participating of cambodia in the regional and international trade

8/14/2019 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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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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((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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((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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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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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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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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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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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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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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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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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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((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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((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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((concontt)) Tourist ReceiptsTourist Receipts


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((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

participating of cambodia in the regional and international trade

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