UNCTAD Expert Meeting

8/14/2019 UNCTAD Expert Meeting

1/52

Cambodia in ParticipatingCambodia in Participatingthe Souththe South--South TradeSouth Trade

Prepared byPrepared by

MScMSc

.

.AgrAgr

. Chan

. ChanBonnivoitBonnivoit

WTO OfficeWTO Office

Ministry of CommerceMinistry of Commerce

CambodiaCambodia

Expert Meeting on Participation of the Developing Countries in NExpert Meeting on Participation of the Developing Countries in New and Dynamic Sectorsew and Dynamic Sectorsof the World Trade: the Southof the World Trade: the South--South Dimension,South Dimension,

1616--17 Oct 2007,17 Oct 2007, PalaisPalais des Nations, Genevades Nations, Geneva


2/52

22

TABLE OF CONTENTSTABLE OF CONTENTS

A.A. IntroductionIntroduction

B.B. Recent economic developmentsRecent economic developments

C.C. Policy in promoting trade: southPolicy in promoting trade: south--south tradesouth tradeD.D. Gains from most open policy: southGains from most open policy: south--south tradesouth trade

E.E. Constraints and solutions?Constraints and solutions?F.F. ConclusionConclusion


3/52


4/5244

B. Recent Economic DevelopmentB. Recent Economic Development


5/52

55

B. Recent Economic Development (B. Recent Economic Development (concontt))

1.1. GDP Growth (%) and InflationGDP Growth (%) and Inflation


6/52

66


2.2. GDP Growth (%) by SectorGDP Growth (%) by Sector


7/52

77


3.3. Official Exchange Rate (Riel/US$)Official Exchange Rate (Riel/US$)

(average mid point(average mid point--buying and selling rate)buying and selling rate)


8/52

88


4.4. Cambodia's Foreign ReserveCambodia's Foreign Reserve


9/52

99


5.5. CambodiaCambodias Foreign Trade (million US$)s Foreign Trade (million US$)


10/52

1010

C. Policy in Promoting Trade, includingC. Policy in Promoting Trade, including

SouthSouth--South TradeSouth Trade


11/52

1111


SouthSouth--South Trade (South 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

also the significant part of the rectangular strategyalso the significant part of the rectangular strategy


12/52

1212


SouthSouth--South Trade (South Trade (concontt))2.2. 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


13/52

1313


SouthSouth--South Trade (South 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

To encompass all initiatives, strategies, measures and actionsTo encompass all initiatives, strategies, measures and actions To strengthen partnerships for consensus building and coordinatiTo strengthen partnerships for consensus building and coordinationon

with the private sector, civil society and donors,with the private sector, civil society and donors,

And to improve implementation and deliveryAnd to improve implementation and delivery


14/52

1414


SouthSouth--South Trade (South Trade (concontt))

3.3. Trade Sector wide Approach (Trade Sector wide Approach (SWApSWAp) () (concontt))

c.c. SWApSWAp tapping on Aid for Tradetapping on Aid for Trade To tap on the financial resources of Aid for Trade,To tap on the financial resources of Aid for Trade,

To enhance its supply capacity,To enhance its supply capacity,

To alleviate poverty andTo alleviate poverty and

To meet its Cambodian Millennium Development GoalsTo meet its Cambodian Millennium Development Goals

((CMDGsCMDGs))


15/52

1515



3.3. Trade Sector wide Approach (Trade Sector wide Approach (SWApSWAp) () (concontt))

d.d. Sector Program for Trade Development inSector Program for Trade Development inCambodiaCambodia

Lesson learntLesson learnt

Link between trade Policy and ImplementingLink between trade Policy and Implementing

Managing and Consultation StructureManaging and Consultation Structure

Sequencing next actionsSequencing next actions Immediate TA mobilizationImmediate TA mobilization

Issues for discussionIssues for discussion


16/52

1616




17/52

1717




18/52

1818




19/52

1919


SouthSouth--South Trade (South Trade (concontt))4.4. Integrating Cambodia into the international CommunityIntegrating Cambodia into the international Community

CambodiaCambodias membership in ASEAN and WTO, as well as cooperation withins membership in ASEAN and WTO, as well as cooperation withinthe framework of the ASEM will provide great opportunities to rethe framework of the ASEM will provide great opportunities to reform theform theinvestment and foreign trade regime by focusing on the liberalizinvestment and foreign trade regime by focusing on the liberalization andation anddecentralization of decision making process, reducing the bureaudecentralization of decision making process, reducing the bureaucratic redcratic redtapes, removing impediments to investments, implementing reformtapes, removing impediments to investments, implementing reform programsprograms

and initiating the modernization of structure and management sysand initiating the modernization of structure and management system of thetem of thenational economy and upgrade its competitiveness to the regionalnational economy and upgrade its competitiveness to the regional (south(south--southsouthdimension) and international standards.dimension) and international standards.

