Cambodia and Vietnam are all set to establish a key trade agreement to further enhance cross-border commercial exchange and improve the livelihoods of people residing in border areas.

A memorandum of understanding (MoU) confirming the conclusion of negotiations on the draft agreement was penned on December 21 by Minister of Commerce Pan Sorasak and Vietnamese Deputy Minister of Industry and Trade Tran Quoc Khanh, during the first of Vietnamese President Nguyen Xuan Phuc’s two-day state visit to Cambodia.

The agreement is expected to be signed in the near future, after the two sides complete their respective internal procedures.

Cambodia Chamber of Commerce (CCC) vice-president Lim Heng told The Post that the agreement would be a huge boon for the Kingdom.

The deal would make it easier to transport all kinds of goods between the two countries, especially in the context of Covid-19, he said, adding that the bulk of Cambodian agricultural products – predominantly raw materials – have historically been exported to Vietnam.

He noted that the CCC “had previously raised a number of issues, and asked the General Department of Customs and Excise, as well as border authorities to strengthen controls and prevent the influx of illegal and counterfeit goods into border areas”.

Royal Academy of Cambodia economics researcher Ky Sereyvath said the agreement would resolve a number of issues concerning trade in border areas, as well as decrease the overall complexity and costs of the customs clearance procedure, and reduce tariff and non-tariff barriers.

But he cautioned that the deal could cause Cambodia to miss out on import tax revenue, and pose a number of other challenges.

“As goods transported through Vietnam are transit goods, tax is paid in Cambodia, but because of this trade facilitation agreement, there may be some loss of import tax,” Sereyvath said.

He also noted that cross-border tax evasion is a problem at some of the shared frontier’s “abundance of corridors”.

Citing the National Phytosanitary Database, the Ministry of Agriculture, Forestry and Fisheries’ General Directorate of Agriculture reported that Cambodia shipped out 7,131,915.04 tonnes of agricultural products in January-November, up by 3,444,288.18 tonnes or 93.40 per cent year-on-year from 3,687,626.86 tonnes, to 68 countries and territories.

Mainly sold to Vietnam and Thailand, the exports were valued at $4,435,768,905, of which milled-rice accounted for $454,480,866 and paddy was to the tune of $546,567,350.