the coming challenges, promote productivity and find markets for its products, such as rice, sugar, rubber, black pepper and fresh-water fish to livestock, and others. Cambodia has 6 million tonnes in rice paddy a year in surplus from domestic consumption.

It is a great opportunity for the nation. Cambodia needs to work as clusters when it comes to such commodities. She needs more silos and better equipped rice mills for rice processing, packaging, as well as logistics, and so forth.

Foreign investors must join hands with Cambodia to translate this opportunity into reality for mutual benefit by technology and knowledge transfer when implementing the deal. This will help Cambodia. With China’s new assistance package of $141 million to improve our productivity, value-added products, business efficiency and other factors, Cambodia can only gain.

Nearly 48,000 registered companies and enterprises, local and foreign in Cambodia, must be ready to take advantage of the trade deal to be implemented by 2021.

The government has taken measures to provide loans and support with technical and legal assistance for local companies, Small Medium Enterprises (SMEs), so that they can take advantage of exporting 340 items to China, of which 95 per cent are now tariff-exempt. The remaining 5 per cent will be exempted over the next five to ten years.

Cambodia has allocated $500 million in loans, including $300 million for financing support and $200 million will go to credit guarantee projects. So far this year, Cambodia has exported more than 300,000 tonnes of milled rice to China, less than its target of 400,000 tonnes.

Among those 8,547 tariff lines of China, there are only 181 lines not included in tariff elimination and reduction schedules. They need to work closely to promote these products too, after the deal takes effect. We have the opportunity, now let us have the will.


Ek Tha is a Standing-Vice Chairman of the Royal Government Spokesperson Unit, spokesman of the Council of Ministers, advisor to the Ministry of Information.


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