The Cambodia-South Korea Free Trade Agreement (CKFTA) is set to be signed on October 26, ushering in a new chapter that will open up fresh avenues in trade and investment between the two Asian nations, according to a senior Ministry of Commerce official.
Ministry undersecretary of state Pen Sovicheat told The Post on October 20 that Minister of Commerce Pan Sorasak and the South Korean trade minister would virtually endorse the CKFTA.
This comes more than eight months after the agreed minutes on the conclusion of negotiations over the trade deal were signed, cementing the terms and conditions for the free trade agreement (FTA).
Under the CKFTA, coupled with the Regional Comprehensive Economic Partnership (RCEP), the Kingdom will lift tariffs on 93.8 per cent of goods traded, with South Korea scrapping duties on 95.6 per cent, Yonhap News Agency reported in February.
Under the deal, more than 10,000 Cambodian goods will be granted duty-free access to South Korea, according to Sovicheat.
Improved access to the South Korean market will create a wealth of opportunities for primary and processed agricultural goods; textiles-based merchandise such as garments, footwear and travel bags; rubber; spare parts; electronic components; light industrial products; and a host of other wares churned out inside and outside of special economic zones (SEZ) in the Kingdom, he said.
The FTA will also facilitate the import of electronics, pharmaceutical products and auto parts, he added.
He portended that heightened purchases of South Korean intermediate and capital goods such as raw materials, machinery and other equipment used in domestic production would lead to a meaningful surge in productivity and quality of goods for export.
Much like the Cambodia-China Free Trade Agreement, the CKFTA “is another indicator of the efforts and successes of the Ministry of Commerce in opening up markets for the export of Cambodian goods", he said.
Bilateral trade between Cambodia and South Korea in the first half of 2021 was worth $451.98 million, up by 6.72 per cent from $423.51 million in the same period last year, according to data from the Korea International Trade Association (Kita).
In January-June, Cambodian exports amounted to $159.4 million, down by 1.6 per cent year-on-year from $162.06 million, and imports clocked in at $292.59 million, up by 11.9 per cent year-on-year from $261.45 million. This means that the trade deficit widened by 34.0 per cent from $99.4 million to $133.2 million.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, previously told The Post that the two countries have cultivated strong trade relations, which will become all the more “special” when the FTA enters into force.
Even so, he encouraged the Kingdom to incorporate more commercially viable commodities into its export portfolio, to make the most out of its trade arrangements with trading partners.
“The diversification of products for export to foreign markets will better position Cambodia to excel in international trade.”