The Cambodian government’s recent sub-decree on tariff rates, special taxes, and export tariffs has been hailed by the Cambodia Chamber of Commerce (CCC) and economists as a significant boost to the country’s exports.

Effective from June 6, the sub-decree specifies reductions in tariffs, special taxes, and export tariffs for certain goods, while increasing them for others. The adjustments primarily benefit the industrial, handicraft, and agricultural sectors, with reductions of 20 to 30 per cent, and even zero taxes on certain agricultural goods.

On the other hand, the sub-decree imposes higher tariff rates on processed goods, equipment, machinery, and electronic equipment. These categories experience an increase of seven to eight per cent.

Notably, the special tariff rates for vehicles, particularly electric vehicles, have been reduced by five to 30 per cent. Conversely, the special tariff rates for rubber tire and metal products have increased by five to 15 per cent.

The sub-decree also targets exports, reducing tariffs on raw materials in the health and agriculture sectors by 10 to 50 per cent. Conversely, mining and metal-related items face higher tariffs, increasing by five to 15 per cent.

Lim Heng, the vice-president of CCC, emphasised the need for flexible tariff rates aligned with global economic trends and Cambodia’s evolving exports and imports. This adaptability supports the utilisation of local raw materials for processing and encourages maximum export potential, including tax exemptions.

Senior economist Ky Sereyvath from the Royal Academy of Cambodia views the tariff rate adjustments, particularly the reductions, as a strategy to promote the export of finished products.

He believes that reducing the special tax for exports boosts the industry by lowering costs. He expects minimal negative impact due to the slight reductions and decreases for most goods affected by the adjustments.

Data from the General Department of Customs and Excise of Cambodia (GDCEC) reveals a slight decrease of 2.4 per cent in Cambodia’s exports to major countries during the first five months of this year (January-May). The total value of exports amounted to over $9 billion, compared to the same period in 2022.