participating of cambodia in the regional and international trade
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Participating of Cambodia inParticipating of Cambodia inthe Regional and Internationalthe Regional and International
TradeTrade
Prepared by Chan Bonnivoit forPrepared by Chan Bonnivoit for
Cambodian ParticipantsCambodian Participants
in IDLOin IDLO CourseCourse
Sydney, 07Sydney, 07--28/11/200828/11/2008
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TABLE OF CONTENTSTABLE OF CONTENTS
A.A. IntroductionIntroduction
B.B. Recent economic developmentsRecent economic developments
C.C. Policy in promoting tradePolicy in promoting tradeD.D. Gains from most open policyGains from most open policy
E.E. Constraints and solutions?Constraints and solutions?F.F. ConclusionConclusion
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A. IntroductionA. Introduction
Cambodia joined ASEAN (30Cambodia joined ASEAN (30--0404--99) and ASEAN +99) and ASEAN +arrangementsarrangements
Since 13Since 13--1010--2004 the Country becomes a member of2004 the Country becomes a member ofWTO.WTO.
Besides, Cambodia has many bilateral negotiations andBesides, Cambodia has many bilateral negotiations andagreements. Interest in those agreements is alwaysagreements. Interest in those agreements is alwaysbased on commercial as well as political considerationsbased on commercial as well as political considerationsof all partnerof all partners Countries.s Countries.
With regard to the above issues mentioned, this paperWith regard to the above issues mentioned, this paperbriefly presents the background, the policy, thebriefly presents the background, the policy, thecommitments, the benefit, and constraints relating tocommitments, the benefit, and constraints relating to
regional and international trade arrangements, and anregional and international trade arrangements, and another trade issues of Cambodia.other trade issues of Cambodia.
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B. Recent Economic DevelopmentB. Recent Economic Development
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B. Recent Economic DevelopmentB. Recent Economic Development
1. GDP growth rate and inflation rate (%)1. GDP growth rate and inflation rate (%)
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
2000 2001 2002 2003 2004 2005 2006
GDP
Inflation
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B. Recent Economic DevelopmentB. Recent Economic Development
((concontt))2. Cambodian real GDP growth by sectors (%)2. Cambodian real GDP growth by sectors (%)
-5%
0%
5%
10%
15%
20%
2002 2003 2004 2005 2006
Agriculture
Industry
Services
Total GDP
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B. Recent Economic DevelopmentB. Recent Economic Development
((concontt))3. Official exchange rate (Riel/US$)3. Official exchange rate (Riel/US$)
3910
3900
3935
3980
4031
4070 4
110
3750
3800
3850
3900
3950
4000
4050
4100
4150
2000 2001 2002 2003 2004 2005 2006
Exchange Rate
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C. Policy in Promoting TradeC. Policy in Promoting Trade
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C. Policy in Promoting Trade (C. Policy in Promoting Trade (concontt))
1.1. The rectangular Strategy of RGCThe rectangular Strategy of RGC
The core of the rectangular strategy is good governanceThe core of the rectangular strategy is good governancefocused at four reform areas:focused at four reform areas:
AntiAnti--CorruptionCorruption
Legal and judicial reform,Legal and judicial reform, Public administration reform, including decentralization andPublic administration reform, including decentralization and
deconcentrationdeconcentration, and, and
Reform of the armed forces, especially demobilizationReform of the armed forces, especially demobilization
The integration of Cambodia into the region and the world isThe integration of Cambodia into the region and the world is
a significant part of the rectangular strategy of RGC.a significant part of the rectangular strategy of RGC.
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C. Policy in Promoting Trade (C. Policy in Promoting Trade (concontt))
2.2. The Integrate Framework of RGCThe Integrate Framework of RGC The Integrated Framework (IF) is the outcome of a commitment madThe Integrated Framework (IF) is the outcome of a commitment made by six multilaterale by six multilateral
Agencies (IMF, ITC, UNCTAD, UNDP, World Bank, and WTO) to coordiAgencies (IMF, ITC, UNCTAD, UNDP, World Bank, and WTO) to coordinate theirnate their
assistance in the area of trade and investment integration intoassistance in the area of trade and investment integration into the global economy amongthe global economy amongthemselves and with other multilateral and bilateral donors.themselves and with other multilateral and bilateral donors.
