The tax imposed on the export of acacia chips is to be abolished to help boost exports of the locally grown raw product, Prime Minister Hun Sen announced on Monday.

Speaking at the grand opening of Aeon Mall, Hun Sen said that acacia chips exported to Japan were now charged a 10 per cent tax, when in the past the premium did not apply. The Ministry of Economy and Finance would review the product’s tax classification and announce changes shortly he said.

“I have received the information yesterday [Sunday]. I contacted [Economy and Finance Minister] Aun Porn Moniroth and learned that it is because [acacia chips] were grouped together with the natural wood export category,” he said, referring to an export classification that attracts a 10 per cent tax.

“There is a large amount of acacia plantation in Cambodia, up to a million trees, and we need potential buyers like Japan to buy and import from us.”

Cambodia exports acacia chips to Japan and China, where they are then turned in to paper products.

The Kingdom’s acacia cultivation area is between 30,000 to 40,000 hectares of land, and a tax break would help increase that number, according to Ma Soktha, head of the Afforestation Office at the Ministry of Agriculture.

“Vietnam can earn around $2.2 billion from exporting acacia. Cambodia could have this chance too if there is supporting policy from the government, just like this tax exemption policy,” he said.

International companies such as Green Rich, Oji Paper and Shin Biotech as well as local producer Sopheak Nika invest in acacia plantations in Cambodia.