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Source: www.asiaecon.org |

CAMBODIA- VIETNAM BILATERAL TRADE ON THE RISE


Two way trade between Cambodia and Vietnam has enjoyed strong growth in the last few years, but only recently has economic relations between the two countries received a significant boost. The signing of key bilateral agreements, along with Cambodia's faltering trade with Thailand during the last few months, provided a recent push for trade between Cambodia and Vietnam, with figures reaching $1.7 billion in 2008.




Two way trade between Cambodia and Vietnam has enjoyed strong growth in the last few years, but only recently has economic relations between the two countries received a significant boost. The signing of key bilateral agreements, along with Cambodia’s faltering trade with Thailand during the last few months, provided a recent push for trade between Cambodia and Vietnam, with figures reaching $1.7 billion in 2008.  Recent investments and agreements between both countries are expected to further expand bilateral economic relations and trade in the following years. 

Vietnam is already Cambodia’s 10th largest foreign investor, as well as Cambodia’s third strongest trade partner within ASEAN, and the sixth largest amongst all of Cambodia’s current trading partners. Cambodia and Vietnam enjoy very complementary economies, along with similar consumer demands and habits. These factors,  combined with 1,137 km of border area, result in an incredible potential for substantial bilateral trade growth with vast possibilities for increased mutual benefits.

While Cambodian-Vietnamese relations have not been fully maximized in the past, bilateral economic relations between the two countries catapulted after the signing of a bilateral agreement in 2007.  The goal of the agreement is aimed at expanding Cambodia- Vietnam trade during the 2007-2015 period. In 2006, bilateral trade stood at $1 billion and enjoyed only slight growth in 2007, with total trade reaching $1.2 billion. The bilateral agreement signed in 2007, allowed for higher investments on special economic zones and increased trade volume between the two countries. This resulted in a $400 million increase in 2008, with total trade totaling $1.7 billion.

Vietnam exported about $1.45 billion worth of goods to Cambodia in 2008, including agricultural machines, pesticides, farm produce, seafood, and petrol. Cambodia’s exports to Vietnam during the same year totaled around $1.35 billion and mainly included grains, tobacco, cassava and wooden products.

Cambodia’s slowing bilateral trade with one of its major trading partners, Thailand, due to border tensions in the last half of 2008, has further encouraged economic relations between Cambodia and Vietnam.  In fact, the conflict with Thailand encouraged the signing of several bilateral agreements promoting expansions in current and future bilateral trade between Cambodia and Vietnam.

For instance, as bilateral trade with Thailand contracted in November, Cambodia signed a bilateral agreement with Vietnam, which included five trade and investment agreements and a visa-free arrangement aimed at boosting trade volume between the two countries.

Further boosting trade between the two neighboring countries, is the development of special economic zones along the countries’ borders. The Cambodian government has licensed six special economic zones along the Vietnam border since 2007, two of which are already in operation and four currently in development stages.
The agreement signed in November, which included the construction of a new $100 million special economic zone in the Vietnam-Cambodia border, is expected to bolster trade, employment and local production. The zone will encompass 100-hectares of land that will be mainly catered to agricultural processing companies. The project is currently under construction and is scheduled for completion in 2015. The economic zone will provide jobs for 5,000 to 10,000 people and hopes to increase bilateral trade by $1 – 2 billion a year.

Cambodia and Vietnam plan to establish more special economic zones along the border, which would further increase trade expansion. Moreover, trade is likely to increase as Cambodia raises it production of rice, rubber and cassava due to increased demand from Vietnam. Stronger anti-smuggling measures will aim at increasing trade revenue between the two countries as well. Additionally, Thailand’s continuing political instability, combined with ongoing border tensions with Cambodia, is expected to result in flat bilateral trade growth between the two countries, encouraging stronger economic relations between Cambodia and Vietnam. With both economies likely to recover from the impact of the economic crisis by the end of 2009, bilateral trade between Cambodia and Vietnam is expected to reach over $2.3 billion in 2010 and $7 billion through 2015.


Source: www.AsiaEcon.org
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Source: www.asiaecon.org |


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