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Cambodia in Participating the South-South Trade Prepared by MSc. Agr. Chan Bonnivoit WTO Office Ministry of Commerce Cambodia
Expert Meeting on Participation of the Developing Countries in New and Dynamic Sectors of the World Trade: the South-South Dimension, 16-17 Oct 2007, Palais des Nations, Geneva
TABLE OF CONTENTS
A. B. C. D. E. F.
Introduction Recent economic developments Policy in promoting trade: south-south trade Gains from most open policy: south-south trade Constraints and solutions? Conclusion
2
A. Introduction
There has been renewed and growing interest in southsouth-south trade cooperation, including through regional or subsubregional trade agreements and, more recently, also trade agreements agreements between developing countries in different continents.
Cambodia joined ASEAN and ASEAN + arrangements, and since 2004 the the Country becomes a member of WTO Besides, Cambodia has many bilateral negotiations and agreements. agreements. Interest in those agreements is always based on commercial as well as political considerations of all partner partner’’s Countries.
With regard to the issues mentioned, this paper briefly examines the background, the commitments, the implementation and the benefit relating to regional trade arrangements arrangements and other trade issues of Cambodia, including the southsouth-south trade.
Section B provides some background information on recent Cambodia Cambodia Economic Development, including its experience in terms of regional trade and bilateral cooperation.
Section C describes Cambodia trade policy and trade negotiations with other Countries with regard to the southsouthsouth trade.
Section D examines the gains from Cambodian open southsouth-south trade in which some specific sectors are raised to be addressed.
Section E examines the constrains that Cambodia is facing in commitment commitment and implementing such trade agreements and arrangements and illustrate some predicable solutions solutions to crack the problems faced.
Some preliminary conclusion is presented in Section F. This Section Section lists some summarized issues that Cambodia faced regarding to promoting southsouth-south trade and the challenge of Cambodia to promote its trade development development as well economic growth.
3
B. Recent Economic Development
4
B. Recent Economic Development (con’t) 1. GDP Growth (%) and Inflation
5
B. Recent Economic Development (con’t) 2. GDP Growth (%) by Sector
6
B. Recent Economic Development (con’t) 3. Official Exchange Rate (Riel/US$) (average mid point-buying and selling rate)
7
B. Recent Economic Development (con’t) 4. Cambodia's Foreign Reserve
8
B. Recent Economic Development (con’t) 5. Cambodia’s Foreign Trade (million US$)
9
C. Policy in Promoting Trade, including South-South Trade
10
C. Policy in Promoting Trade, including South-South Trade (con’t) 1. The rectangular Strategy of RGC – The core of the rectangular strategy is good governance focused at four reform areas: Anti-Corruption Legal and judicial reform, Public administration reform, including decentralization and deconcentration, and Reform of the armed forces, especially demobilization
– The integration of Cambodia into the region and the world is also the significant part of the rectangular strategy 11
C. Policy in Promoting Trade, including South-South Trade (con’t) 2.
The Pro-Poor Trade Strategy of RGC –
Preliminary evidence examined suggests that trade is making a significant positive contribution to economic growth and poverty reduction and that such contribution can be further enhanced and provided Cambodia to become proactive in promoting trade for poverty reduction.
–
Regarding this issue RGC established a Pro-Poor Trade Strategy organized around tree basic concepts:
Shifting the balance of policy emphasis from issues of market access and macro-reforms for trade to micro and meso-level issues of supply capacity Focusing strongly on the delivery of capacity-building support at the export enterprise and export sector level; and Stressing the regionalization and geographical decentralization of export business within Cambodia
12
C. Policy in Promoting Trade, including South-South Trade (con’t) 3. Trade Sector wide Approach (SWAp) a.
SWAp is an instrument for better management, coordination and effectiveness of resources. Now RGC is willing to utilize SWAp in the Trade Sector.