IF came about as a result of the High Level Meeting (HLM) forIF came about as a result of the High Level Meeting (HLM) for LDCsLDCs organized by theorganized by theWTO in October 1997 in Geneva.WTO in October 1997 in Geneva.
TheThe IFIFss strategy must be fullystrategy must be fully mainstreamedmainstreamed in the countryin the countrys national strategy fors national strategy forpoverty reduction. In other words, the countrypoverty reduction. In other words, the countrys trade sector strategy must be fullys trade sector strategy must be fullysupport and coherent with national objectives of poverty reductisupport and coherent with national objectives of poverty reduction.on.
In the donor community based in Cambodia, UNDP has taken the leaIn the donor community based in Cambodia, UNDP has taken the lead to ensure effectived to ensure effective
implementation of IF and coordination among local donors. UNDPimplementation of IF and coordination among local donors. UNDP--Phnom Penh and thePhnom Penh and theInternational Trade Center (Geneva) are cooperating and workingInternational Trade Center (Geneva) are cooperating and working directly with RGC anddirectly with RGC andothers to backstop work in this area.others to backstop work in this area.
-- Accordingly, an initial goal of IF in Cambodia is to work with CAccordingly, an initial goal of IF in Cambodia is to work with Cambodian stakeholdersambodian stakeholdersand develop such a Proand develop such a Pro--Poor Trade Sector Strategy.Poor Trade Sector Strategy.
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C. Policy in Promoting Trade (C. Policy in Promoting Trade (concontt))
3.3. The ProThe Pro--Poor Trade Strategy of RGCPoor Trade Strategy of RGC Preliminary evidence examined suggests that trade is making aPreliminary evidence examined suggests that trade is making a
significant positive contribution to economic growth and povertysignificant positive contribution to economic growth and povertyreduction and that such contribution can be further enhanced andreduction and that such contribution can be further enhanced andprovided Cambodia to become proactive in promoting trade for povprovided Cambodia to become proactive in promoting trade for povertyertyreduction.reduction.
Regarding this issue RGC established a ProRegarding this issue RGC established a Pro--Poor Trade StrategyPoor Trade Strategyorganized around tree basic concepts:organized around tree basic concepts: Shifting the balance of policy emphasis from issues of market acShifting the balance of policy emphasis from issues of market access andcess and
macromacro--reforms for trade to micro andreforms for trade to micro and mesomeso--level issues of supply capacitylevel issues of supply capacity
Focusing strongly on the delivery of capacityFocusing strongly on the delivery of capacity--building support at the exportbuilding support at the exportenterprise and export sector level; andenterprise and export sector level; and
Stressing the regionalization and geographical decentralizationStressing the regionalization and geographical decentralization of exportof exportbusiness within Cambodiabusiness within Cambodia
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C. Policy in Promoting Trade (C. Policy in Promoting Trade (concontt))
3.3. Trade Sector wide Approach (Trade Sector wide Approach (SWApSWAp))
a.a. SWApSWAp is an instrument for better management,is an instrument for better management,coordination and effectiveness of resources. Now RGC iscoordination and effectiveness of resources. Now RGC is
willing to utilizewilling to utilize SWApSWAp in the Trade Sector.in the Trade Sector.
