Bilateral trade volume between Cambodia and Japan topped $1.700 billion in 2021, marking a small increase of 0.49 per cent from more than $1.692 billion a year earlier, according to preliminary data from the Ministry of Commerce.
Last year, Cambodian exports to Japan were worth $1.094 billion, up by 3.61 per cent over 2020, and imports were $607 million, down by 4.68 per cent year-on-year, the figures show.
This means that the Kingdom’s trade surplus with Japan widened to $0.49 billion in 2020, from $0.42 billion a year earlier.
Without mentioning concrete figures, Cambodia Chamber of Commerce vice-president Lim Heng told The Post on January 13 that although the increment in trade between the two countries last year was small, Japanese investment in the Kingdom had increased considerably.
Many Japanese companies today are investing in Cambodia’s special economic zones (SEZ), especially in Phnom Penh and Koh Kong province, spanning virtually all fields, he said, commenting that a potential bilateral free trade agreement (FTA) with Japan would reinforce diplomatic and trade relations between the two countries.
The Post understands that the ministry has set up a working group to study the feasibility of an FTA with Japan.
Heng put forth that a number of conducive factors will act as a tailwind for trade with Japan and other countries, including new investment laws and regulations, bilateral and regional FTAs, and Cambodia’s various tariff preferences and beneficial arrangements granted by trading partners.
“Several Japanese firms have also been mentioning this ‘Japan Plus One’ policy, which implies that if they open up shop in Vietnam or Thailand, they’ll set up here in Cambodia too,” he said.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, remarked that trade between the two countries has remained on a positive trend during Covid, with exports to Japan largely unimpeded by the knock-on effects of the pandemic.
“With an FTA, investment and trade with Japan would get a significant boost, and in particular, prompt more Japanese investors to turn to manufacturing in Cambodia to raise exports to Japan, and other countries as well,” he said.
Japanese investors in Cambodia tend to prefer sectors such as retail, supermarkets, services and restaurants, although a great number have delved into tourism, hotels, banking, construction and real estate.
The ministry listed footwear and apparel, and electrical and electronic components as key Cambodian exports to Japan; and vehicle engine parts, agricultural machinery, electronics and home appliances as major imports.