Cambodia witnessed a significant increase in the export of electrical and electronic equipment in the first four months of 2023, earning $979.06 million, a 94.24% year-on-year growth from $504.039 million, and a 36.72% half-on-half increase compared to July-October 2022’s $716.11 million. These figures are according to the provisional Customs (GDCE) data in “International Merchandise Trade Statistics” bulletins.
This category of items, corresponding to Chapter 85 of the Harmonised System (HS) of Tariff Nomenclature, accounted for 13.534% of the $7.234 billion value of Cambodia’s total merchandise exports over the four months. This is compared to 6.627% and $7.606 billion in January-April 2022, as well as 9.719% and $7.368 billion in July-October 2022.
Factors Driving the Growth
In a May 29 interview Cambodia Chamber of Commerce (CCC) vice-president Lim Heng stated that Chapter 85 exports are rising every year, driven by preferential tariffs from numerous countries and major markets “waiting to buy” the merchandise, including the US, EU, Japan, and South Korea.
Additionally, free trade agreements (FTA) designed to draw more investment to the Kingdom are supporting a rise in the manufacturing capacity of these items. Examples of such pacts include those with China (CCFTA) and South Korea (CKFTA), as well as the Regional Comprehensive Economic Partnership (RCEP).
Cambodia’s investment laws, geographical location, and distinctive labor force characteristics provide the country with a chance to absorb many export-oriented investment projects looking to move their production chains amid trade disputes between major powers.
“The more of the aforementioned items Cambodia can manufacture, the more it’ll be able to attract direct investment from automakers and large industry players,” Lim Heng said, stressing that steady global economic progress should underpin growth in these exports.
Future Outlook
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, stated that preferential tariffs from major countries have driven a steady acceleration in the number of companies investing in increasingly diverse ventures in the Kingdom. This diversification serves as a buffer against a severe drop in purchase orders for a particular category of commodities, which is crucial for export planning.
“I expect that as a result of this growth, there’ll be more manufacturers producing finished goods in the future,” Vanak said.
In 2022, Cambodia exported electrical and electronic equipment worth $1.998 billion, an 84.83% increase over 2021 and a 546.86% growth against 2015, making up 8.888% of the $22.483 billion registered in total outbound merchandise trade.
The strong performance of the electrical and electronic equipment sector is positive for Cambodia’s economy, offering opportunities for future investors to capitalise on the country’s manufacturing capabilities, preferential trade agreements, and increasing demand for these goods in major markets.
Source: The Phnom Penh Post
