The UAE-Cambodia Comprehensive Economic Partnership writes a new chapter in bilateral relations – and connects two centres of growth
In a world that often seems fragmented and polarized, the United Arab Emirates and Cambodia are breaking new ground by forging a path of friendship and economic collaboration. The completion of the UAE-Cambodia Comprehensive Economic Partnership Agreement this week marks a significant milestone in our growing trade and investment relationship, opening doors to a future that holds tremendous potential for both nations.
At the heart of this partnership lies a shared vision of progress and prosperity. Cambodia’s remarkable economic growth over the last two decades, which has lifted millions of people out of poverty , owes much to its embrace of regional and global exchange, with its well-established trade routes to China to India, and a manufacturing sector that reaches every corner of the world. It has enjoyed an average annual growth rate of 7.7 percent between 1998 and 2019, and a 5.2 percent growth in 2022 – which demonstrates remarkable potential and resilience.
It is, then, a natural partner for the UAE, which has delivered similarly exponential growth since the millennium – and whose economic performance continues to exceed forecasts. We have already built a solid foundation, with non-oil bilateral trade reaching US$407 million in 2022, an increase of more than 33 percent from the previous year and 28 percent more than the pre-Covid levels of 2019. The UAE is also Cambodia’s largest trading partner in the Arab world, accounting for 70 percent of its total trade with the region.
We can, therefore, only be excited about the opportunity the UAE-Cambodia CEPA offers – for our manufacturers, exporters, investors and business communities. This is a landmark deal that removes or reduces customs duties on 92 percent of product lines, eliminates unnecessary trade barriers, opens up market access to service exports, facilitates investment flows, and creates a platform for SMEs to collaborate and scale.
In practice, this means Cambodia’s manufacturing sector can leverage the UAE’s unrivalled global connectivity and world-class logistics infrastructure to seamlessly serve new markets – not only in the Middle East but into Africa and Europe. As one of the leading re-exporters of commodities such as tea, coffee, rice and diamonds, we can extend the reach of Cambodia’s output, whether apparel or agricultural produce.
In the other direction, our manufacturers can support Cambodia’s industrial development with the supply of iron, steel, aluminium, polymers and machine parts, while services such as finance, aviation, transport and consulting will all find a rich seam of opportunity in Cambodia’s emerging business landscape. As a result, we are projecting that bilateral trade will exceed US$1 billion within five years, a two-and-a-half-fold increase from current levels.
Beyond the exchange of goods and services, this partnership can accelerate investment into priority sectors such as logistics, which will help support the nation’s emerging e-commerce sector, and renewable energy, which is coming into greater focus as we build towards COP28 in Dubai this year.
Cambodia has already made significant strides in this area, with more than 50 percent of its energy requirements derived from renewable sources, but combining our expertise and resources we can assist the development of sustainable energy infrastructure, creating a greener, cleaner future for generations to come.
Tourism is another high-potential sector. Cambodia’s rich cultural heritage, stunning landscapes, and warm hospitality have always attracted visitors from around the world, but the UAE’s renowned hospitality expertise and development knowledge can assist in reviving the sector with new experiences and offerings as it seeks to rebuild following the pandemic.
We also encourage Cambodian investment into the UAE. Our business ecosystem offers a dynamic platform for Cambodia’s investors and entrepreneurs to innovate and expand globally. They can take advantage of an enabling environment characterized by light-touch regulation, low taxation, digital infrastructure, a high-caliber, multinational workforce – and, thanks to our trade program, potential new customers right around the world.
A new corridor of opportunity
The UAE-Cambodia CEPA will not only deliver long-lasting benefits for our nations, but have a significant impact on the wider region. As we saw during the global pandemic, our economic health relies on the multilateral trading system and the frictionless flow of products, parts and produce around the world. By connecting two future-focused economies in the heart of two rapidly evolving regions, this deal will secure key East-West supply chains – and help develop south-south trade.
Indeed, closer integration between the UAE and Cambodia has the potential to create a new corridor of opportunity, one that connects the Arabian Gulf and South-East Asia and nurtures joint ventures and clusters of excellence in high-potential sectors. With the CEPA now signed, we are both keen to deepen our friendship and explore the untapped opportunities of the Global South.
It is my hope that this historic agreement will enter into force before Q4 this year so we can enter 2024 with a new sense of purpose. But, beyond the deal, our shared values and our mutual respect will ensure we continue to build towards a future of prosperity and progress.
My message to all Cambodians is clear: Let us seize this moment of opportunity and build for tomorrow under a newly galvanized friendship forged in the pursuit of greater opportunities for both our nations.
Thani Al Zeyoudi is UAE Minister of State for Foreign Trade
The views expressed are his own.