Trade deficit to fuel growth

[PHNOM PENH POST]

CAMBODIA’S trade deficit has been downplayed as a concern by experts as figures showed the Kingdom imported US$882 million more in goods than it exported during the first five months of this year.

Ministry of Commerce figures showed imports increased to US$2.65 billion in the first five months, a growth of 58 per cent on the corres-ponding period last year.

Exports grew 47 per cent during the same period to $1.77 billion year-on-year.

The growth in imports had come from increased domestic consumption stemming from an improved economy, Economic Institute of Cambodia senior researcher Neou Seiha said.

“The trade deficit … is not a bad sign,” he said yesterday.

“It’s because we need raw materials to supply production here, and the deficit grows along with increases in demand.”

A large trade deficit did not mean  imports ought to be banned, but  that the Kingdom should work on increasing its own production capacity to compete, Neou Seiha said.

Local producers had gradually improved their production capacity, curbing the flows of imported products to some extent, but challenges remained, he said.

“We need more time to improve our labour to a high standard, although we can import more high-tech material to improve our production,” Neou Seiha said.

Agricultural exports more than doubled in value during the first five months of 2011, hitting $176 million this year. Garment exports increased 27 per cent in value to $1.446 billion, the statistics showed.

Ministry of Commerce secretary of state Chan Nora said recent agreements with many advanced economies, such as China, had helped  boost the Kingdom’s agricultural production this year.

Without agreements, Cambodian agricultural producers had fewer markets to sell their produce to, resulting in lower prices, he said.