Bicycles need to comprise of a minimum of 40 per cent local components to qualify for duty-free status in the EU. AFP
While bicycle industries around the world rust during the ongoing coronavirus pandemic, the Kingdom’s locally-assembled ones continue to pedal into the international market in higher numbers.
Local channel BTV News reported that the Kingdom exported some 498,000 bicycles worth about $119 million in the first quarter of this year, more than $10 million over the same period last year.
Cambodia Chamber of Commerce vice-president Lim Heng told The Post on Thursday that exports of locally-assembled bicycles can only gain traction as traffic and health concerns force people to reconsider their primary means of transportation.
“The market can only expand and unfold its potential in the future, as more countries around the world think about developing lanes for bicycles.
“Bicycle exports will continue to increase in the second quarter, buoyed by a heightened aversion to public transport. Cycling as a workout option is not likely to decline anytime soon,” said Heng.
Steadfast in his positive outlook of the market, he highlighted that now is the opportunity to invest in bicycle assembly in Cambodia for export.
Royal Academy of Cambodia economic researcher Hong Vanak said though the Covid-19 pandemic continues to snarl exports around the world, bicycle exports are rolling out of the Kingdom at a leisurely pace.
He noted that as exports continue on a roll, the components required for assembly will see demand increase accordingly.
“Though some orders were cancelled during the first quarter due to Covid-19 concerns, bicycle exports from Cambodia remained in the green. This growth is a vital contributor to national economic development,” he said.
On February 12, the EU Commission announced the partial withdrawal of the Everything But Arms (EBA) scheme.
The suspension affects one-fifth or €1 billion ($1.1 billion) of Cambodia’s annual exports to the EU’s 27-nation bloc.
The decision would take effect on August 12, unless the Parliament objects. The partial withdrawal would affect selected garment and footwear products, and all travel goods and sugar, the EU Commission said.
For years the Kingdom’s bicycle manufacturers have enjoyed continued growth to the European market owing to their duty-free export status under EBA, which exempts their shipments from the EU’s 14 per cent import duty. That figure is six per cent for electric bicycles.
Last year, Ministry of Commerce spokesman Seang Thay said bicycles need to comprise of a minimum of 40 per cent local components to qualify for duty-free status in the EU, although goods from other ASEAN nations can also count as local materials in certain cases.
Thay said if tariffs are imposed on bicycles, exports will slow, but it does not mean Cambodia will completely lose its market.
“Exports will see a tiny decline, but I don’t think it is a major problem. The government has introduced several reforms making production costs lower. This will allow exporters to continue shipping goods to the EU market,” he said.
Netherlands-based bicycle industry specialist website Bike Europe reported that the Kingdom has been the leading supplier of bicycles to the EU since 2017, overtaking Taiwan, which held the position for over two decades.
Cambodia exported more than 1.42 million bicycles in 2017, up nine per cent from 1.29 million in 2016, it reported.
Cambodia exported a total of 1.52 million bikes to the European market in 2018, worth $331 million, said a World Bank report. This makes bicycle exports to the EU market the third most important product of Cambodia after garment and footwear.
With additional reporting by Patrocinio Rivera
