The commerce minister on May 3 reiterated an invitation for South Korean investors to pump money into a range of Cambodian sectors and take advantage of the Cambodia-Korea Free Trade Agreement (CKFTA) that took effect on December 1.
Minister of Commerce Pan Sorasak was speaking during newly-minted South Korean ambassador Park Jung-wook’s courtesy call on him, where the two officials discussed strengthening bilateral trade and economic relations and cooperation, according to a commerce ministry press release issued after the meeting.
This comes as provisional Customs (GDCE) statistics show that South Korea was Cambodia’s 14th largest trading partner in 2022, with bilateral merchandise trade totalling $778.924 million, up 0.63 per cent over 2021, but still down 11.66 per cent from the record $881.761 million logged in 2019 – when the peninsular nation was the Kingdom’s ninth largest trading partner.
The minister suggested “both sides” discuss services and investment to further promote and enhance bilateral trading arrangements, and ramp up cooperation under the framework of the ASEAN-Korean Free Trade Agreement (AKFTA) and similar deals in the interest of mutual benefit and reciprocity.
He hailed the CKFTA, and lauded South Korean efforts to promote bilateral trade and contributions to the Kingdom’s economic development.
The ambassador seemed open to the minister’s invitation to take advantage of bilateral free trade agreements (FTA) and other treaties to which both countries are parties, the release noted, adding that outreach workshops and capacity building training for officials were suggested during the meeting.
Praising relations between the two countries, particularly in terms of trade and other economic fields, Park expressed his commitment to promoting bilateral trade and working to attract more Korean and foreign players to invest in Cambodia.
The minister voiced support for the 2023 Cambodia-Korea Business Forum, which is scheduled to be held on May 19 in Phnom Penh, and called for more joint efforts to organise more business forums to potentially draw in additional foreign investors, the release said.
Meanwhile, the two governments at end-2022 signed a concessional loan agreement for a Cambodia-Korea Friendship Bridge between the capital and Kandal province’s Arey Ksat town, according to a statement from the Council for the Development of Cambodia (CDC) – the government’s highest decision-making body for large-scale investments.
Although noting that the bridge is slated to cost about $246 million, CDC secretary-general Sok Chenda Sophea explained that the project could provide a substantial shot in the arm for the local transport and logistics industries, justifying the hefty price tag.
He was speaking at the Cambodia-Korea Business and Investment Forum on January 27 in Seoul, South Korea, noted the CDC statement.
Reflecting on the modern technologies and “determined spirit to overcome all obstacles” that he said South Korean investors have brought to the Kingdom, Chenda Sophea called on more businesspeople from the economic powerhouse to bet on the Kingdom and profit from FTA use as well as the incentives granted by the new, more favourable Law on Investment.
He especially encouraged Korean automotive and electronics investors to consider incorporating Cambodia into their regional supply chains, pointing out that the government on December 9 approved the official “Cambodia’s Automotive and Electronics Sectors Development Roadmap” for local development in these domains.
The roadmap is designed to turn Cambodia into a regional and global production hub for automotive and electronic components, draw in more investment in the field, and boost exports by billions of US dollars in the long run.
Through this framework, the government hopes to “expand the export[s] of [the] automotive sector by around $500 million and of the electronics sector by around $1.6 billion while generating around 10,000 new jobs in the automotive sector and around 16,000 new jobs in the electronics sector by 2027”, according to the roadmap.
Also present at the forum, Sorasak remarked that the commerce ministry expects the CKFTA to fuel Cambodian exports to South Korea, particularly garments, footwear, bags and textile-related items, general spare parts, electronics, rubber and agricultural products.
Under the CKFTA, coupled with the Regional Comprehensive Economic Partnership (RCEP), the Kingdom is to lift tariffs on 93.8 per cent of goods traded, with South Korea scrapping duties on 95.6 per cent, according to the Yonhap News Agency. Commerce ministry spokesman Penn Sovicheat has also noted that the CKFTA will provide more than 10,000 Cambodian items duty-free access to South Korea.
An FTA is an international treaty between two or more economies designed to reduce or eliminate certain barriers to imports and exports among them, generally while safeguarding safety, security, health and other legitimate regulatory objectives. Such a pact can also serve to facilitate and promote greater economic ties among signatories in areas such as investment and intellectual property protection.
Last year, Cambodia’s exports to and imports from South Korea came in at $233.638 million and $545.286 million, respectively, up 20.38 per cent and down 5.98 per cent year-on-year, narrowing the Kingdom’s trade deficit with the East Asian country by 19.2 per cent on an annual basis to $311.648 million, according to the GDCE.
Citing the GDCE, the ministry’s Trade Training and Research Institute (TTRI) reported that Cambodia’s top exports to South Korea in 2022 were “footwear, gaiters and the like” ($54 million), “articles of apparel, knit or crocheted” ($52 million), “electrical, electronic equipment” ($45 million), “articles of apparel, not knit or crocheted” ($35 million) and “aluminium” ($12 million) – corresponding to chapters 64, 61, 85, 62 and 76 of the Harmonised System (HS).
The Kingdom’s top imports from the fourth-largest Asian economy last year were “vehicles other than railway, tramway” ($132 million), “raw hides and skins – other than furskins – and leather” ($55 million), “beverages, spirits and vinegar” ($52 million), “knitted or crocheted fabric” ($34 million) and “electrical, electronic equipment” ($31 million) – or chapters 87, 41, 22, 60 and 85 of the HS.