M’sia’s trade relationship with Cambodia needs more work

Cambodia

KUALA LUMPUR: Malaysia’s current trade relationship with Cambodia may make it difficult to move up the value chain and at the same time take advantage of the lower operating costs in the latter, said The Diplomat in an analysis.

Bilateral trade between both countries has been growing slowly, recording only USD386 million in 2015. Malaysian exports to Cambodia are mainly textiles, and manufactured goods in metal, processed food and chemical industries. In return, the country imports mostly rice and rubber.

Other statistics tell the story as well, according to the report. There are some 1,600 Malaysian companies registered in Cambodia. About 2,000 Malaysians work in that country.

Food processing is an area where both countries interests overlap. Malaysia and Cambodia signed an agreement in June 2016 to explore investment potential in the halal food industry. Halal food exports from Cambodia enjoy duty-free entry in the European Union (EU) which is highly-protected.

The June 2016 Agreement was witnessed by visiting Prime Minister Najib Abdul Razak and Cambodian Prime Minister Hun Sen.

The emphasis was on enhancing trade and boosting export competitiveness through a joint commission. Cambodia is keen on quality jobs and reducing over-dependence on Chinese investments.

The report was also commenting on a Memorandum of Understanding (MoU) signed on August 8 between the Malaysian External Trade Development Corporation (Matrade) and the Cambodia Chamber of Commerce (CCC). The August 8 Agreement was a follow up to Najib’s June visit.

The MoU calls for exchange of trade information and matching investment and business opportunities.

Visiting Malaysian Minister of International Trade and Industry Mustapha Mohamed also brought along 35 representatives from 20 Malaysian companies. Apart from the MoU, the visit by the Export Acceleration Mission (EAM) was also to attend the 44th Annual Asean Economic Ministers Meeting and a business opportunities seminar in Phnom Penh.

Cambodia’s Commerce Minister Pan Sorasak joined Mustapha at the business seminar.

Sorasak said that he’s keen to attract investments in “travel goods”. Such goods from countries like Cambodia enjoy duty-free, quota-free status under the Generalised System of Preferences (GSP) in the United States.

Van Sou Leng, the chairman of the Garment Manufacturers Association in Cambodia, estimates that at least 100,000 jobs could be added to the travel goods manufacturing sector.

Travel goods, however, may not be high on Malaysia’s priority list, according to The Diplomat. Travel goods include luggage, backpacks, handbags and wallets.

Malaysia, as stressed by Mustapha during his visit, was keen on new areas of economic cooperation. These include the halal industry, utilities, infrastructure, road development, renewable energy and high value services.