Cambodia and Switzerland have pledged to further strengthen trade relations and look into establishing a bilateral free trade agreement (FTA), as import-export flows between the two countries passed the $1.4 billion mark in 2022, according to a Ministry of Commerce statement.
The commitment was made during a January 19 working meeting on Cambodia-Switzerland economic cooperation, held between commerce minister Pan Sorasak and Helene Budliger Artieda, chief of Switzerland’s State Secretariat for Economic Affairs (SECO), on the sidelines of the “Davos” summit, the statement noted.
The minister said the two-way trade between the two countries has time and again been in positive growth territory since diplomatic relations were established in 1963.
According to the commerce ministry, the Cambodian-Swiss merchandise trade volume reached $1.445 billion last year, up 48.32 per cent from $974.280 million in 2021, which was up 156.98 per cent from $379.128 million in 2020. The figures were sourced from Customs, which corroborated all but the 2021 figure, citing a slightly lower $974.279 million.
Sorasak suggested looking into entering into a bilateral FTA to underpin positive development in trade cooperation between the two countries and governments.
An FTA is an international treaty between two or more economies designed to reduce or eliminate certain barriers to imports and exports among them, generally while safeguarding safety, security, health and other legitimate regulatory objectives. Such a pact can also serve to facilitate and promote greater economic ties among signatories in areas such as investment and intellectual property protection.
The minister also extended his gratitude to the Swiss government for providing the Kingdom with aid as well as development programmes in good governance, agriculture, food security, job training and other domains.
Budliger Artieda welcomed the initiative, and stated that the Swiss government has been and is currently supporting Cambodia in its transitions and economic development efforts.
She voiced commitment to improving bilateral relations, as well as expanding cooperation in priority areas, including through international frameworks.
Commerce ministry figures show that Cambodian merchandise exports to and imports from Switzerland last year came to $9.275 million and $1.436 billion, respectively, down 10.52 per cent and up 48.95 per cent year-on-year, expanding the Kingdom’s trade deficit with the landlocked Central European country by 49.60 per cent to $1.427 billion.
Cambodia Chamber of Commerce (CCC) vice-president Lim Heng welcomed the commitment made at the meeting, especially the part concerning a potential FTA.
Heng commented to The Post on January 24 that the number of Swiss companies operating in Cambodia remains limited, but posited that more FTAs would: improve access for Cambodian goods to more markets, woo new investors, and create more local jobs.
He affirmed the private sector’s steadfast support for entering into FTAs with new markets, which he said could provide a buffer for the Kingdom in the event that it loses preferential tariff preferences provided under the EU’s ‘Everything But Arms’ (EBA) trade scheme and similar regimes.
Many preferential trade arrangements, offered by a range of jurisdictions, grant duty- and quota-free access exclusively to the least developed countries (LDC), a grouping which Cambodia would need to exit to achieve its ambitious vision of becoming an “upper-middle income” economy by 2030 and a “high-income” one by 2050.
“We expect these agreements to provide a leg-up in lieu of these preferential trade regimes, to drive economic growth in Cambodia through imports and exports,” Heng said, stressing that the CCC will be on stand-by to offer input in any FTA talks.
He also voiced appreciation to the Swiss government for its technical assistance, human resource training, and other “significant contributions” to Cambodia’s development.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, remarked that as a strong trading power and wealthy European economy with a high-potential market, Switzerland offers ample trade opportunities for Cambodia.
Given its proximity and relations with EU and other European markets, an FTA with Switzerland would boost exports of garments and other textile-related items, bicycles and agricultural products to the region, he said.
“Additionally, closer cooperation with Switzerland would be like improved cooperation with the EU, capturing the interest of investors from other countries in the Cambodian market,” Vanak added.
A commerce ministry official, who declined to be named, noted that Cambodia exports textiles, precious stones and agricultural products to Switzerland, and imports pharmaceuticals and machinery.
Swiss confectionery giant Nestle has also unveiled plans to invest in Cambodia, and set up an operation in the “near future”, in a move widely hailed by local dairy farmers as a means of propping up the fresh milk market in the Kingdom.
This came during Sorasak’s visit to Nestle headquarters in Vevey, Switzerland on June 16, with a representative affirming that the company was looking for more opportunities in Cambodia.