b.b. The Ministry of Commerce stands ready to develop aThe Ministry of Commerce stands ready to develop a
SWApSWAp in order (3 pillars):in order (3 pillars):
To reform Legal and Institutions,To reform Legal and Institutions,
To develop Production and Services Sectors,To develop Production and Services Sectors,
To build up the Capacity of HRTo build up the Capacity of HR
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C. Policy in Promoting Trade (C. Policy in Promoting Trade (concontt))
4. Special Economic Zone/Special Production Zone4. Special Economic Zone/Special Production Zone The main rationale of establishingThe main rationale of establishing SEZsSEZs is to:is to:
Provide investors with adequate infrastructure and supportive faProvide investors with adequate infrastructure and supportive facilitiescilities Diversifying the Cambodian economy and promoting exportDiversifying the Cambodian economy and promoting export
Enhance competitiveness of garment industry and other labor inteEnhance competitiveness of garment industry and other labor intensive activitiesnsive activities
Promote agroPromote agro--industry, food processingindustry, food processing
Promote assembling industryPromote assembling industry
Promote electronic and electric appliances industriesPromote electronic and electric appliances industries
The following growth poles have been identified for industrial dThe following growth poles have been identified for industrial development:evelopment: PoipetPoipet andand andand KohKoh Kong (at the CambodianKong (at the Cambodian--Thai border)Thai border)
BavetBavet and Phnom Den (at the Cambodianand Phnom Den (at the Cambodian--Vietnamese border)Vietnamese border)
Phnom PenhPhnom Penh Sihanouk VilleSihanouk Ville
Sihanouk Ville portSihanouk Ville port has harbor facilities andhas harbor facilities and dry portsdry ports which have beenwhich have beendeveloped to enhance its competitive edge as an international codeveloped to enhance its competitive edge as an international commercialmmercial
gateway.gateway.
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C. Policy in Promoting Trade (C. Policy in Promoting Trade (concontt))
5. Integrating Cambodia into the international Community5. Integrating Cambodia into the international Community
CambodiaCambodias membership in ASEAN (30s membership in ASEAN (30--0404--1999) and1999) andWTO (13WTO (13--1010--2004), as well as cooperation within the2004), as well as cooperation within the
framework of the ASEM.framework of the ASEM.
CambodiaCambodias membership in Great Mekong Subs membership in Great Mekong Sub--Region, theRegion, theAyeyawadeeAyeyawadee--ChaoChao PhrayaPhraya--Mekong Economic CooperationMekong Economic Cooperation
Strategy (ACMECS) and other Triangular Developments atStrategy (ACMECS) and other Triangular Developments at
subsub--regional levelregional level Integrating Cambodia into the international Community willIntegrating Cambodia into the international Community will
provide great opportunities to reform the investment andprovide great opportunities to reform the investment and
foreign trade regime.foreign trade regime.
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C. Policy in Promoting Trade (C. Policy in Promoting Trade (concontt))
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Cambodia in ASEANCambodia in ASEAN
CountryCountry Industrial and AgroIndustrial and Agro--
Industrial ProductsIndustrial Products
Agricultural ProductsAgricultural Products
ILIL TELTEL ILIL TELTEL SLSL
ASEANASEAN--66 19931993--20032003 19961996--20032003 19961996--20032003 19971997--20032003 20012001--20102010
VietnamVietnam 19961996--20062006 19991999--20062006 19991999--20062006 20002000--20062006 20042004--20132013
Laos &Laos &MyanmarMyanmar
19981998--20082008 20012001--20082008 20012001--20082008 20022002--20082008 20082008--20152015
CambodiaCambodia 20002000--20102010 20032003--20102010 20032003--20102010 20042004--20102010 20082008--20172017
Schedules of Tariff Rate of CambodiaSchedules of Tariff Rate of Cambodia
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CambodiaCambodias Tariffs by Product Groups fors Tariffs by Product Groups for
Accession into WTOAccession into WTO
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CambodiaCambodias Service Commitments fors Service Commitments for
Accession into WTOAccession into WTO Undertaken market access and national treatment commitments in aUndertaken market access and national treatment commitments in at least one subt least one sub--
sector under each of 11 different service which are communicatiosector under each of 11 different service which are communications services,ns services,
construction and related engineering services, distribution servconstruction and related engineering services, distribution serv
ices, educationices, education
services, environmental services, financial services, healthservices, environmental services, financial services, health--related services,related services,tourism and travel services, recreational services and transporttourism and travel services, recreational services and transport services.services.
Allowing foreign firm to operate in the areas of legal servicesAllowing foreign firm to operate in the areas of legal services (with some(with some
exceptions), accounting, auditing, bookkeeping, banking, managemexceptions), accounting, auditing, bookkeeping, banking, management consulting,ent consulting,telecommunication and transport, but some conditions were attachtelecommunication and transport, but some conditions were attached to marketed to marketaccess in areas of financial services (banking and insurance) anaccess in areas of financial services (banking and insurance) anddtelecommunication services.telecommunication services.
