Tourism wins in China trade deal

Workers at Phnom Penh Autonomous Port ready Cambodian cassava chips for their trip to China. Photo by Mai Vireak

Don Weinland
Friday, 06 April 2012
Phnom Penh Post

Unless Cambodian exporters find new routes to China, a proposed doubling of bilateral trade to US$5 billion by 2017 would mean little more than increased Chinese goods and investment flooding into the Kingdom.

Chinese investments and imports dominated bilateral trade with Cambodia, which was worth about $2.5 billion in 2011, experts said.

The prospect of increased trade, however, did turn heads in the tourism industry when Chinese President Hu Jintao pledged to augment the relationship during a visit last week.

“Because of this agreement, there could be a huge outflow of tourists from China to Cambodia,” Cambodian Association of Travel Agents advisor Mohan Gunti said yesterday. “We have the connectivity and we have the government support to attract more and more [Chinese visitors].”

More than 247,190 Chinese tourists visited Cambodia in 2011, or about 8.6 per cent of all tourists that year, according to the Ministry of Tourism. Although outnumbered by Korean and Vietnamese visitors, incoming travelers from China grew by 39.2 per cent in 2011 compared to the year before.

Tourism is Cambodia’s second-largest industry after garment manufacturing. Mohan Gunti said he couldn’t comment directly on the agreement, but he added that a boost in press coverage in China would “put Cambodia on the map” there.

The increase in bilateral trade would include foreign direct investment, trade, tourism and banking, the majority of which would come from China, Cambodian Chamber of Commerce director general Nguon Meng Tech said yesterday.

“The trade flow will not be equal given China’s trade surplus,” he said.

Chinese and Cambodian officials yesterday said they could not provide exact figures on Cambodia’s trade deficit with China. In October, Minister of Economy and Finance Keat Chhon said Cambodia’s trade deficit would fall from 8.7 per cent of GDP in 2011 to about 8.2 per cent this year.

Cambodia saw a 72 per cent year-on-year increase in investment from China in 2011, data from the Cambodian Investment Board showed. The investment in fixed assets hit $1.19 billion last year, or about 17 per cent of total investment.

Shanghai Construction Group told the Post in September that it planned to build an additional $700 million during the next five years in irrigation canals, freeways and bridges. At the time, the company had already invested $500 million in Cambodia’s infrastructure.

Chheng Kimlong, a business and economics lecturer at the University of Cambodia, said the Kingdom’s contribution to the trade relationship was only a fraction of the total.

“I don’t see much trade from the Cambodian side now,” he said, adding that Cambodia imported a large variety of goods from China including cellphones and motorcycles.

The first shipment of Cambodian cassava left port for China on January 15, the Post reported, although officials declined to give a dollar value of the exports at the time.

Cambodia this week signed a rubber deal with Thailand and China, but Cambodia’s total rubber production, about 100,000 tonnes per year, could only fill one-fifth of the order.

Much ambiguity remains on the future of rice exports to China after a test run to China early this year failed to pass Chinese border inspections, the Post reported this week.

Garment manufacturing, which composed the vast majority of Cambodia’s industrial sector, would not help lessen the trade deficit, Ken Loo, secretary general of the Garment Manufacturers Association in Cambodia, said yesterday.
To contact the reporter on this story: Don Weinland at don.weinland@phnompenhpost.com