According to the World Bank (WB), Cambodia ranked third in terms of real income gains and export growth among members of the Regional Comprehensive Economic Partnership (RCEP).
In its recent working paper, “Estimating the Economic and Distributional Impacts of the Regional Comprehensive Economic Partnership,” the Washington-based lender said the Kingdom came third after Vietnam and Malaysia in terms of real income gains.
As for export growth, the report said Cambodia is expected to register a 6.5% increase, the highest after Vietnam and Japan at 11.4% and 8.9%, respectively, according to the document. 46-page research.
RCEP is the world‘s largest trade pact, signed on November 15, 2020 by the 10 ASEAN countries and five other Asia-Pacific countries – Australia, China, Japan, New Zealand and South Korea – and entering in force in Cambodia on January 1, 2022.
Ratification is still pending in South Korea and four ASEAN countries – Indonesia, Malaysia, Myanmar and the Philippines.
The working paper says the deal has the potential to elevate an additional 27 million people to middle class status by 2035.
“Considering the full scenario, with reductions in tariffs, non-tariff measures and trade costs, Lao PDR, Thailand, Cambodia, Vietnam and Malaysia benefit the most. These positive gains are magnified when a productivity boost is assumed.
“In this scenario, real income in Vietnam and Malaysia increases by almost 5%. In Japan, the lowest-earning country in this scenario, real income increases by 0.5%.
“Interestingly, for Japan, the impact of the four RCEP scenarios is similar, suggesting that most of the gains are associated with lower tariffs, unlike the rest of the countries, where lower tariffs lead to lower tariffs. very low impacts, even a negative impact as in Cambodia and Vietnam.
“In terms of total exports, the fastest growing sectors for Cambodia are wood and paper products. [34.8 per cent]chemical, rubber and plastics [25.3 per cent]and electrical equipment, and machinery [24.2 per cent] develop the most.
“[This is] the result of the tariff reduction in the case of chemicals and plastics [two percentage point reduction, between 2035 and 2020]and due to the reduction of non-tariff measures for wood and paper [14.8 percentage points decrease between 2035 and 2020],” It said.
Hong Vanak, director of international economics at the Royal Academy of Cambodia, previously told The Post that before signing the deal, the Cambodian government carefully weighed potential products that could meet the perceived needs of signatories.
He suggested that the Kingdom increase the volume and quality of production and raise its level of diversification.
“Although the RCEP agreement binds us to more trading partners and provides special conditions on the export and import of goods, the most important thing is that our products can meet the needs of other countries? This is an important detail to seriously reflect on,” he said.
Cambodian Chamber of Commerce Vice President Lim Heng pointed out that trade agreements, whether bilateral or multilateral, are a net positive for the national economy, creating export opportunities and improving the economy. access to investments.
“Because RCEP is a regional agreement with major markets in major countries, Cambodia should strive to expand its production with emphasis on quality to bring more revenue to the national economy,” said- he declared.
RCEP has a combined gross domestic product (GDP) of $26.2 trillion, or 30% of global GDP, and engages 2.2 billion people, or 30% of the world’s population, he said, citing 2019 data.
With RCEP negotiations and additional research as the basis, the Jakarta-based Economic Research Institute for ASEAN and East Asia (ERIA) found that RCEP would increase the Kingdom’s GDP by an additional 2%. , would increase exports by an additional 7.3% and increase investment by an additional 23.4%.