CambodiaCambodias membership in Great Mekong Subs membership in Great Mekong Sub--Region, theRegion, the AyeyawadeeAyeyawadee--ChaoChao

PhrayaPhraya--Mekong Economic Cooperation Strategy (ACMECS) and otherMekong Economic Cooperation Strategy (ACMECS) and otherTriangular Developments at subTriangular Developments at sub--regional level are also demonstrating thatregional level are also demonstrating thatCambodia is involving so much in promoting southCambodia is involving so much in promoting south--south dimension in order tosouth dimension in order topush the trade among those Countries and with an other Countriespush the trade among those Countries and with an other Countries in the worldin the worldand to encourage the economic welfare.and to encourage the economic welfare.


20/52

2020




21/52

2121

Schedules of Tariff Rate of Cambodia inSchedules of Tariff Rate of Cambodia in

ASEANASEAN


22/52

2222

CambodiaCambodias Tariffs by Product Groupss Tariffs by Product Groups


23/52

C P li i P i T d i l di


24/52

2424

5.5. Bilateral agreement on the promotion of trade and protection ofBilateral agreement on the promotion of trade and protection ofinvestmentsinvestments

between the Kingdom of Cambodia and other Countriesbetween the Kingdom of Cambodia and other Countries




25/52

2525


SouthSouth--South Trade (South Trade (concontt))6.6. Trade related to Investment: Investment ProtectionTrade 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


26/52

2626


SouthSouth--South Trade (South Trade (concontt))6.6. Trade related to Investment (Trade related to Investment (concontt): Investment): Investmentss

Incentive ComparisonIncentive Comparison19941994 20032003


27/52

2727

D. Gains from most open Policy: SouthD. Gains from most open Policy: South--

South TradeSouth Trade1.1. Investment Sector of CambodiaInvestment Sector of Cambodia

It is not so hasty to say that Cambodia has capacity and abilityIt is not so hasty to say that Cambodia has capacity and ability to investto invest

into an other Countries as well into the partner Countries in thinto an other Countries as well into the partner Countries in the South,e South,although Cambodia is enjoying the political stability and the soalthough Cambodia is enjoying the political stability and the soundundmacro economy, because the Country war just recovered from themacro economy, because the Country war just recovered from thesuffering under the war, internal strife, instability and backwasuffering under the war, internal strife, instability and backwardness.rdness.

But from the most open policy to other Countries in the region aBut from the most open policy to other Countries in the region and tond tothe World, including to the South Countries, Cambodiathe World, including to the South Countries, Cambodias investments investmentsector can be seen as a dynamic sector benefiting from this libesector can be seen as a dynamic sector benefiting from this liberalralpolicy, and it is being interested by the foreign investors frompolicy, and it is being interested by the foreign investors from the regionthe region

and the world, including from the South Countries.and the world, including from the South Countries.

The following slides illustrate the gains.The following slides illustrate the gains.


28/52

2828


South Trade (South Trade (concontt)) Investments in Cambodia 2004 (by Country)Investments in Cambodia 2004 (by Country)

G i f li S h


29/52

2929



D G i f t P li S thD G i f t P li S th


30/52

3030



D G i f P li S hD G i f P li S h


31/52

3131


South Trade (South Trade (concontt)) Investments in Cambodia by Country 1994Investments in Cambodia by Country 1994--11stst Half 2006Half 2006

D G i f P li S hD G i f t P li S th


32/52

3232


South Trade (South Trade (concontt)) Investments by Sector (1994Investments by Sector (1994--11stst Half 2006)Half 2006)

D Gains from most open Policy: SouthD Gains from most open Policy: South


33/52

3333


South Trade (South Trade (concontt))2.2. Tourist Sector of CambodiaTourist Sector of Cambodia The growth in tourism has been robust and is a strong contributiThe growth in tourism has been robust and is a strong contribution toon to

the 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 oftourist 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 theAsian 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.

