International Trade in Cambodia

News Related to International Trade in Cambodia

Business outline for Cambodia

Economic Overview

From 2004 to 2007, Cambodia showed high levels of GDP growth, amounting to 10% per year. Due to the effects of global economic sluggishness, growth started to decrease in 2008 and reduced considerably in 2009 (-2%), before resuming growth in 2010 (4.8%). Growth should continue to accelerate in 2011.

Textile, tourism and mining are the main growth drivers, however, the country remains highly dependent on foreign aid. Offshore deposits of oil and natural gas have recently been found in Cambodia, a fact that offers the country new economic growth opportunities. Nevertheless the absence of basic infrastructures, the high population growth and the lack of economic development due to years of social unrest are major problems, which negatively affect growth.

In co-operation with international financial institutions (IMF and the World Bank), the governement is attempting to tackle the main challenges: establish economic reforms necessary for developing the private sector, in a way that would create employment of a population that is demographically unbalanced (50% of the population is under 21 years) and unskilled. Ensuring greater budget flexibility, preserving financial stability, promoting economic diversification and supporting rural development are also among the priorities.

Cambodia is a poor country (which is part of the least developed countries - LDC), where per capita wealth is lower than that of the neighboring countries, where the level of education is low and unemployment increasing.

FDI in Figures

FDIs were growing exponentially between 2004 and 2007, due to healthy macro-economic policies, political stability, regional economic growth and the government advocated opening of the economy. However, global slow down has put a break to this dynamism.

Although Cambodia encourages foreign investment and offers incentives to investors, the lack of transparency of the legal system, corruption and inadequate financial institutions are factors that hinder foreign investment.

The main sector receiving FDI is tourism. The main investing countries are Malaysia and Taiwan.

Foreign Trade Overview

The country is open to trade. In effect the trade policy's main aim is to diversify exports to other sectors, other than the traditional textile sector.

Customs duties vary from 1 to 120%, and most the trade barriers have been removed. The import of certain products, like pharmaceuticals products and firearms, is regulated. Simplified custom duties, exemption of import duties on certain items, and the recent initiatives taken by government to work with multilateral agencies like World Bank, the IMF and the Asian Development Bank are points that favor trade.

With the crisis, Cambodia's trade balance deficit has deepened, textile exports have shrunk and imports of consumption goods and vehicles have gone out of control.

Cambodia's main trade partners are NAFTA (North American Free Trade Agreement) member countries, Hong Kong and the European Union. The country mainly exports clothes, wood, rubber, rice and fish to the United States, Hong Kong, Canada, Vitnam, United Kingdom, The Netherlands and Germany. The main import products are petroleum products, cigarettes, gold, construction material, machinery, motor vehicles and pharmaceutical products from Thailand, China, Vietnam, Hong Kong, Singapore, South Korea and the United States.