The upcoming Law on Rules of Origin will be a major force behind economic growth, enabling significant amounts of additional direct investment in Cambodia and boosting overall consumer confidence, private sector forecasters have said.

“Rules of Origin”, or RoO, are the criteria required to ascertain the national source of a product, according to the World Trade Organisation (WTO). “Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports.”

The Council of Ministers on May 19 approved the draft rule-of-origin law, which has three main objectives: facilitating origin verification procedures; boosting imports and exports, especially those involving preferential treatment; and providing anti-counterfeit protections.

Comprising nine chapters and 35 articles, the draft law was passed during a meeting of the council – also called the Cabinet – and will now be sent to the National Assembly for consideration in the near future.

A Cabinet statement said the proposed law establishes a clear legal foundation for authorities in charge of determining the origins of goods, issuing certificates of origin (CO), or promoting or supporting the export of Cambodian goods.

The bill will improve social welfare and generate additional economic benefits, including more funds for state coffers, in addition to aiding the Kingdom in fulfilling its WTO commitments, it said.

The statement presented the draft rule-of-origin law as a key facet of the global legal system that complements Cambodia’s bilateral, regional and multilateral free trade agreements (FTA), such as the deals with China (CCFTA) and South Korea (CKFTA) as well as the Regional Comprehensive Economic Partnership (RCEP).

“The [bill] represents yet another significant milestone in the creation of normative documents for the economic and trade sectors,” it said.

Cambodia Chamber of Commerce (CCC) vice-president Lim Heng suggested to The Post on May 23 that the proposed law could be key to stimulating economic growth, given its provisions to prevent sales of goods from unknown sources, and may inspire confidence among investors in the Kingdom.

He claimed that the bill was in keeping with the WTO’s demands that each country maintain high export standards to protect consumer safety and welfare. “Consumers will benefit from clear standards and high-quality products.”

The law could also pave the way for new preferential trading arrangement or FTAs, Heng contended, sharing that public and private stakeholders have worked together to register certain regional products as geographical indications (GI) or collective marks in a bid to protect their quality and reputation.

Keo Mom, CEO of Ly Ly Food Industry Co Ltd, one of Cambodia’s largest food processing enterprises, added that the law would complement efforts to spread awareness of the Kingdom’s high-quality goods, especially produce, and win over consumers.

It could also support the expansion of export-oriented industries as well as bolster exports of Cambodian produce and other merchandise, thereby stimulating economic growth, she said.

“We take great pride in the premium produce and merchandise that Cambodia makes, as well as its RoO certification, which distinguishes the Kingdom on the international scene.

“The law can truly aid in luring direct investors to Cambodia, due to the confidence that this proper RoO certification instils worldwide,” she said.

Leading a working group to defend the draft law at the May 19 Cabinet plenary session, Minister of Commerce Pan Sorasak said: “The draft rule-of-origin law is an addition to existing legal provisions in the commercial and economic sectors that will bring them into conformity with ASEAN and WTO regulations.”

Cambodia’s international trade volume reached $15.611 billion in the first four months of 2023, down 14.10 per cent year-on-year from $17.650 billion, according to provisional Customs (GDCE) figures.

Cambodian imports and exports for the January-April period clocked in at $7.927 billion and $7.234 billion, respectively, down 21.07 per cent and down 4.89 per cent year-on-year from $10.043 billion and $7.606 billion.

The Kingdom’s trade deficit – the amount by which a country’s imports exceed its exports – for the four-month period came in at $692.796 million, shrinking by 71.57 per cent on a yearly basis from $2.437 billion.

Last month alone, international trade was to the tune of $3.909 billion, down 12.88 per cent compared to $4.487 billion in April 2022. Imports and exports reached $2.067 billion and $1.842 billion, down 20.43 per cent and down 2.51 per cent year-on-year. The monthly trade deficit stood at $224.68 million, narrowing by 68.26 per cent from a year ago.