Country Report onCountry Report on

Presented by: Mr. Thol Nara Multilateral Trade Department Ministry of Commerce Cambodia

Regional Training Program : Enhancing Utilization of ASEAN FTA, Trade Negotiation and Trade Policy Development.25-07-2012, Mekong Institute, Thailand .

Outline of Presentation

1. Cambodia’s Integration into the Region and Global

2. Trade Liberalization

3. Services Liberalization 4. Investment Liberalization

5. Challenges towards AEC Integration in 2015

Integration into the Region and Global

- 23, October 1991: Paris Declaration is essential especially for peace and stability.

- 30 April 1999: Cambodia joined ASEAN

- 13 October 2004, the country become the WTO member.

- Cambodia has also many bilateral agreements. Interest in those agreements based on commercial as well as political of all partner’s countries.

- Since 2000, Cambodia’s international trade has played a positive role in increasing GDP, particularly contribution to the poverty eradication and employment generation.

International Trade Policy and Development

Moving toward bilateral, regional and multilateral arrangements and trade openness.

1. General System of Preferences (GSP)2. AFTA – Common Effective Preferential Tariff (CEPT)3. AFAS (the 8 packages of negotiation)4. ASEAN Integration System of Preferences (AISP)

Trade LiberalizationTrade Liberalization

Under AFTAUnder AFTA, to reduce tariff lines to 5 % and below by , to reduce tariff lines to 5 % and below by 2010 and remaining tariff lines (Sensitive agriculture 2010 and remaining tariff lines (Sensitive agriculture products) by 2017 within CEPT.products) by 2017 within CEPT.

Tariff ReformTariff Reform

a.a. Reduced maximum tariff rates from 120 % to 35 %Reduced maximum tariff rates from 120 % to 35 %

b.b. The tariff bands of 35 % protects several semi processed The tariff bands of 35 % protects several semi processed goods and consumer goods such as processed meat and goods and consumer goods such as processed meat and daily sectors, processed vegetables and fruits..etc. daily sectors, processed vegetables and fruits..etc.

c.c. Most non-trade barriers were eliminatedMost non-trade barriers were eliminated

Pattern of Cambodian Trade Pattern of Cambodian Trade

- Imports:Imports: Petroleum products, Cigarettes, Gold, Construction Petroleum products, Cigarettes, Gold, Construction materials, Machinery, Motor vehicles, Pharmaceutical products. materials, Machinery, Motor vehicles, Pharmaceutical products.

Pattern of Cambodian TradePattern of Cambodian Trade

- Exports:Exports: Clothing, Footwear, Timber, Rubber, Rice, Fish, Clothing, Footwear, Timber, Rubber, Rice, Fish, Tobacco, and Cassava. The Major Cambodia’s export partners are Tobacco, and Cassava. The Major Cambodia’s export partners are the US, EU, Canada, China, Japan Korea, Vietnam.the US, EU, Canada, China, Japan Korea, Vietnam.

Cambodian Exports to ASEAN Dialogue Cambodian Exports to ASEAN Dialogue Partners (2010-2011)Partners (2010-2011)

Bilateral and Regional IntegrationBilateral and Regional Integration

Cambodia can export :Cambodia can export :

- 297 agricultural products at 0 tariff to China297 agricultural products at 0 tariff to China

- 249 products at a preferential rate to Thailand 249 products at a preferential rate to Thailand

- A quota and duty free access but with a quota to all A quota and duty free access but with a quota to all Canadian markets except for bananas. Canadian markets except for bananas.

- 496 agricultural and fishery products both quota and duty 496 agricultural and fishery products both quota and duty free to Japanfree to Japan

Cambodia and Vietnam renewed the agreement on goods Cambodia and Vietnam renewed the agreement on goods in transit. in transit.

Services Liberalization Services Liberalization

GATS and AFAS (to made a number of specific GATS and AFAS (to made a number of specific commitments to liberalize trade in services)commitments to liberalize trade in services)

Accession to WTO, scheduling specific Accession to WTO, scheduling specific commitments under GATS in more than half of commitments under GATS in more than half of the services sectors.the services sectors.

Under AFAS, 8 packages of regional services Under AFAS, 8 packages of regional services trade liberalization have been completed so far….trade liberalization have been completed so far….

Tourism comprises a major part of Cambodia’s Tourism comprises a major part of Cambodia’s services industry..services industry..

Visitor Arrivals and Tourism ReceiptsVisitor Arrivals and Tourism Receipts

Investment LiberalizationInvestment Liberalization

Agriculture and agro-industryAgriculture and agro-industry Transport and telecommunications infrastructuresTransport and telecommunications infrastructures Energy and electricity sectorsEnergy and electricity sectors Labor-intensive industries and export-oriented Labor-intensive industries and export-oriented

processing and manufacturingprocessing and manufacturing Tourism-related industriesTourism-related industries Human resource developmentHuman resource development Mining of minerals (including oil exploitation)Mining of minerals (including oil exploitation) Encouraged investment activitiesEncouraged investment activities

Investment LiberalizationInvestment Liberalization

Special Economic Zones (SEZs)Special Economic Zones (SEZs)

- One stop services- One stop services

- Fiscal incentive (Income tax, - Fiscal incentive (Income tax, customs and VAT benefits)customs and VAT benefits)

- Infrastructure and trade facilitation- Infrastructure and trade facilitation

506

2,243

763 744 853448 218 205 238 251 229

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4,415

2,673

10,891

5,859

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8,000

10,000

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FDI Trends flowed in Cambodia (Investment Trends 1994- July 2011)

Approved Investments by Country/Region Approved Investments by Country/Region (1994- July 2011)(1994- July 2011)

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8,849

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812

ChallengesChallenges

Under ATIGAUnder ATIGA

- Trade Facilitation (NTMs and NTBs) Trade Facilitation (NTMs and NTBs)

- ““Trade Barriers” especially non-tariff trade Trade Barriers” especially non-tariff trade barriers (are tough subject for negotiation such barriers (are tough subject for negotiation such TBT, SPS, ROO.TBT, SPS, ROO.

Under AFASUnder AFAS- Capacity building for government and private Capacity building for government and private

sectorssectors- Legal institutionsLegal institutions

Possible SolutionsPossible Solutions - Trade facilitation’s issues: improving supply capacity Trade facilitation’s issues: improving supply capacity

and reducing cost of doing business.and reducing cost of doing business.- Improving physical infrastructureImproving physical infrastructure- To facilitate international trade, a country’s goods and To facilitate international trade, a country’s goods and

services must fulfill certain standards imposed by services must fulfill certain standards imposed by global certification and accreditation institutions. global certification and accreditation institutions.

- Capacity building for trade development in both Capacity building for trade development in both government and the private sector.government and the private sector.

- Enhancing market access through strengthening trade Enhancing market access through strengthening trade promotion and market information activities.promotion and market information activities.

- Promoting small and medium enterprises (SMEs). Promoting small and medium enterprises (SMEs).

ConclusionConclusion

- Cambodia should identify, prioritize, implement, and - Cambodia should identify, prioritize, implement, and monitor trade policy and policy development that monitor trade policy and policy development that include investments in infrastructure such as:include investments in infrastructure such as:

1.1. Physical and legal infrastructurePhysical and legal infrastructure

2.2. Human resource developmentHuman resource development

3.3. Research and development for Research and development for competitivenesscompetitiveness

- Participation of donor communities are also play - Participation of donor communities are also play importance role in integrated framework (IF) for importance role in integrated framework (IF) for trade-related technical assistance…..trade-related technical assistance…..

Thank you for your attention !