The Regional Comprehensive Economic Partnership (RCEP) builds on the existing free trade agreements created by the ASEAN partnership, further developing economic integration and shaping future trade policies.
The RCEP agreement – that came into force on January 1, 2022 – is designed to reduce trade barriers and improve market access for goods in constituent nations. This partnership, in addition to Cambodia’s existing bilateral FTAs with China and South Korea, are key factors when attracting investment to Cambodia.
Vongsey Vissoth, Secretary of State for the Ministry of Economy and Finance, supported this notion at the Macroeconomic Management for 2022 conference. “The Regional Comprehensive Economic Partnership (RCEP) free trade pact and bilateral free trade agreements (FTAs) are one of the key factors attracting foreign direct investments to Cambodia in the post-Covid-19 era,” he said.
The RCEP FTA is the world‘s largest trading bloc with 15 countries, including all ASEAN members, Australia, China, Japan, South Korea, and New Zealand and are key to promoting economic growth in the long run.
Cambodia’s economy is mainly supported by garment, footwear, tourism, real estate, construction and agriculture will all enjoy positive growth this year.
“Cambodia’s national economy is forecast to grow by 5.6 percent in 2022, up from 3 percent in 2021”, adding that “the growth is expected at a higher rate of 6.5 percent in 2023 and up to 7 percent in 2024.”
This growth will support the government’s plan to provide a stimulus package of more than $1 billion for these sectors in 2022, to boost the economy and mitigate the impacts caused by the pandemic.
Hong Vannak, Director of International Economics at the Royal Academy of Cambodia, told Khmer Times that the RCEP and other bilateral FTAs will allow Cambodia to export goods to large markets without trade barriers.
Cambodia is gearing up for growth by reforming its investment law and upgrading its logistics sector, in addition to developing infrastructure. These upgrades, coupled with its stable macroeconomic and diversification of goods and services, make Cambodia a much more attractive prospect for overseas investors.
In ‘The Strategic Framework and Programs for Economic Recovery in the Context of Living with the Covid-19 in a New Normal 2021-2023” seminar, the Ministry of Economics and Finance outlined three areas that Cambodia should focus on to optimise its recovery post the Covid-19 era are: First, Cambodia must boost the growth of key sectors that preceded the Covid-19 crisis, to return to the path of economic growth and boost potential sectors.
Second, implement key reform measures to improve the investment climate and trade facilitation for investment and business, as well as take advantage of existing free trade agreements.
Third, focus on resilience through preparedness and responsiveness, to preserve the sustainability of Cambodia’s socio-economic development in the event of a similar crisis.
This article was first published in Khmer Times. All contents and images are copyright to their respective owners and sources.
