SOK CHAN
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| Cambodia's garment industry has been the backbone of the economy. KT/Chor Sokunthea |
Although the trade deficit in Cambodia remains high, the value of exports from the kingdom to international markets has increased compared with last year, according to a report from the Ministry of Commerce.
The report, released yesterday, shows that the total trade value in 2016 was $21.93 billion, up about 4.18 percent from $21.02 billion in 2015.
Meanwhile, the trade deficit increased to about 18.28 percent this year from 16.52 percent last year.
The report explains that Cambodia’s total export value increased about 3.06 percent to about $9.86 billion this year from $9.56 billion in 2015.
Total imports were more than $12 billion – a 5.10 percent increase from more than $11.4 billion last year, giving the country a trade deficit of $2.2 billion, or 18.28 percent.
Commerce Ministry spokesperson Soeng Sophary said the increase in total export value was due to increased investment in the kingdom and the diversification of products for export.
She added that investment from foreign countries has increased year-on-year and as a result, basic manufacturing has improved, transforming from a system utilizing traditional methods to one utilizing increased skills and modern technology.
Ms. Sophary said that in previous years, Cambodia depended mostly on garment and footwear exports to foreign markets, but now the government has diversified with agricultural exports.
There are an increasing number of locals and foreigners investing in the agriculture sector, she added, saying that the kingdom’s agricultural products have been exported to Japan, South Korea, China, the European Union and other countries in the region.
“The trade deficit is a concern and if we talk about trade value, it is always up and down, but our production capacity is improving,” Ms. Sophary said.
“The most important thing is the buyer as they also take a look at the other countries around Cambodia. If there is high demand, they will purchase or order more from us.”
The value of foreign direct investment was $1.199 billion over the first nine months of this year, an increase of about 59 percent from $489.5 billion over the same period last year, according to a report from the Council for the Development of Cambodia (CDC) released last Thursday.
The government approved about 70 investment projects, of which there were 57 in the industrial sector, four in the agriculture sector, two in the services sector and seven in the tourism sector, according to the CDC report.
Commerce Minister Pan Sorasak told reporters after the ministry’s 2016 annual meeting yesterday that Cambodia’s trade deficit was due in part to the export of agricultural products. He said other countries in the region presented a challenge to the kingdom’s export market.
“There are many strategies we are working on to push exports. For instance, we have a trade center in China where customers can purchase our products,” he said.
“It is to create a market in a foreign country to sell our agriculture and handicrafts and provide information on tourism. Our priority is to push rice exports.”
Mey Kalyan, a senior adviser to the government’s Supreme National Economic Council, said the elevated trade deficit was no surprise as Cambodia has long had one.
However, he said it was a concern if imports continued to exceed exports by an ever increasing margin and said the government should thoroughly observe the situation to prevent this from occurring.
“There must be careful and continued observation of this trend since three percent export growth is not much and mostly stable,” Mr. Kalyan said. “We have to be careful with dollar appreciation and a rising interest rate in 2017 as it lowers export competitiveness. It is a concern of our country.”
The Commerce Ministry’s report also revealed that imports from the international market this year also increased compared with 2015, but Ms. Sophary explained that the increase was because Cambodia lacked the raw materials to support certain sectors.
Ms. Sophary said that not only raw materials were imported, but also daily consumer products as Cambodia could not produce enough to supply the local market.
She added that investors were needed for modern machines and other equipment to increase domestic production.
“In order to balance trade value with the international market, we need to enforce production ability,” Ms. Sophary said.
“If we have the full ability to supply the local market and more investment from local and foreigners to produce products to supply the local market, our production will be strong and we can balance it, but it takes a long time.
“The government is trying to prepare soft and hard measures to support labor skills, innovation and leadership.”
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