b. The Ministry of Commerce stands ready to develop a SWAp
To encompass all initiatives, strategies, measures and actions To strengthen partnerships for consensus building and coordination with the private sector, civil society and donors, And to improve implementation and delivery 13
C. Policy in Promoting Trade, including South-South Trade (con’t) 3. Trade Sector wide Approach (SWAp) (con’t) c. SWAp tapping on Aid for Trade
To tap on the financial resources of Aid for Trade, To enhance its supply capacity, To alleviate poverty and To meet its Cambodian Millennium Development Goals (CMDGs)
14
C. Policy in Promoting Trade, including South-South Trade (con’t) 3. Trade Sector wide Approach (SWAp) (con’t) d. Sector Program for Trade Development in Cambodia
Lesson learnt Link between trade Policy and Implementing Managing and Consultation Structure Sequencing next actions Immediate TA mobilization Issues for discussion 15
C. Policy in Promoting Trade, including South-South Trade (con’t)
16
C. Policy in Promoting Trade, including South-South Trade (con’t)
17
C. Policy in Promoting Trade, including South-South Trade (con’t)
18
C. Policy in Promoting Trade, including South-South Trade (con’t) 4.
Integrating Cambodia into the international Community –
Cambodia’s membership in ASEAN and WTO, as well as cooperation within the framework of the ASEM will provide great opportunities to reform the investment and foreign trade regime by focusing on the liberalization and decentralization of decision making process, reducing the bureaucratic red tapes, removing impediments to investments, implementing reform programs and initiating the modernization of structure and management system of the national economy and upgrade its competitiveness to the regional (south-south dimension) and international standards.
–
Cambodia’s membership in Great Mekong Sub-Region, the Ayeyawadee-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS) and other Triangular Developments at sub-regional level are also demonstrating that Cambodia is involving so much in promoting south-south dimension in order to push the trade among those Countries and with an other Countries in the world and to encourage the economic welfare.
19
C. Policy in Promoting Trade, including South-South Trade (con’t)
20
Schedules of Tariff Rate of Cambodia in ASEAN
21
Cambodia’s Tariffs by Product Groups
22
Cambodia’s Service Commitments
Undertaken market access and national treatment commitments in at least one sub-sector under each of 11 different service which are communications services, construction and related engineering services, distribution services, education services, environmental services, financial services, health-related services, tourism and travel services, recreational services and transport services.
Allowing foreign firm to operate in the areas of legal services (with some exceptions), accounting, auditing, bookkeeping, banking, management consulting, telecommunication and transport, but some conditions were attached to market access in areas of financial services (banking and insurance) and telecommunication services.
Allowing foreign firms to provide higher education and adult education services.
Undertook commitments to improve in health care and in the provision of sanitary, refuse disposal and sewerage treatment services.
Reserving part of a market for Cambodian small and medium sized enterprise in areas such as banking, tourism and courier service (Ex: relating to tourist guides services; opening hotel market only for hotels of three stars or higher; and allowing foreign supply of retailing services only a small number of specific items or for very large supermarkets or department stores. 23
C. Policy in Promoting Trade, including South-South Trade (con’t) 5.
Bilateral agreement on the promotion of trade and protection of investments between the Kingdom of Cambodia and other Countries
24
C. Policy in Promoting Trade, including South-South Trade (con’t) 6. Trade related to Investment: Investment Protection • • • • • •
Equal treatment of all investors No nationalization adversely affecting the property of investors No price controls on products or service No restriction on foreign equity participation No restriction on foreign convertibility Remittance of foreign currencies abroad
25
C. Policy in Promoting Trade, including South-South Trade (con’t) 6.
Trade related to Investment (con’t): Investment’s Incentive Comparison 1994
2003
26
D. Gains from most open Policy: SouthSouth Trade 1.
Investment Sector of Cambodia •
It is not so hasty to say that Cambodia has capacity and ability to invest into an other Countries as well into the partner Countries in the South, although Cambodia is enjoying the political stability and the sound macro economy, because the Country war just recovered from the suffering under the war, internal strife, instability and backwardness.
•
But from the most open policy to other Countries in the region and to the World, including to the South Countries, Cambodia’s investment sector can be seen as a dynamic sector benefiting from this liberal policy, and it is being interested by the foreign investors from the region and the world, including from the South Countries.
•
The following slides illustrate the gains.
27
D. Gains from most open Policy: SouthSouth Trade (con’t) Investments in Cambodia 2004 (by Country)
28
D. Gains from most open Policy: SouthSouth Trade (con’t) Investments in Cambodia 2005 (by Country)
29
D. Gains from most open Policy: SouthSouth Trade (con’t) Investments in Cambodia 2006 (by Country)
30
D. Gains from most open Policy: SouthSouth Trade (con’t) Investments in Cambodia by Country 1994-1st Half 2006
31
D. Gains from most open Policy: SouthSouth Trade (con’t) Investments by Sector (1994-1st Half 2006)
32
D. Gains from most open Policy: SouthSouth Trade (con’t) 2.
Tourist Sector of Cambodia •
The growth in tourism has been robust and is a strong contribution to the services sector of the Country. GDP of the services sectors grew at an average of 8.6% over the 2000-2005 period.