D G i f t P li S thD G i f t P li S th


34/52

3434


South Trade (South Trade (concontt)) Visitors to CambodiaVisitors to Cambodia

D G i f t P li S thD Gains from most open Policy: South


35/52

3535


South Trade (South Trade (concontt)) Tourist arrivals to CambodiaTourist arrivals to Cambodia



36/52

3636


South Trade (South Trade (concontt)) Top 10 main market arrivals to Cambodia (2005)Top 10 main market arrivals to Cambodia (2005)



37/52

3737


South Trade (South Trade (concontt)) Tourist ReceiptsTourist Receipts



38/52

3838


South Trade (South Trade (concontt))3.3. Garment Sector of CambodiaGarment Sector of Cambodia

The garment sector of Cambodia is a new and dynamic sector tradeThe garment sector of Cambodia is a new and dynamic sector trade of theof the

Country which is accounted approximately 80% of total CambodianCountry which is accounted approximately 80% of total Cambodian exportexportvalue, although it was slight decreased in year 2006 due to finivalue, although it was slight decreased in year 2006 due to finishing MFA.shing MFA.(seen slides below)(seen slides below)

Why this sector would be took to demonstrate for the southWhy this sector would be took to demonstrate for the south--south trade of thissouth trade of thispaper, although the people knew that Cambodian garment productspaper, although the people knew that Cambodian garment products exportedexportedmostly to the developed Countries as USA, EU, Japan and South Komostly to the developed Countries as USA, EU, Japan and South Korea, andrea, andeven though the raw material and other inputs for those productieven though the raw material and other inputs for those production are importedon are importedmostly from China, Taiwan, Hong Kong, Malaysia, Thai etc.mostly from China, Taiwan, Hong Kong, Malaysia, Thai etc.

Base on the data illustrating below, it can be considered that tBase on the data illustrating below, it can be considered that the new and mosthe new and mostdynamic trade sector of Cambodia may be existed and promoted thrdynamic trade sector of Cambodia may be existed and promoted through theough the

bilateral negotiations with the South Countries as well the Nortbilateral negotiations with the South Countries as well the North Countries.h Countries.



39/52

3939


South Trade (South Trade (concontt)) CambodiaCambodias garment exports (million US$)s garment exports (million US$)

D Gains from most open Policy: SouthD Gains from most open Policy: South-


40/52

4040


South Trade (South Trade (concontt)) Number of textile and apparel factories in CambodiaNumber of textile and apparel factories in Cambodia

(Jan 1994(Jan 1994

--Jan 2006)Jan 2006)

D Gains from most open Policy: SouthD Gains from most open Policy: South--


41/52

4141


South Trade (South Trade (concontt)) Number of Garment factories in Cambodia (1994Number of Garment factories in Cambodia (1994 -- 2006)2006)



42/52

4242

D. Gains from most open Policy: SouthD. Gains from most open Policy: South

South Trade (South Trade (concontt)) CambodiaCambodias total textiles and garment exports to the variouss total textiles and garment exports to the variousmarkets by Oct 2006markets by Oct 2006

E Positive issues gained by the southE. Positive issues gained by the south--


43/52

4343

E. Positive issues gained by the southE. Positive issues gained by the south

south tradesouth trade Garment Sector:Garment Sector:

Providing exporters with access to raw materials and intermediatProviding exporters with access to raw materials and intermediate inputs ate inputs atworld market prices. For example, membership in ASEAN and the biworld market prices. For example, membership in ASEAN and the bilaterallateraltrade and investment protection agreement with China allows Cambtrade and investment protection agreement with China allows Cambodia toodia toimport fabrics from ASEAN countries or from China to produce garimport fabrics from ASEAN countries or from China to produce garments forments forthe US or EU market.the US or EU market.

CambodiaCambodias textile and garment industry well illustrates the role of expos textile and garment industry well illustrates the role of exportsrtsand investment in generating employment and helping to reduce poand investment in generating employment and helping to reduce poverty.verty.More than half the current 280,000 skilled and unskilled jobs inMore than half the current 280,000 skilled and unskilled jobs in the industrythe industryhave been created during the past five years, making the industrhave been created during the past five years, making the industry by far they by far the

largest source of job growth during this period.largest source of job growth during this period.

Garment exports have also helped manage the balance of payments;Garment exports have also helped manage the balance of payments; they rosethey rosesharply from around US$20 million in 1995 to almost US$2 billionsharply from around US$20 million in 1995 to almost US$2 billion in 2005.in 2005.

