Foreign investments are expected to pour into Cambodia after an announcement by US President Joe Biden to allow a 24-month tariff exemption on solar panels that are manufactured in Cambodia and three other Southeast Asian countries.
Ministry of Commerce secretary of state Seang Thay told The Post that they were informed of Biden’s announcement to grant temporary suspension on import duties on solar cells and modules from Cambodia, Malaysia, Thailand and Vietnam.
“Tax exemption for the production of solar cells and modules which will be imported by the US is another new opportunity for Cambodia to expand production in this sector.
“It’s because the investment environment as well as business in Cambodia is already good,” he said, noting that the ministry was told about Biden’s announcement on the evening of June 6.
The new investment law also makes it more convenient for investors. Therefore, as long as there is a good market, investors will expand their production.
“In fact, in the past the US has provided tax exemptions on luggage and travel goods to Cambodia, which led to significant growth in production in this sector in Cambodia,” Thay said.
On June 7, Reuters confirmed an earlier report that the US would halt taxes on solar panels from the four countries following an investigation on whether 80 per cent of solar panel imports by the US were allegedly circumventing tariffs from goods made in China.
Ministry of Mines and Energy spokesman and director-general for Energy, Heng Kunleang, told The Post on June 8 that Cambodia has a policy to encourage the production of solar panels as well as electric spare parts and equipment for domestic and export markets.
“Cambodia, like other countries in the world, is working together to mitigate the effects of climate change and maximise the use of renewable energy. As such, the government encourages and supports the production of solar panels for domestic use and export,” Kunleang said.
“It’s not only the US that promotes green and renewable energy and joins hands in the battle against climate change, Cambodia is the same – it’ll keep pushing and inspiring producers and consumers to use these forms of energy, at 50 per cent out of total consumption by 2040.
“In 2021, solar energy consumption was less than 12 per cent,” he said.
Meanwhile, Cambodia Chamber of Commerce vice-president Lim Heng welcomed the exemption of import duties on solar panels, saying that it would boost investment in factories to produce more solar panels in Cambodia.
“This is another good sign because we have the generalised system of preferences from the US and another tax exemption is really a good thing for US-Cambodia trade relations,” he said.
Previously, the production of electricity as well as solar panels were from those installed in Cambodia and exported in large quantities.
The US raised tariffs on imports from China amid trade tensions.
“This problem resulted in some companies investing here by opening factories, especially electrical equipment and solar products,” he said.
Last year, the General Department of Customs and Excise said 54,319.83 tonnes of solar panels, valued at $273.87 million, were exported from Cambodia, representing an increase of 27 per cent.
Out of that, exports to the US totalled 53,188.19 tonnes, up more than 33 per cent and valued at $256.88 million.