•
The number of tourists increased by 35% in 2005 relative to the year before. Tourists from the Republic of Korea ranked first in terms of tourist arrivals.
•
More than 50% of total tourist arrivals to Cambodia are from the Asian and Pacific countries, and about a quarter of the tourist arrivals are from the Europe.
•
The number of Cambodian tourists to the neighbor Countries increases from year to year and account approximate at 800,000 persons for last year.
33
D. Gains from most open Policy: SouthSouth Trade (con’t) Visitors to Cambodia
34
D. Gains from most open Policy: SouthSouth Trade (con’t) Tourist arrivals to Cambodia
35
D. Gains from most open Policy: SouthSouth Trade (con’t) Top 10 main market arrivals to Cambodia (2005)
36
D. Gains from most open Policy: SouthSouth Trade (con’t) Tourist Receipts
37
D. Gains from most open Policy: SouthSouth Trade (con’t) 3. Garment Sector of Cambodia •
The garment sector of Cambodia is a new and dynamic sector trade of the Country which is accounted approximately 80% of total Cambodian export value, although it was slight decreased in year 2006 due to finishing MFA. (seen slides below)
•
Why this sector would be took to demonstrate for the south-south trade of this paper, although the people knew that Cambodian garment products exported mostly to the developed Countries as USA, EU, Japan and South Korea, and even though the raw material and other inputs for those production are imported mostly from China, Taiwan, Hong Kong, Malaysia, Thai etc.
•
Base on the data illustrating below, it can be considered that the new and most dynamic trade sector of Cambodia may be existed and promoted through the bilateral negotiations with the South Countries as well the North Countries.
38
D. Gains from most open Policy: SouthSouth Trade (con’t)
Cambodia’s garment exports (million US$)
39
D. Gains from most open Policy: SouthSouth Trade (con’t)
Number of textile and apparel factories in Cambodia (Jan 1994 -Jan 2006)
40
D. Gains from most open Policy: SouthSouth Trade (con’t)
Number of Garment factories in Cambodia (1994 - 2006)
41
D. Gains from most open Policy: SouthSouth Trade (con’t)
Cambodia’s total textiles and garment exports to the various markets by Oct 2006
42
E. Positive issues gained by the southsouth trade Garment Sector: – Providing exporters with access to raw materials and intermediate inputs at world market prices. For example, membership in ASEAN and the bilateral trade and investment protection agreement with China allows Cambodia to import fabrics from ASEAN countries or from China to produce garments for the US or EU market. – Cambodia’s textile and garment industry well illustrates the role of exports and investment in generating employment and helping to reduce poverty. More than half the current 280,000 skilled and unskilled jobs in the industry have been created during the past five years, making the industry by far the largest source of job growth during this period. – Garment exports have also helped manage the balance of payments; they rose sharply from around US$20 million in 1995 to almost US$2 billion in 2005.
43
E. Positive issues gained by the southsouth trade (con’t) Agricultural Sector: – The productivity of Cambodia is considered low, in particular for the agriculture sector. However, through south-south trade, the small yields might also be turned into a good opportunity to enhance productivity in the sector. – The south-south trade would open up foreign markets to Cambodian agricultural products, while also obliging Cambodian farmers to become more competitive so as to succeed in local and foreign markets. 44
E. Positive issues gained by the southsouth trade (con’t) Investment Sector: – Foreign investment has an important role in upgrading technology levels and transferring commercial and industrial knowledge. Cambodia has much to learn from the foreign firms that know foreign markets the best and possess the technology, managerial experience, and marketing channels that are needed to export successfully. – From the most open policy to other Countries in the region and to the World, including to the south Countries, Cambodia’s investment sector can be seen as a dynamic sector benefiting from this liberal policy, and it is being interested by the foreign investors from the region and the world, including from the south Countries. 45
E. Negative issue effected by the southsouth trade (con’t) Vietnam and Thai recently allowed Cambodia duty free access to 40 and 250 types of agricultural products. But till now it seems still not well-built effects for agricultural trade of Cambodia into the market of these Countries, because it can be that Cambodia does not have comparative advantage for those productions. It is not like the garment sector that Cambodia has also the GSP to the US market. Regarding to China market, Cambodia has also the duty free and quota free for some agricultural products. But till now those effects for Cambodian agricultural trade are the same case like with Vietnam and Thai. 46
E. Negative issue effected by the southsouth trade (con’t)
47
E. Negative issue effected by the southsouth trade (con’t)
48
E. Constraints
Constraints – Domestic problems relating to factor endowments, infrastructure, bureaucracy, corruption, HR and capital – The market access’s issues not only for goods, but for services – SPS and TBT’s issues – National treatment’s issues – Trade facilitation’s issues 49