Allowing foreign firms to provide higher education and adult eduAllowing foreign firms to provide higher education and adult education services.cation services.
Reserving part of a market for Cambodian small and medium sizedReserving part of a market for Cambodian small and medium sized enterprise inenterprise inareas such as banking, tourism and courier service (tourist guidareas such as banking, tourism and courier service (tourist guides services;es services;opening hotel market only for hotels of three stars or higher; aopening hotel market only for hotels of three stars or higher; and allowing foreignnd allowing foreignsupply of retailing services only a small number of specific itesupply of retailing services only a small number of specific items or for very largems or for very largesupermarkets or department stores.supermarkets or department stores.
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C. Policy in Promoting Trade (C. Policy in Promoting Trade (concontt))
6. Bilateral agreement on the promotion and protection of invest6. Bilateral agreement on the promotion and protection of investmentsmentsbetween the Kingdom of Cambodia and other Countries.between the Kingdom of Cambodia and other Countries.
Already signed:Already signed:
1.1. MalaysiaMalaysia
2.2. ThailandThailand3.3. USA (OPIC)USA (OPIC)
4.4. ChinaChina
5.5. SwitzerlandSwitzerland
6.6. SingaporeSingapore
7.7. ROKROK
In the pipeline: Laos, Myanmar, Czech Republic, Ukraine, Egypt,In the pipeline: Laos, Myanmar, Czech Republic, Ukraine, Egypt, Russia,Russia,PDR Korea, Libya, UK, Algeria and Japan.PDR Korea, Libya, UK, Algeria and Japan.
8. France
9. Philippines
10. OPEC
11. Croatia
12. Cuba
13. Vietnam
14. Netherlands
15. Pakistan
16. Austria17. Australia
18. Indonesia
19. Germany
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C. Policy in Promoting Trade (C. Policy in Promoting Trade (concontt))
7. Trade related to Investment: Investment Protection7. Trade related to Investment: Investment Protection
Equal treatment of all investorsEqual treatment of all investors No nationalization adversely affecting the property ofNo nationalization adversely affecting the property of
investorsinvestors
No price controls on products or serviceNo price controls on products or service No restriction on foreign equity participationNo restriction on foreign equity participation
No restriction on foreign convertibilityNo restriction on foreign convertibility
Remittance of foreign currencies abroadRemittance of foreign currencies abroad
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D. Gains from most open tradeD. Gains from most open trades policys policy
618
578
554
196
160
140
145
63342
831
3037
0
500
1000
1500
2000
2500
3000
3500
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Total FDI
1. Investment in Cambodia1. Investment in Cambodia
FDI in Cambodia (in USD Million)
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D. Gains from most open tradeD. Gains from most open trades policys policy
((concontt))
2,059
1,95
6
1,35
9
559357
331
267
200
500
1,000
1,500
2,000
2,500
China
Malaysia Korea USA EU
Thailand
Sing
apore Japan
1. Investment in Cambodia (1. Investment in Cambodia (concontt))
Investments by Countries 1994-1st Half 2006 (Million US$)
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D. Gains from most open tradeD. Gains from most open trades policys policy
((concontt))2.2. Tourist Sector of Cambodia (GATS)Tourist Sector of Cambodia (GATS)
The growth in tourism has been robust and is a strong contributiThe growth in tourism has been robust and is a strong contribution toon tothe services sector of the Country. GDP of the services sectorsthe services sector of the Country. GDP of the services sectors grewgrew
at an average of 8.6% over the 2000at an average of 8.6% over the 2000--2005 period.2005 period.
The number of tourists increased by 35% in 2005 relative to theThe number of tourists increased by 35% in 2005 relative to the yearyearbefore. Tourists from the Republic of Korea ranked first in termbefore. Tourists from the Republic of Korea ranked first in terms ofs of
tourist arrivals.tourist arrivals. More than 50% of total tourist arrivals to Cambodia are from theMore than 50% of total tourist arrivals to Cambodia are from the
Asian and Pacific countries, and about a quarter of the touristAsian and Pacific countries, and about a quarter of the tourist arrivalsarrivalsare from the Europe.are from the Europe.
