Trade between Cambodia and Singapore has seen a significant uptick in the first nine months of 2023, with the total value surpassing $723 million, marking a 12.5% increase from the same period last year.

The growth positions Singapore as the Kingdom’s eighth-largest trading partner, as reported by the General Department of Customs and Excise (GDCE).

Between January and September 2023, bilateral trade figures reached $723.54 million, signifying an appreciable climb from the $643.1 million recorded in 2022.

However, the growth was largely driven by an increase in imports from Singapore, which rose by 14.7% to $690.04 million. Meanwhile, Cambodia’s exports to Singapore faced a downturn, decreasing by 19% to $33.5 million.

The report shows a widening trade deficit for the country, which now stands at $656.54 million for the first three quarters of the year, rising from $560.36 million seen during the same period in 2022.

Hong Vanak, an economist at the Royal Academy of Cambodia, said on November 5 that the country’s trade with Singapore has been progressing steadily, attributable to its ASEAN membership and participation in the Regional Comprehensive Economic Partnership (RCEP).

He said Singapore plays a crucial role in facilitating the transit of Cambodian goods to global markets, noting that beyond the existing trade, numerous Singaporean investors are actively operating businesses in the country.

“Considering Cambodia’s capabilities, I believe the volume of exports will continue to rise, particularly in the agricultural sector,” he said.

He further noted that the country’s exports to Singapore include garments, bags, shoes, electrical components and various agricultural and agro-industrial products. Singapore’s exports to Cambodia primarily consist of electrical equipment, electronic components, beverages, foodstuffs, construction materials and certain pharmaceuticals.

To enhance bilateral trade, the two countries signed the “Second Protocol” at Cambodia’s Ministry of Economy and Finance on November 2. The agreement amends the existing Double Tax Avoidance (DTA) and the Prevention of Fiscal Evasion treaty.

The protocol was formalised by finance minister Aun Pornmoniroth and Singaporean ambassador to Cambodia Teo Lay Cheng.

A press release from the ministry explained that the objective of the protocol is to bring the Cambodia-Singapore DTA into alignment with international standards.

The amendment is part of the latest developments under the inclusive framework of the Organisation for Economic Cooperation and Development (OECD) aimed at tackling Base Erosion and Profit Shifting (BEPS) – strategies that exploit loopholes in the tax code.

The agreement was originally signed on April 20, 2016, and its provisions became effectively implemented on January 1, 2018.

By the end of 2021, foreign direct investment (FDI) in the Kingdom had reached a total of $41 billion, growing at an average annual rate of 9.6%.

Singapore stands as the county’s fourth-largest investor, contributing $2.7 billion and representing 6.4% of total FDI, according to data from the Council for the Development of Cambodia (CDC).

For reference, trade volume between the two countries reached $3.323 billion in 2022, reflecting a 36.3% decrease from the previous year. The downturn included a 22.8% reduction in Cambodian exports to Singapore, valued at $92.57 million, and a 36.6% decline in Singaporean imports amounting to $3.230 billion, as per the GDCE.