Prime Minister Hun Manet recently undertook an official visit to meet his Malaysian counterpart Anwar Ibrahim. STPM
Cambodia and Malaysia have agreed to deepen their bilateral collaboration in various sectors, aiming to boost their economic and investment ties.
Malaysia is currently among Cambodia’s top trading partners and a significant contributor to foreign direct investment (FDI) in the country.
Prime Minister Hun Manet recently undertook an official visit to meet his Malaysian counterpart Anwar Ibrahim. During the visit, he engaged with numerous prominent Malaysian leaders, members of the National Assembly, senators and business professionals.
During the February 27 visit, both nations committed to further strengthening their relationship, as announced by Manet and Ibrahim at a joint press conference.
The leaders expressed their commitment to enhancing cooperation in various areas, including security and defence, tourism, technology, digital advancements, finance, halal food and energy security.
“[Anwar’s] visit to Cambodia last March, and my current visit, will deepen the long-standing relationship between [our countries],” Manet stated.
The two governments have also agreed to consider arranging a meeting of the Cambodia-Malaysia Joint Commission for Bilateral Cooperation (JCBC) in the future and to explore the facilitation of submarine energy lines between Laos, Cambodia and Singapore, traversing Malaysian waters.
Seng Vanly, a lecturer of international relations and a regional political observer, noted that Manet’s visit underscored his keen attention to Cambodia’s relationship with Malaysia, particularly under Ibrahim’s government.
Vanly anticipates that the visit will also serve to strengthen the personal relations between the two leaders.
Economic ties on the rise
Malaysia emerged as one of Cambodia’s leading trading partners in 2023. Trade value for the year exceeded $632 million, marking a 2% increase compared to the previous year’s figure of over $620 million, as reported by the General Department of Customs and Excise (GDCE).
Imports from Malaysia surged by 371% to $527.38 million, while Cambodia’s exports to the Muslim-majority nation decreased by 6% to $105 million, resulting in a trade deficit for Cambodia of approximately $422.38 million.
In the previous year, Cambodia experienced a significant influx of foreign tourists, with 5.5 million arrivals, a substantial increase of 139.5% compared to 2022.
According to the Council for the Development of Cambodia (CDC), the country attracted 268 ventures in 2023, with capital investments nearing $4.9 billion. This represents an almost 20% rise from the $4 billion recorded in 2022.
Chinese investments topped the FDI list, accounting for over 40%, followed by contributions from Thailand, Japan, the Cayman Islands, Samoa, South Korea, the British Virgin Islands, Singapore and Malaysia.
Lim Heng, vice-president of the Cambodia Chamber of Commerce (CCC), noted that during Manet’s official visit to Malaysia, there was considerable interest from the Malaysian private sector regarding potential investment opportunities in Cambodia.
He said the interest was focused on expanding existing businesses or investing in new sectors.
“We, the CCC, signed a memorandum of understanding [MoU] with the Malaysian Chamber of Commerce at the Malaysia-Cambodia Business Forum,” he stated.
He mentioned that the Malaysian chamber also suggested to Manet the establishment of a Cambodia-Malaysia Special Economic Zone (SEZ).
“In response, our prime minister agreed to the request and will set up a working group to make it happen within 2024. I believe that following [Manet’s] official visit and private sector engagement there, we will see an increase in bilateral trade and investment flows between the countries, especially as Malaysia is also a member of the Regional Comprehensive Economic Partnership [RCEP]. Membership allows them to invest here and then export to other RCEP members,” he added.
Ky Sereyvath, an economics researcher at the Royal Academy of Cambodia, noted that the Kingdom has become a major buyer of goods from Malaysia, a leading regional producer of electronics, construction materials and daily necessities.
He noted that the robustness and maturity of Malaysia’s industrial and agricultural sectors have resulted in a vast production capacity for various goods at significantly lower costs than those in Cambodia.
“Given Malaysia’s booming industry and agriculture, Cambodia could reduce its trade gap by exporting potentially successful products for processing in Malaysia,” he suggested, citing milled rice, latex and palm oil fresh fruit bunches (FFB) as examples.
Central banks sign finance MoU
The central banks of Cambodia and Malaysia have signed an MoU aimed at strengthening cooperation in financial innovation and payments. The agreement is particularly focused on facilitating cross-border trade and tourism activities between the two countries.
Chea Serey, governor of the National Bank of Cambodia (NBC), and Abdul Rasheed Ghaffour, governor of Bank Negara Malaysia (BNM), formalised the document, expected to benefit up to 5 million merchants, including small businesses from both countries, who currently accept QR payments.
Serey emphasised the significance of the agreement in enhancing collaboration between the two banks.
“Through the MoU, the NBC and BNM will collaborate to drive financial innovation and improve cross-border QR code payment systems. This aims to boost trade activities and financial inclusion in both countries and to promote the use of local currencies, in alignment with ASEAN objectives,” she stated.
