Indonesia was perhaps the brightest spot in Cambodia’s merchandise trade over January, with formal imports from and exports to the archipelago nation collectively clocking in at $88.045 million, marking a 95.87 per cent increase over the same month in 2022, according to Customs (GDCE).
Of that, Cambodian imports from and exports to Indonesia were valued at $85.930 million and $2.114 million, respectively, up 100.0 per cent and up 6.1 per cent year-on-year, but down 25.14 per cent and down 39.7 per cent month-on-month. Bilateral trade was also down 25.57 per cent compared to December 2022.
The Kingdom registered a monthly trade deficit with Indonesia of $83.816 million in January, expanding by 104.60 per cent year-on-year but narrowing by 24.68 per cent month-on-month.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, suggested to The Post on March 7 that geographical proximity, coupled with membership in ASEAN and the Regional Comprehensive Economic Partnership (RCEP), in part bolstered trade between the two countries.
However, he expressed concern over the sizeable trade deficit tilted in Indonesia’s favour, calling for redoubled public and private efforts to bring in more Indonesian investment and to identify local products that could command high demand on the Indonesian market.
Vanak put forth two potential drivers behind Cambodian imports of Indonesian goods: the former’s demand for raw materials and other inputs for export-oriented manufacturing and processing industries; and the latter’s broad export capacity, which he linked to its membership in the Group of 20 (G20) leading economic powers.
On the other hand, halal food imports from Indonesia have been on the rise, fuelled by the fairly large number of Indonesian tourists and investors in the Kingdom, he surmised.
Halal food production is that where every aspect of the ingredients, materials, procurement, processes, methodologies and facilities are deemed permissible under Islamic Law, as defined in the religion’s holy book, the Quran.
In a previous interview with The Post, Cambodia Chamber of Commerce vice-president Lim Heng claimed that the Kingdom’s free trade agreements (FTA) have become a big draw for Indonesian and other foreign investors, particularly the RCEP as well as the bilateral deals with China and South Korea.
He assured that trade deficits are not necessarily bad news, reasoning in Cambodia’s case that, as a developing country with limited resources, the Kingdom requires raw materials and equipment to be brought in from abroad to fulfil local demand, including for the production and processing of export goods.
“It’s important to look at export markets, as the prospects for Cambodia’s overseas sales are brighter than ever,” Heng opined.
Interestingly, the Ministry of Tourism tallied an all-time record of 75,653 Indonesian visitors to Cambodia last year, of which the majority had their purpose of visit marked “business”, at 55,107, followed by “holiday” (20,328) and “others” (218) – compared to second-place 2019’s 66,804 (26,410 business; 38,530 holiday; 1,864 others).
Indonesians accounted for 3.32 per cent of all foreign visitors to the Kingdom last year, versus the 1.01 per cent recorded in 2019.
The uptick in Indonesian business travellers could be attributed to the establishment of the Indonesian Chamber of Commerce in Cambodia (IndoCham) on September 23, 2021, along with a variety of major business-related events that have opened doors for partnerships between public and private organisations of both countries.
One such event is the February 22, 2022 Indonesia-Cambodia Investment Dialogue, at which then-Indonesian ambassador Sudirman Haseng vowed that his embassy would work with IndoCham to promote trade between the two Southeast Asian countries and attract investment to the Kingdom.
According to the GDCE, the merchandise trade volume between Cambodia and Indonesia totalled $948.533 million in 2022, surging by 48.27 per cent over a year earlier, with Cambodian imports constituting a 96.12 per cent share, inching up by 1.08 percentage points on a yearly basis.
Cambodian imports from and exports to Indonesia amounted to $911.694 million and $36.839 million, respectively, up 49.96 per cent and 15.9 per cent year-on-year, expanding the Kingdom’s trade deficit with the world’s most populous Islamic nation by 51.84 per cent to $874.854 million, from $576.167 million in 2021.
According to Trading Economics, out of Cambodia’s $31.78 million worth of goods exports to Indonesia in 2021, “knitted or crocheted fabrics” accounted for the most at $6.40 million, followed by “glass and glassware” ($5.97 million), “articles of apparel and clothing accessories, knitted or crocheted” ($5.13 million), and “Footwear, gaiters and the like” ($3.58 million).
The next four items were: “articles of apparel and clothing accessories, not knitted or crocheted” ($3.22 million), “printed books, newspapers, pictures” ($1.29 million), “miscellaneous articles of base metal” ($1.23 million) and “electrical, electronic equipment” ($1.13 million).
For reference, the eight categories respectively correspond to chapters 60, 70, 61, 64, 62, 49, 83 and 85 of the harmonised tariff schedule.