E. Solutions?
Solutions? – – – – – – – –
Better sourcing of raw materials or production of raw materials locally Capacity building and education programs Improving infrastructure Reducing bureaucracy and corruption Encouraging competition Regional arrangement base on impartiality benefit Further negotiations in WTO Bilateral negotiations and agreements 50
F. Conclusion
South-south trade has been increasing, and the process and the results depend on the capacity, ability and feasibility of the Countries concerned.
It is difficult to conclude that the south-south trade is either good or bad for the concerned Countries, because the trade is not always fairness or impartiality.
Much will depends on how adroitly the process is managed. In some case, south-south trade will definitely have both positive and negative impacts. The positive impacts will have to be maximized, and the negative impacts will have to be well managed if the concerned Countries have to benefit explicitly from them. (Ex.)
In case of Cambodia as a LDC’s Country, the south-south trade currently sounds tiny meaning for promoting trade sector and the economic development of the Country due to limitation of many things to carry out the south-south trade in the impartial balance.
The WTO membership of Cambodia, the ASEAN and ASEAN + arrangements create the proper conditions for trade and investment, push for outward-oriented policies to promote efficiency, promote structural reform to encourage domestic competition, and create strong institutions to foster good governance in the Country.
But base on data illustrated above, the bilateral negotiations and agreements, even though with the South Country or North Country, certainly are a key instrument in pushing and promoting any trade sectors which are recognized by the Country as a significant sectors to encourage its economic growth.
51
sUmGrKuN THANKS YOU
52
Expert Meeting on Participation of the Developing Countries in New and Dynamic Sectors of the World Trade: the South-South Dimension, 16-17 Oct 2007, Palais des Nations, Geneva
TABLE OF CONTENTS
A. B. C. D. E. F.
Introduction Recent economic developments Policy in promoting trade: south-south trade Gains from most open policy: south-south trade Constraints and solutions? Conclusion
2
A. Introduction
There has been renewed and growing interest in southsouth-south trade cooperation, including through regional or subsubregional trade agreements and, more recently, also trade agreements agreements between developing countries in different continents.
Cambodia joined ASEAN and ASEAN + arrangements, and since 2004 the the Country becomes a member of WTO Besides, Cambodia has many bilateral negotiations and agreements. agreements. Interest in those agreements is always based on commercial as well as political considerations of all partner partner’’s Countries.
With regard to the issues mentioned, this paper briefly examines the background, the commitments, the implementation and the benefit relating to regional trade arrangements arrangements and other trade issues of Cambodia, including the southsouth-south trade.
Section B provides some background information on recent Cambodia Cambodia Economic Development, including its experience in terms of regional trade and bilateral cooperation.
Section C describes Cambodia trade policy and trade negotiations with other Countries with regard to the southsouthsouth trade.
Section D examines the gains from Cambodian open southsouth-south trade in which some specific sectors are raised to be addressed.
Section E examines the constrains that Cambodia is facing in commitment commitment and implementing such trade agreements and arrangements and illustrate some predicable solutions solutions to crack the problems faced.
Some preliminary conclusion is presented in Section F. This Section Section lists some summarized issues that Cambodia faced regarding to promoting southsouth-south trade and the challenge of Cambodia to promote its trade development development as well economic growth.
