Government
officials and key economic experts say the free trade agreement (FTA) between
Vietnam and the European Union (EU), widely expected to be signed this year,
should not be viewed as a threat, but rather as an opportunity to strengthen
Cambodia’s industry.Many have raised fears and concerns that the FTA between
neighbouring Vietnam and the EU, one of Cambodia’s biggest trade partners,
could severely hurt the kingdom’s exports.
Negotiations
for a Vietnam-EU FTA were launched in June 2012 and are expected to conclude
this year. Under the new deal, it is believed Vietnam will enjoy access to the
EU market nearly tariff-free.“The FTA would definitely affect Cambodia’s
exports, particularly for milled rice and garments and footwear,” said Vongsey
Visoth, secretary of state at the Ministry of Economy and Finance.“However, for Cambodia, not everything would be negative. There would be some
good things for us as a result of this deal.”On the negative side, Mr Visoth
said, Cambodian exports to the EU will probably take a hit, as Vietnam will be
able to send products to the European market more cheaply. “Vietnam will be
able to export with no tariffs,” he said.
On
the other hand, the agreement will force Cambodia to become a more competitive
player in the region, which will result in the country upping its quality
standards, productivity and capacity.“Whether or not Vietnam has an FTA, we
have to survive according to market principles,” Mr Visoth said.“We don’t want
others to feed us water. We need to rely on ourselves, and we are getting
there, step by step.”“We have to improve our industry, including productivity and logistics, and try
to work our way up the value chain,” he said. “Threats like this always are
opportunities in disguise.“We can turn this situation on its head and use it to
improve ourselves.”Chan Sophal, director of the Centre for Policy Studies, sees
another advantage of an FTA between Vietnam and the EU.
“Under the deal, Vietnam’s industrial activity will rise significantly and it
will need raw materials from neighboring countries to meet demand,” he said.
“And they would buy those raw materials from Cambodia.”“It will be an opportunity
for Cambodia to increase exports to Vietnam. They will face shortages because
they will be sending so much of their local production overseas, and Cambodia
will need to step in to fill their demand.”May
Kalyan, senior advisor to the Supreme Economic Council, stressed the importance
of stepping up the game in the industrial sector to face the challenges that
the new agreement will pose.
“Our share of the international market would become smaller,” he said. “We are
going to need to diversify production and find new markets for our products.
This is a must.”Mr Kelyan also said the country would need to address the
high cost of transportation and electricity in the country, as well as
upgrading the skills of the local workforce.“We are now on the right path,
working towards these goals. We are increasingly able to compete with other
countries.“But it will take some time to deal with our structural problems,” he said.Cambodia’s
GDP is expected to increase by 6.9 percent in 2018, driven mainly by strong
performances in the agriculture, manufacturing and services sector, according
to government data.The trade volume between Cambodia and the EU was worth $5.1
billion in 2016, a 13 percent increase year-on-year. $4.5 billion of that trade
were Cambodian exports to the EU.
Source: Vietnam Economic Times, Vietnam Saturday, 20 January 2018