[PHNOM PENH POST]
RECENT robust figures for trade with Thailand and South Korea and the
start of construction at Japanese firm Minebea’s new factory in the
Phnom Penh Special Economic Zone provide tangible reminders of
Cambodia’s economic promise, after the negative implications of last
week’s EU sugar export shame under the Everything But Arms programme.
PPSEZ
Managing Director Hiroshi Uematsu has underlined in recent weeks that
Cambodia is subject to rising demand from foreign firms keen to take
advantage of the country’s “favourable export access to a variety of
world markets and a comparably low wage level within the region”.
Certainly,
Cambodia’s membership of ASEAN is proving a major economic plus for the
country leading to a fall in tariffs with key markets China, South
Korea, India, Japan, New Zealand and Australia prompting a corresponding
rise in investor interest.
Firms like Minebea will be able to take advantage of these FTAs as and when they come into effect, a powerful incentive.
After
ratifying the FTA with Australia in January, the reduction in tariffs
on key exports items has already started – garments, for example, will
see a fall in export taxes from this year that will keep on sliding to
zero until 2021, according to the agreement. Similarly, tariffs on trade
with India began reducing at the start of last year and within ASEAN
this free-trade process is expected to be complete by 2015.
The impact these deals have on Cambodia’s attractiveness as a destination for investment should not be underestimated.
Including
with ASEAN, the Kingdom now enjoys free trade agreements at various
stages of enactment with countries that represent about half the
population of the entire planet, include two of the world’s three
largest economies in Japan and China, and among the fastest growing.
These
are real advantages for investors, as noted by Uematsu who said a
further 10 companies are in talks regarding the possibility of joining
the PPSEZ. Once big names like Minebea come here, other smaller supply
businesses follow, creating a virtuous circle of foreign direct
investment that generates jobs and economic development.
The
Everything But Arms advantages combined with these FTAs provide a unique
and potent incentive for free trade and investment. After all, the EU
is the largest economic entity in the world generating some US$16.2
trillion last year in economic activity, according to the International
Monetary Fund. The EBA program offers Cambodia tariff-free export
access.
The Cambodian government therefore has to make sure it
does not let the tainted business interests of CPP Senator Ly Yong Phat
undermine this excellent economic opportunity as a result of human
rights abuses at sugar concessions that have rightly aggravated the EU.
Rectifying the situation with a thorough investigation and improvement
in land rights when it comes to concessions is the only way forward now.
If
the government does not see this it will not only be failing its own
people, it will also be undermining the promise of genuine economic
opportunity for Cambodia.
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