Photo credit: The Phnom Penh Post
TRADE, ECONOMY, AND INVESTMENT
Cambodia, Laos pledge to boost bilateral trade
(7 December 2018) Cambodia and Laos have agreed to increase trade and investment activity between the two countries. The Cambodian commerce ministry indicated that trade volume between the two countries amounted to only US$27 million last year—significantly lower than Cambodia-Vietnam’s US$3.8 billion and Cambodia-Thailand’s US$6.16 billion. Speaking at the Lao-Cambodian Business Forum in Vientiane, Cambodian commerce minister Pan Sorasak expounded on the country’s “flexible and highly favourable” policies for foreign direct investment, which will help businesses “make long-term profits” while also contribute to Cambodia’s economic growth. The lacklustre trade could change following the completion of a cross-border bridge—linking the Preah Vihear province in Cambodia to the Champasak province in Laos—which can facilitate travelling and the transportation of goods between the two countries, according to the Cambodian Chamber of Commerce.
Vietnamese logistics sector urged to take advantage of global integration to fulfill potential
(8 December 2018) The Vietnamese deputy minister of industry and trade Cao Quốc Hưng urged its logistics sector to embrace global integration in order to fulfill its full potential and maintain the targeted 12-14% annual growth rate. In this regard, it is deemed that Vietnam’s participation in the Trade Facilitation Agreement (TFA) of the World Trade Organisation (WTO) that took effect on February 2, 2017, could be an instrumental factor. WTO analysis indicated that the TFA could help cut total trade costs of WTO members by 14.3%. Earlier in the year, Prime Minister Nguyen Xuan Phuc had set out some important targets for the logistics sector. The sector is projected to contribute 8-10% to the country’s GDP by 2025. Further, logistics costs are expected to fall 16-20% and it is hoped that Vietnam’s logistics sector will be ranked among the world’s top 50 by 2025. The government has been conducting numerous activities in order to achieve growth targets, including cutting red tape for logistics companies, digitizing government processes and public services, and publishing testing standards for local firms.
New port to enhance Myanmar-India trade connectivity is ready for operation
(7 December 2018) The Myanmar Ministry of External Affairs announced that Sittwe Port, a project under the Kaladan Multi-Modal Transit Transport Project to facilitate connectivity between Myanmar and India’s mainland and north eastern states, is ready for operation. A tender will be opened this or the next month for appointing a port operator and movement of ships is expected in six months after the operator takes over. The project will further enhance the movement of ships between the two countries and reduce pressure on existing waterways. Further, given its strategic significance, the project was financed through India’s grant assistance to Myanmar.
Cambodia urges local and Vietnamese private sector to increase investment
(10 December 2018) Cambodian commerce minister Pan Sorasak has called on the Cambodian and Vietnamese private sector to boost investment in order to achieve the countries’ US$5 billion bilateral trade target. According to the minister, Vietnam is Cambodia’s fifth largest investor with investment inflows for 206 projects amounting to US$3 billion, while Cambodia has 18 investment projects in Vietnam worth US$58.1 million. Further, bilateral trade between the two countries for the period of January to July 2018 was valued at US$2.7 billion—a 19% increase compared to the same period in 2017. The two countries have conducted several initiatives to boost bilateral trade and investment, including signing cross-border trade agreements, eliminating double taxation and developing a model market on the Cambodian-Vietnam border in the Thary Tbaung Khmum Special Economic Zone.
Laos and Cambodia sign energy agreement
(7 December 2018) Cambodia signed an agreement with Laos during a meeting in Vientiane to increase its import of electricity from Laos for Cambodian provinces near the countries’ border. Cambodia currently consumes 2,000 megawatts of electricity every year, with imports accounting for under 20% of its total consumption. The country, which also imports electricity from Thailand and Vietnam, expects seven hydropower plants to be fully operational by the end of 2018 to run alongside its coal power plants, fossil fuel power stations and renewable energy sources.
About Greater Mekong Subregion (GMS)
The Greater Mekong Subregion (GMS) Economic Programme was launched by the Asian Development Bank in 1992 connecting five developing ASEAN countries, namely Cambodia, Laos, Myanmar, Vietnam and Thailand, and Chinese provinces of Yunnan and Guangxi Zhuang Autonomous region. The region has some of the most robust economies sharing the Mekong River Basin thanks to its reform and liberalisation. The subregion is growing at a faster pace than the whole of East Asia and the Asia Pacific as the GDP growth rate for 2017 was at 6.4 percent, according to the World Bank. The population at the subregion as of 2016 is at 340 million while the GDP at PPP is at US$3.1 trillion in 2016. In 2015, trading within the region was at US$444 billion.