3
B. Recent Economic Development
4
B. Recent Economic Development (con’t) 1. GDP Growth (%) and Inflation
5
B. Recent Economic Development (con’t) 2. GDP Growth (%) by Sector
6
B. Recent Economic Development (con’t) 3. Official Exchange Rate (Riel/US$) (average mid point-buying and selling rate)
7
B. Recent Economic Development (con’t) 4. Cambodia's Foreign Reserve
8
B. Recent Economic Development (con’t) 5. Cambodia’s Foreign Trade (million US$)
9
C. Policy in Promoting Trade, including South-South Trade
10
C. Policy in Promoting Trade, including South-South Trade (con’t) 1. The rectangular Strategy of RGC – The core of the rectangular strategy is good governance focused at four reform areas: Anti-Corruption Legal and judicial reform, Public administration reform, including decentralization and deconcentration, and Reform of the armed forces, especially demobilization
– The integration of Cambodia into the region and the world is also the significant part of the rectangular strategy 11
C. Policy in Promoting Trade, including South-South Trade (con’t) 2.
The Pro-Poor Trade Strategy of RGC –
Preliminary evidence examined suggests that trade is making a significant positive contribution to economic growth and poverty reduction and that such contribution can be further enhanced and provided Cambodia to become proactive in promoting trade for poverty reduction.
–
Regarding this issue RGC established a Pro-Poor Trade Strategy organized around tree basic concepts:
Shifting the balance of policy emphasis from issues of market access and macro-reforms for trade to micro and meso-level issues of supply capacity Focusing strongly on the delivery of capacity-building support at the export enterprise and export sector level; and Stressing the regionalization and geographical decentralization of export business within Cambodia
12
C. Policy in Promoting Trade, including South-South Trade (con’t) 3. Trade Sector wide Approach (SWAp) a.
SWAp is an instrument for better management, coordination and effectiveness of resources. Now RGC is willing to utilize SWAp in the Trade Sector.
b. The Ministry of Commerce stands ready to develop a SWAp
To encompass all initiatives, strategies, measures and actions To strengthen partnerships for consensus building and coordination with the private sector, civil society and donors, And to improve implementation and delivery 13
C. Policy in Promoting Trade, including South-South Trade (con’t) 3. Trade Sector wide Approach (SWAp) (con’t) c. SWAp tapping on Aid for Trade
To tap on the financial resources of Aid for Trade, To enhance its supply capacity, To alleviate poverty and To meet its Cambodian Millennium Development Goals (CMDGs)
14
C. Policy in Promoting Trade, including South-South Trade (con’t) 3. Trade Sector wide Approach (SWAp) (con’t) d. Sector Program for Trade Development in Cambodia
Lesson learnt Link between trade Policy and Implementing Managing and Consultation Structure Sequencing next actions Immediate TA mobilization Issues for discussion 15
C. Policy in Promoting Trade, including South-South Trade (con’t)
16
C. Policy in Promoting Trade, including South-South Trade (con’t)
17
C. Policy in Promoting Trade, including South-South Trade (con’t)
18
C. Policy in Promoting Trade, including South-South Trade (con’t) 4.
Integrating Cambodia into the international Community –
Cambodia’s membership in ASEAN and WTO, as well as cooperation within the framework of the ASEM will provide great opportunities to reform the investment and foreign trade regime by focusing on the liberalization and decentralization of decision making process, reducing the bureaucratic red tapes, removing impediments to investments, implementing reform programs and initiating the modernization of structure and management system of the national economy and upgrade its competitiveness to the regional (south-south dimension) and international standards.
–
Cambodia’s membership in Great Mekong Sub-Region, the Ayeyawadee-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS) and other Triangular Developments at sub-regional level are also demonstrating that Cambodia is involving so much in promoting south-south dimension in order to push the trade among those Countries and with an other Countries in the world and to encourage the economic welfare.
19
C. Policy in Promoting Trade, including South-South Trade (con’t)
20
Schedules of Tariff Rate of Cambodia in ASEAN
21
Cambodia’s Tariffs by Product Groups
22
Cambodia’s Service Commitments
Undertaken market access and national treatment commitments in at least one sub-sector under each of 11 different service which are communications services, construction and related engineering services, distribution services, education services, environmental services, financial services, health-related services, tourism and travel services, recreational services and transport services.
Allowing foreign firm to operate in the areas of legal services (with some exceptions), accounting, auditing, bookkeeping, banking, management consulting, telecommunication and transport, but some conditions were attached to market access in areas of financial services (banking and insurance) and telecommunication services.
Allowing foreign firms to provide higher education and adult education services.
Undertook commitments to improve in health care and in the provision of sanitary, refuse disposal and sewerage treatment services.
