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Cambodia: Kingdom casts it export net wider to mitigate exit of major US and EU markets
Due to COVID-19’s devastating economic effect causing the collapse of Cambodia’s two major export markets, the United States and the European Union, representing about 75 percent of total market share, is forcing a refocus on expanding the Kingdom’s highly concentrated export market.
Khmer Times spoke to Penn Sovicheat, the under-secretary of state and spokesperson for the Ministry of Commerce, who said that diversification has been one of the ministry’s highest priorities and the ministry understands the devastating effect COVID-19 has had on these two major trading partners.
“Because of the effect COVID-19 has had, and will continue to have, on our biggest export partners, we are now focusing on other markets such as intra-Asean, China, Australia, New Zealand and Canada – markets that we consider still economically viable for trade,” Mr Penn said.
To achieve this, the ministry has outlined an enhanced focus on free-trade agreements (FTAs) such as the Regional Comprehensive Economic Partnership (RCEP) between Asean nations and their partner states Australia, China, Japan, New Zealand and South Korea, as well as the continued FTA negotiations with China that are expected to be finalised by the end of the year. India, which is also an Asean FTA partner, opted out of RCEP in November last year.
“When Cambodia graduates from its LCD (least-developed nation) status, the ministry wants to ensure the country remains competitive enough to maintain its export competency and continue to attract foreign direct investment,” Penn said.
“Outside the RCEP we are looking to the former Soviet bloc nations as a growing destination for our products, too. However, for both the African and South American markets we do not see much potential,” Penn added.
Export diversification has been a long-term policy for the Ministry of Commerce since the ministry released its 2019-2023 Cambodia Trade Integration Strategy, with its Minister Pan Sorasak stating upon the release of the report the need for a new strategy that focuses on strengthening the country’s competitiveness to support its transition into a developed economy and to benefit from new sources of growth, particularly from the so-called Fourth Industrial Revolution, involving 5G, artificial intelligence and the internet of things.
“Cambodia needs to be ready to continue to undergo reforms to boost competitiveness, as well as diversify markets and production to increase exports,” he said.
Diversification is another key term being used by both Cambodian policymakers and analysts, said Dr Chheang Vannarith, president of the Asian Vision Institute, who has previously stated: “There are three layers of diversification at the international, national and local levels. Internationally, Cambodia needs to build more economic and strategic partnerships, expand export markets and make new friends.”
In 2019, Cambodia exported $14.53 billion of goods, a year-on-year increase of 12.7 percent, according to official government reports. However, this amount is expected to drastically reduce under the current economic conditions caused by the Coronavirus pandemic.
Source: https://www.khmertimeskh.com/50712402/kingdom-casts-it-export-net-wider-to-mitigate-exit-of-major-us-and-eu-markets/