South Korea has pledged to expand economic and trade cooperation with Cambodia after a free trade agreement (FTA) signed by the two countries last year enters effect in the near future, Prime Minister Hun Sen affirmed in a statement at the weekend.
The premier met South Korean President Moon Jae-in on February 11, at the 2022 World Summit for Peace on the Korean Peninsula in Seoul.
At the meeting, Moon remarked that Cambodia is a key priority for South Korea, especially as the FTA nears implementation, and said the agreement was “being sent to Parliament” for ratification after “completion of the procedures”, according to the statement.
The president voiced satisfaction over the exceptional level of bilateral cooperation, and said Seoul would stick to the policy of encouraging Korean investors to enter the Cambodian market, using the new Law on Investment as a major enticement.
Moon also noted that there are 300 South Korean companies investing and doing business in Cambodia.
Hun Sen asked Moon for Seoul’s continued support for Cambodian industry, especially in the processing segment, suggesting a “plus one” business model, in which Korean companies could expand supply chain networks developed in Thailand or Vietnam to Cambodia.
In expectation of a considerable jump in Korean investment into Cambodia driven by the Kingdom’s new investment law, the premier suggested forging special cooperative partnerships in the fields of food processing and agro-industry for export to the East Asian nation.
Ministry of Commerce spokesman Pen Sovicheat told The Post early this month that the FTA would come into force 60 days after both countries deposit their instrument of ratification – which he called a “notification letter” – a document by which a country formally agrees to be bound by a treaty. He voiced confidence that the deal would enter into effect no later than June 30.
Cambodia Chamber of Commerce vice-president Lim Heng told The Post that the private sector is looking forward to the FTA, which he said is “more favourable” than a similar pact that the Kingdom struck with China – especially the tariff concessions on agricultural products.
"The agreement with Korea is more liberal than China's because tariffs on agricultural products are almost zero, whereas China’s still has some agricultural products taxed, such as rubber. On the other hand, the commerce ministry says it will pursue further negotiations with China," he said.
The bill authorising the ratification of the FTA was enacted into law by a Royal Code signed by the King on January 29.
Sovicheat previously reported that the agreement would grant more than 10,000 Cambodian goods duty-free access to South Korea.
Under the deal, coupled with the Regional Comprehensive Economic Partnership (RCEP), the Kingdom will lift tariffs on 93.8 per cent of goods traded, with South Korea scrapping duties on 95.6 per cent, Yonhap News Agency reported in October citing the South Korean trade ministry.
The two deals are expected to deliver significant gains to bilateral trade flows between Cambodia and South Korea, which grew 9.015 per cent last year to $965.132 million, from $885.322 million in 2020, according to data from the Korea International Trade Association (Kita).
In 2021, Cambodian exports to South Korea amounted to $341.503 million, up by 7.353 per cent year-on-year from $318.112 million, while imports clocked in at $623.628 million, rising by 9.947 per cent from $567.210 million in 2020.
Cambodia’s trade deficit with South Korea widened by 13.258 per cent from $249.099 million in 2020 to $282.125 million last year.
In December alone, bilateral trade was to the tune of $95.395 million, a 10.966 per cent uptick from $85.968 million in December 2020. Of that, Cambodia’s exports amounted to $32.439 million, rising by 23.916 per cent from $26.179 million, and imports clocked in at $62.955 million, up by 5.295 per cent from $59.789 million.