Reserving part of a market for Cambodian small and medium sized enterprise in areas such as banking, tourism and courier service (Ex: relating to tourist guides services; opening hotel market only for hotels of three stars or higher; and allowing foreign supply of retailing services only a small number of specific items or for very large supermarkets or department stores. 23
C. Policy in Promoting Trade, including South-South Trade (con’t) 5.
Bilateral agreement on the promotion of trade and protection of investments between the Kingdom of Cambodia and other Countries
24
C. Policy in Promoting Trade, including South-South Trade (con’t) 6. Trade related to Investment: Investment Protection • • • • • •
Equal treatment of all investors No nationalization adversely affecting the property of investors No price controls on products or service No restriction on foreign equity participation No restriction on foreign convertibility Remittance of foreign currencies abroad
25
C. Policy in Promoting Trade, including South-South Trade (con’t) 6.
Trade related to Investment (con’t): Investment’s Incentive Comparison 1994
2003
26
D. Gains from most open Policy: SouthSouth Trade 1.
Investment Sector of Cambodia •
It is not so hasty to say that Cambodia has capacity and ability to invest into an other Countries as well into the partner Countries in the South, although Cambodia is enjoying the political stability and the sound macro economy, because the Country war just recovered from the suffering under the war, internal strife, instability and backwardness.
•
But from the most open policy to other Countries in the region and to the World, including to the South Countries, Cambodia’s investment sector can be seen as a dynamic sector benefiting from this liberal policy, and it is being interested by the foreign investors from the region and the world, including from the South Countries.
•
The following slides illustrate the gains.
27
D. Gains from most open Policy: SouthSouth Trade (con’t) Investments in Cambodia 2004 (by Country)
28
D. Gains from most open Policy: SouthSouth Trade (con’t) Investments in Cambodia 2005 (by Country)
29
D. Gains from most open Policy: SouthSouth Trade (con’t) Investments in Cambodia 2006 (by Country)
30
D. Gains from most open Policy: SouthSouth Trade (con’t) Investments in Cambodia by Country 1994-1st Half 2006
31
D. Gains from most open Policy: SouthSouth Trade (con’t) Investments by Sector (1994-1st Half 2006)
32
D. Gains from most open Policy: SouthSouth Trade (con’t) 2.
Tourist Sector of Cambodia •
The growth in tourism has been robust and is a strong contribution to the services sector of the Country. GDP of the services sectors grew at an average of 8.6% over the 2000-2005 period.
•
The number of tourists increased by 35% in 2005 relative to the year before. Tourists from the Republic of Korea ranked first in terms of tourist arrivals.
•
More than 50% of total tourist arrivals to Cambodia are from the Asian and Pacific countries, and about a quarter of the tourist arrivals are from the Europe.
•
The number of Cambodian tourists to the neighbor Countries increases from year to year and account approximate at 800,000 persons for last year.
33
D. Gains from most open Policy: SouthSouth Trade (con’t) Visitors to Cambodia
34
D. Gains from most open Policy: SouthSouth Trade (con’t) Tourist arrivals to Cambodia
35
D. Gains from most open Policy: SouthSouth Trade (con’t) Top 10 main market arrivals to Cambodia (2005)
36
D. Gains from most open Policy: SouthSouth Trade (con’t) Tourist Receipts
37
D. Gains from most open Policy: SouthSouth Trade (con’t) 3. Garment Sector of Cambodia •
The garment sector of Cambodia is a new and dynamic sector trade of the Country which is accounted approximately 80% of total Cambodian export value, although it was slight decreased in year 2006 due to finishing MFA. (seen slides below)
•
Why this sector would be took to demonstrate for the south-south trade of this paper, although the people knew that Cambodian garment products exported mostly to the developed Countries as USA, EU, Japan and South Korea, and even though the raw material and other inputs for those production are imported mostly from China, Taiwan, Hong Kong, Malaysia, Thai etc.
•
Base on the data illustrating below, it can be considered that the new and most dynamic trade sector of Cambodia may be existed and promoted through the bilateral negotiations with the South Countries as well the North Countries.