E Positive issues gained by the southE. Positive issues gained by the south--


44/52

4444


south trade (south trade (concontt))

Agricultural Sector:Agricultural Sector: The productivity of Cambodia is considered low, in particularThe productivity of Cambodia is considered low, in particularfor the agriculture sector. However, through southfor the agriculture sector. However, through south--southsouthtrade, the small yields might also be turned into a goodtrade, the small yields might also be turned into a good

opportunity to enhance productivity in the sector.opportunity to enhance productivity in the sector.

The southThe south--south trade would open up foreign markets tosouth trade would open up foreign markets to

Cambodian agricultural products, while also obligingCambodian agricultural products, while also obligingCambodian farmers to become more competitive so as toCambodian farmers to become more competitive so as tosucceed in local and foreign markets.succeed in local and foreign markets.

E. Positive issues gained by the southE. Positive issues gained by the south--


45/52

4545


south trade (south trade (concontt)) Investment Sector:Investment Sector:

Foreign investment has an important role in upgrading technologyForeign investment has an important role in upgrading technology

levels and transferring commercial and industrial knowledge.levels and transferring commercial and industrial knowledge.Cambodia has much to learn from the foreign firms that knowCambodia has much to learn from the foreign firms that knowforeign markets the best and possess the technology, managerialforeign markets the best and possess the technology, managerialexperience, and marketing channels that are needed to exportexperience, and marketing channels that are needed to export

successfully.successfully.

From the most open policy to other Countries in the region and tFrom the most open policy to other Countries in the region and too

the World, including to the south Countries, Cambodiathe World, including to the south Countries, Cambodiassinvestment sector can be seen as a dynamic sector benefiting froinvestment sector can be seen as a dynamic sector benefiting frommthis liberal policy, and it is being interested by the foreign ithis liberal policy, and it is being interested by the foreign investorsnvestorsfrom the region and the world, including from the south Countrifrom the region and the world, including from the south Countries.es.

E. Negative issue effected by the southE. Negative issue effected by the south--


46/52

4646

E. Negative issue effected by the south. Negat ve ssue e ected by t e sout

south trade (south trade (concontt)) Vietnam and Thai recently allowed Cambodia duty free access toVietnam and Thai recently allowed Cambodia duty free access to

40 and 250 types of agricultural products. But till now it seems40 and 250 types of agricultural products. But till now it seems

still not wellstill not well--built effects for agricultural trade of Cambodia intobuilt effects for agricultural trade of Cambodia intothe market of these Countries, because it can be that Cambodiathe market of these Countries, because it can be that Cambodiadoes not have comparative advantage for those productions. It isdoes not have comparative advantage for those productions. It isnot like the garment sector that Cambodia has also the GSP to thnot like the garment sector that Cambodia has also the GSP to theeUS market.US market.

Regarding to China market, Cambodia has also the duty free andRegarding to China market, Cambodia has also the duty free and

quota free for some agricultural products. But till now thosequota free for some agricultural products. But till now thoseeffects for Cambodian agricultural trade are the same case likeeffects for Cambodian agricultural trade are the same case likewith Vietnam and Thai.with Vietnam and Thai.



47/52

4747

E. Negative issue effected by the southg y




48/52

4848

g yg y


E C iE C i


49/52

4949

E. ConstraintsE. Constraints

ConstraintsConstraints

Domestic problems relating to factor endowments,Domestic problems relating to factor endowments,infrastructure, bureaucracy, corruption, HR andinfrastructure, bureaucracy, corruption, HR and

capitalcapital

The market accessThe market accesss issues not only for goods, buts issues not only for goods, but

for servicesfor services

SPS andSPS and TBTTBTss issuesissues National treatmentNational treatments issuess issues

Trade facilitationTrade facilitations issuess issues

E S l i ?E S l i ?


50/52

5050

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 infrastructureImproving infrastructure Reducing bureaucracy and corruptionReducing bureaucracy and corruption

Encouraging competitionEncouraging competition

Regional arrangement base on impartiality benefitRegional arrangement base on impartiality benefit Further negotiations in WTOFurther negotiations in WTO

Bilateral negotiations and agreementsBilateral negotiations and agreements


51/52
http://appendix%20for%20presentation%20of%20the%20south-south%20trade.ppt/


52/52

5252

sUmGrKuNsUmGrKuNTHANKS YOUTHANKS YOU

UNCTAD Expert Meeting

Documents

Transcript of UNCTAD Expert Meeting