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Source: www.asiaecon.org |


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, which combined with 1,137 km of border area, results in an incredible potential for substantial bilateral trade growth with vast possibilities for increased mutual benefits.

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 to 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 next following years.

“Vietnamese side has invested 100 million U.S. dollars capital in Cambodia Angkor air,” Sok An, deputy prime minister and minister in charge of the Council of Ministers, said at the signing ceremony which was presided over by Prime Minister Hun Senand visiting Vietnamese Deputy Prime Minister Truong Vinh Trong, who is also representative of the prime minister of Vietnam.

“Cambodia will have 51 percent share and Vietnamese side controls 49 percent,” Sok An said, adding that the Cambodian new airline will help to push the tourism sector in the Kingdom while the world has met with global economic and financial crisis. The Vietnamese investment on Cambodia Angkor Air will be processed for30 years, Sok An said.

Cambodian and 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,  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, resulting 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.

Further boosting trade between the two neighboring countries, is the development of special economic zones along the countries’ common 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,  included the construction of a new $100 million special economic zone in the Vietnam-Cambodia border,  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 still occurring  border tensions with Cambodia, is expected to result in a flat bilateral trade growth between the two countries, encouraging stronger economic relations between Cambodia and Vietnam. With both economies likely to recover from the impacts of the economic crisis by the end of 2009, bilateral trade between Cambodia and Vietnam are expected to reach over $2.3 billion in 2010 and $7 billion through 2015.

Source: www.asiaecon.org |


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