38
D. Gains from most open Policy: SouthSouth Trade (con’t)
Cambodia’s garment exports (million US$)
39
D. Gains from most open Policy: SouthSouth Trade (con’t)
Number of textile and apparel factories in Cambodia (Jan 1994 -Jan 2006)
40
D. Gains from most open Policy: SouthSouth Trade (con’t)
Number of Garment factories in Cambodia (1994 - 2006)
41
D. Gains from most open Policy: SouthSouth Trade (con’t)
Cambodia’s total textiles and garment exports to the various markets by Oct 2006
42
E. Positive issues gained by the southsouth trade Garment Sector: – Providing exporters with access to raw materials and intermediate inputs at world market prices. For example, membership in ASEAN and the bilateral trade and investment protection agreement with China allows Cambodia to import fabrics from ASEAN countries or from China to produce garments for the US or EU market. – Cambodia’s textile and garment industry well illustrates the role of exports and investment in generating employment and helping to reduce poverty. More than half the current 280,000 skilled and unskilled jobs in the industry have been created during the past five years, making the industry by far the largest source of job growth during this period. – Garment exports have also helped manage the balance of payments; they rose sharply from around US$20 million in 1995 to almost US$2 billion in 2005.
43
E. Positive issues gained by the southsouth trade (con’t) Agricultural Sector: – The productivity of Cambodia is considered low, in particular for the agriculture sector. However, through south-south trade, the small yields might also be turned into a good opportunity to enhance productivity in the sector. – The south-south trade would open up foreign markets to Cambodian agricultural products, while also obliging Cambodian farmers to become more competitive so as to succeed in local and foreign markets. 44
E. Positive issues gained by the southsouth trade (con’t) Investment Sector: – Foreign investment has an important role in upgrading technology levels and transferring commercial and industrial knowledge. Cambodia has much to learn from the foreign firms that know foreign markets the best and possess the technology, managerial experience, and marketing channels that are needed to export successfully. – From the most open policy to other Countries in the region and to the World, including to the south Countries, Cambodia’s investment sector can be seen as a dynamic sector benefiting from this liberal policy, and it is being interested by the foreign investors from the region and the world, including from the south Countries. 45
E. Negative issue effected by the southsouth trade (con’t) Vietnam and Thai recently allowed Cambodia duty free access to 40 and 250 types of agricultural products. But till now it seems still not well-built effects for agricultural trade of Cambodia into the market of these Countries, because it can be that Cambodia does not have comparative advantage for those productions. It is not like the garment sector that Cambodia has also the GSP to the US market. Regarding to China market, Cambodia has also the duty free and quota free for some agricultural products. But till now those effects for Cambodian agricultural trade are the same case like with Vietnam and Thai. 46
E. Negative issue effected by the southsouth trade (con’t)
47
E. Negative issue effected by the southsouth trade (con’t)
48
E. Constraints
Constraints – Domestic problems relating to factor endowments, infrastructure, bureaucracy, corruption, HR and capital – The market access’s issues not only for goods, but for services – SPS and TBT’s issues – National treatment’s issues – Trade facilitation’s issues 49
E. Solutions?
Solutions? – – – – – – – –
Better sourcing of raw materials or production of raw materials locally Capacity building and education programs Improving infrastructure Reducing bureaucracy and corruption Encouraging competition Regional arrangement base on impartiality benefit Further negotiations in WTO Bilateral negotiations and agreements 50
F. Conclusion
South-south trade has been increasing, and the process and the results depend on the capacity, ability and feasibility of the Countries concerned.
It is difficult to conclude that the south-south trade is either good or bad for the concerned Countries, because the trade is not always fairness or impartiality.
Much will depends on how adroitly the process is managed. In some case, south-south trade will definitely have both positive and negative impacts. The positive impacts will have to be maximized, and the negative impacts will have to be well managed if the concerned Countries have to benefit explicitly from them. (Ex.)
In case of Cambodia as a LDC’s Country, the south-south trade currently sounds tiny meaning for promoting trade sector and the economic development of the Country due to limitation of many things to carry out the south-south trade in the impartial balance.
The WTO membership of Cambodia, the ASEAN and ASEAN + arrangements create the proper conditions for trade and investment, push for outward-oriented policies to promote efficiency, promote structural reform to encourage domestic competition, and create strong institutions to foster good governance in the Country.
But base on data illustrated above, the bilateral negotiations and agreements, even though with the South Country or North Country, certainly are a key instrument in pushing and promoting any trade sectors which are recognized by the Country as a significant sectors to encourage its economic growth.
51
sUmGrKuN THANKS YOU
52
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