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| Participants of the Cambodia-Korea Business and Investment Forum pose for a photo at InterContinental Seoul COEX in southern Seoul, Friday. Courtesy of Ministry of Trade, Industry and Energy |
By Kwon Mee-yoo
The Korea-Cambodia free trade agreement (FTA) went into effect last December, marking a new phase in the relationship between the two countries. To promote the new FTA and raise awareness of opportunities in Cambodia, the Embassy of Cambodia in Korea organized a forum at a hotel in southern Seoul, Friday.
The bilateral FTA signals a higher level of market liberalization compared to the existing Korea-ASEAN FTA and the Regional Comprehensive Economic Partnership (RCEP), a multilateral trade pact covering 10 ASEAN states and five partners of Australia, China, Japan, New Zealand and Korea.
There are high expectations for the FTA between Korea, known for its advanced technology, and Cambodia, a rapidly developing country with political and economic stability in the ASEAN region. Approximately two months after its implementation, the FTA has already begun to have a tangible effect, such as a rise in the number of certificates of origin being issued.
Ambassador of Cambodia to Korea Chring Botum Rangsay said she was involved in the negotiations for the FTA, which holds a special significance for her.
"One of my ambitions is to kick start this FTA by doing this forum to share information and gather interest from the public of both sides. And hopefully in response, we will build a network to continue to execute this trade and investment deal," Chring said.
From Cambodia, Minister of Commerce Pan Sorasak and Minister Attached to the Prime Minister and Secretary General of the Council for the Development of Cambodia (CDC) Sok Chenda Sophea led the delegation to the forum.
The ambassador said that trade and investment should be intertwined in the relationship between Korea and Cambodia, as Korean investment in Cambodia will decrease production costs and be mutually beneficial for both countries, explaining why both minister-level officials are visiting Korea.
The Cambodian minister of commerce, told The Korea Times that the FTA would establish a more organized approach between Korea and Cambodia, building on the existing friendship that has existed for decades.
"We believe that the two countries have a different kind of level of development and they complement each other in the economy and development," he said.
"Cambodia is a developing country and we have plenty of natural resources, which need to be explored, whereas Korea has high technologies and is very advanced in many sectors ― agricultural processing, automobiles and electronics. Cambodia can offer natural resources that need to be processed by Korean companies and exported throughout the country and the world."
Pan also noted that Cambodia could play a key role in the regional supply chain with a geographical centrality.
"We are promoting regional supply capacities and supply chain resiliency. ASEAN is integrated as ASEAN Economic Community and Korea doing trade with Cambodia is actually a part of a greater supply chain," he said.
"Korea has investments in, let's say, Vietnam and Thailand, which are our neighbors. So we can work and supply as part of the whole big supply chain amongst ASEAN… Korean companies could use Cambodia as a hub to work with other countries in ASEAN."
The CDC director general introduced the new Cambodian Law on Investment, which aims to create a more favorable environment for foreign investors in the country in light of the ongoing global challenges such as geopolitical tension, climate change, supply chain disruptions and the fourth industrial revolution.
"All this brings us to think about a new law that will fit the new situation. Although the situation is changing, evolving every day, but at least our new law tries to respond to the new landscape," Sok told The Korea Times.
The new investment law in Cambodia offers a high level of openness, allowing foreign investors to participate in all sectors and providing the freedom to move capital, including the ability to repatriate all profits.
It also emphasizes capacity building and training of the labor force, offering a 150 percent tax deduction for expenses related to this and includes incentives for key industries such as electronics, green energy and automotive.
"Compared to the former law, which gives incentives for production activities, the new law gives incentives for service such as logistics, which has been considered as a weak point of Cambodia," Sok explained.
Sok said the amicable relations between Korea and Cambodia could prompt more Korean companies to invest in Cambodia and vice versa.
"If there is the problem between two governments, it will not encourage nationals from one country to go to do business with the other country. (Korea and Cambodia) have gotten closer and closer over the years. Cambodia is the No. 1 recipient of Korean ODAs (official development assistance) and it tells you that the government of Korea pays attention to and contributes to the development of Cambodia," the director general said, adding that he Cambodia-Korea FTA also sends a strong message to the Korean business community.
The director general emphasized that Cambodia is creating a favorable environment for Korean businesses to invest in, with a young and skilled labor force as well as access to the ASEAN market.
"We anticipate that Korean companies that have experienced disruptions because of COVID and geopolitical reasons may consider to relocate and I ask them to take a look at Cambodia," Sok said.
"In December 2022, the government adopted the roadmap for the development of the automotive and electronic sectors and we wish Korean companies in those sectors to consider that Cambodia has prepared the grounds for their activities."
