April 13, 2023
PHNOM PENH – Cambodian exports to South Korea were to the tune of $72.535 million in the first quarter of 2023 – up 18.3 per cent from $61.333 million in the year-ago period – accounting for 39.94 per cent of the total two-way merchandise trade, up 13.78 percentage points on year, according to provisional Customs (GDCE) data.
Additionally, the Kingdom in March recorded its best monthly goods trade balance result with South Korea so far in the 2016-2023 period, with a deficit of just over $8.5 million.
The GDCE’s International Trade Balance Statistics bulletin released on April 10 shows that the Cambodia-South Korea merchandise trade came to $181.612 million for the three-month period, down 22.54 per cent on-year from $234.469 million.
At the same time, Cambodian goods imports from South Korea clocked in at $109.078 million, down 37.00 per cent on-year from $173.135 million, narrowing the Kingdom’s trade deficit with the East Asian peninsular nation by 67.3 per cent to $36.543 million from $111.802 million in January-March 2022.
South Korea was Cambodia’s 12th largest trading partner, 14th biggest export destination, and number-eight import source for the reference period.
In an interview with The Post on April 10, Hong Vanak, director of International Economics at the Royal Academy of Cambodia (RAC), commented that global economic uncertainty arising from the Russo-Ukrainian conflict and other geopolitical disputes – which he stressed have been especially severe since end-2022 – has caused disruptions in international trade flows.
The weakening global economic growth momentum has led consumers to cut down on unnecessary spending, he said. Nonetheless, Cambodian exports to South Korea have managed to buck the trend and remain in positive growth territory, Vanak pointed out.
Vanak put this down to the bilateral Cambodia-Korea Free Trade Agreement (CKFTA) – which took effect on December 1 – along with the high demand on the South Korean market for Cambodian goods, which he argued generally align with the East Asian nation’s quality standards and related requirements.
“Maintaining export growth now is crucial,” he stressed.
Once global economic growth regains its footing, Cambodia will have more opportunities to step up overseas sales of its products, Vanak said, adding that the numbers of factories and companies operating in the Kingdom have been on a steady march upward.
Last month alone, the bilateral merchandise trade came to $57.59 million, down 36.02 per cent from $90.02 million in March 2022 but up 3.8 per cent from $55.46 million in February 2023, the GDCE bulletin indicated.
Cambodian imports from South Korea reached $33.062 million, down 52.12 per cent year-on-year from $69.057 million and down 4.88 per cent month-on-month from $34.758 million, while exports to the fourth largest Asian economy were $24.530 million, up 17.0 per cent year-on-year from $20.963 million and up 18.5 per cent month-on-month from $20.701 million.
The Kingdom registered a monthly trade deficit with South Korea of $8.53 million in March, shrinking by 82.26 per cent year-on-year from $48.09 million and 39.3 per cent month-on-month from $14.06 million. This is the lowest such figure recorded in the 2016-2023 period to date, with the second lowest logged in January 2023 ($13.95 million). Cambodia has yet to have a monthly trade surplus with the world’s tenth-largest economy in the aforementioned timeframe.
For reference, the lowest monthly trade deficit numbers booked each year in the 2016-2022 period were: $15.44 million (August 2016), $16.04 million (January 2017), $20.79 million (March 2018), $25.51 million (January 2019), $17.48 million (July 2020), $15.9 million (April 2021) and $14.17 million (September 2022).
On April 3, Minister of Economy and Finance Aun Pornmoniroth met with South Korean ambassador Park Jung-wook at his ministry.
The minister praised South Korea’s contributions to the peace-building and restoration process in Cambodia as well as socio-economic development, and remarked that capital inflows and private investment volumes attributed to the Group of 20 (G20) member state have been progressively growing.
He confidently stated that the CKFTA will materially increase two-way trade, and that the bilateral Double Taxation Agreement (DTA) could be harnessed to create a better investment environment that draws in more Korean players “to ensure growth from year to year”.
To recap, the DTA treaty entered into force on January 29, 2021 with provisions generally taking effect on January 1, 2022.
“Recently, large Korean companies have come to invest in the establishment of vehicle assembly plants in Cambodia for well-known carmakers,” Pornmoniroth noted.
According to Vanak, major Cambodian exports to South Korea comprise garments, footwear, travel goods, electronic components, and agricultural products, while notable imports include vehicles, electronics and pharmaceuticals.
Provisional GDCE statistics indicated that South Korea was Cambodia’s 14th largest trading partner in 2022, with the two-way merchandise trade amounting to $778.924 million, up 0.63 per cent over 2021, but still down 11.66 per cent from the record $881.761 million logged in 2019.
Cambodia’s exports to and imports from South Korea came in at $233.638 million and $545.286 million, respectively, up 20.38 per cent and down 5.98 per cent year-on-year, narrowing the Kingdom’s trade deficit with the East Asian country by 19.2 per cent, from $385.871 million in 2021 to $311.648 million in 2022.