The number of Cambodian tourists to the neighbor CountriesThe number of Cambodian tourists to the neighbor Countriesincreases from year to year and account approximate at 800,000increases from year to year and account approximate at 800,000persons for last year.persons for last year.
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D. Gains from most open tradeD. Gains from most open trades policys policy
((concontt)) Tourist ReceiptsTourist Receipts
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D. Gains from most open tradeD. Gains from most open trades policys policy
((concontt))3. Cambodia3. Cambodias garment exports (million US$)s garment exports (million US$)
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E. ConstraintsE. Constraints
ConstraintsConstraints Domestic problems relating to factor endowments,Domestic problems relating to factor endowments,
structural adjustment, infrastructure, bureaucracy,structural adjustment, infrastructure, bureaucracy,HR, capital etc.HR, capital etc.
The capacity of supplyThe capacity of supply
The market accessThe market accesss issues regarding to ROO, SPSs issues regarding to ROO, SPS
andand TBTTBTss issuesissues Trade facilitationTrade facilitations issuess issues
A huge trade deficit with some Countries.A huge trade deficit with some Countries.
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E. Solutions?E. Solutions?
Solutions?Solutions?
Better sourcing of raw materials or production of rawBetter sourcing of raw materials or production of rawmaterials locallymaterials locally
Capacity building and education programsCapacity building and education programs
Improving infrastructure and structural adjustmentImproving infrastructure and structural adjustment Reducing bureaucracy and corruptionReducing bureaucracy and corruption
Encouraging competitionEncouraging competition
Regional arrangement base on impartiality benefitRegional arrangement base on impartiality benefit
Further negotiations in WTO to prefer forFurther negotiations in WTO to prefer for LDCsLDCs
Bilateral negotiations and agreementsBilateral negotiations and agreements
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F. ConclusionF. Conclusion
Trade has been increasing, and the process and theTrade has been increasing, and the process and theresults depend on the capacity, ability and feasibilityresults depend on the capacity, ability and feasibility
of the Countries concerned.of the Countries concerned.
It is difficult to conclude that the trade is either goodIt is difficult to conclude that the trade is either good
or bad for the concerned Countries, because the tradeor bad for the concerned Countries, because the tradeis not always fairness or impartiality.is not always fairness or impartiality.
In some case, the trade will definitely have bothIn some case, the trade will definitely have bothpositive and negative impacts. The positive impactspositive and negative impacts. The positive impactswill have to be maximized, and the negative impactswill have to be maximized, and the negative impactswill have to be well managed if the concernedwill have to be well managed if the concerned
Countries have to benefit explicitly from them.Countries have to benefit explicitly from them.
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F. ConclusionF. Conclusion
In case of Cambodia as aIn case of Cambodia as a LDCLDCss Country, the trade currentlyCountry, the trade currentlysounds a significant meaning for promoting some key sectorsounds a significant meaning for promoting some key sectorand the economic development of the Country, even though theand the economic development of the Country, even though the
Country has a limitation of the resources concerned to carryCountry has a limitation of the resources concerned to carryout the trade in the impartial balance.out the trade in the impartial balance.
The WTO membership of Cambodia, the ASEAN and ASEANThe WTO membership of Cambodia, the ASEAN and ASEAN+ arrangements create the proper conditions for trade and+ arrangements create the proper conditions for trade andinvestment, push for outwardinvestment, push for outward--oriented policies to promoteoriented policies to promoteefficiency, promote structural reform to encourage domesticefficiency, promote structural reform to encourage domesticcompetition, and create strong institutions to foster goodcompetition, and create strong institutions to foster goodgovernance in the Country.governance in the Country.
The bilateral tradeThe bilateral trades negotiations and agreements are certainlys negotiations and agreements are certainly
also a key instrument in pushing and promoting the key sectorsalso a key instrument in pushing and promoting the key sectorswhich are recognized by the Country as a significant sectors towhich are recognized by the Country as a significant sectors toencourage its economic growth.encourage its economic growth.
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sUmGrKuNsUmGrKuNTHANKS YOUTHANKS YOU
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