Will Cambodia Join RCEP-Led Supply Chain Integration?
Cambodia, a member of the Regional Comprehensive Economic Partnership (RCEP), is poised to deepen its integration into regional supply chains. As the world’s largest free trade agreement, RCEP offers Cambodia opportunities to enhance trade, attract investment, and modernize its economy.Dimerco+1PongoShare+1
Understanding RCEP and Its Significance
RCEP encompasses 15 Asia-Pacific countries, including the 10 ASEAN nations and key partners like China, Japan, South Korea, Australia, and New Zealand. Collectively, these countries represent about 30% of global GDP and over a quarter of world trade. The agreement aims to reduce tariffs, harmonize trade rules, and facilitate investment among member states. Time+3Xinhua News+3Dimerco+3ASEAN+1Dimerco+1Time
Cambodia’s Economic Landscape
Cambodia’s economy has traditionally relied on sectors like garments, agriculture, and tourism. However, the government has been pursuing industrial diversification to move up the value chain. Participation in RCEP aligns with this goal by providing access to larger markets and encouraging foreign direct investment.
Trade Growth with RCEP Partners
Since RCEP’s implementation in 2022, Cambodia has experienced notable trade growth with member countries. In the first nine months of 2024, exports to RCEP nations reached $6.76 billion, marking a 16.3% increase compared to the same period in 2023. Imports from these countries also rose by 17.3%, totaling $18.78 billion. Phnom Penh Postvntr.moit.gov.vn
Integration into Regional Supply Chains
RCEP facilitates Cambodia’s integration into regional supply chains by simplifying customs procedures and establishing common rules of origin. This allows Cambodian products to qualify for preferential treatment across member countries, enhancing their competitiveness. Time
Moreover, Cambodia is gradually diversifying its production structure, moving beyond traditional sectors. Recent trends indicate growth in intermediate input production, particularly in electronics and transport equipment, signaling a shift towards more complex manufacturing activities. ERIA
Challenges and Considerations
Despite the opportunities, Cambodia faces challenges in fully leveraging RCEP benefits. Infrastructure limitations, such as transportation and logistics, can hinder efficient supply chain integration. Additionally, the country must address non-tariff barriers and enhance regulatory frameworks to attract and retain investment.
Capacity building is essential to ensure that local businesses, especially small and medium-sized enterprises (SMEs), can navigate the complexities of international trade and comply with RCEP provisions.
Government Initiatives and Future Outlook
The Cambodian government is actively working to overcome these challenges. Initiatives include infrastructure development projects, such as the expansion of Sihanoukville Autonomous Port, and policies aimed at improving the business environment. Phnom Penh Post
Furthermore, Cambodia’s Industrial Development Policy 2015–2025 outlines strategies to modernize the industrial sector, emphasizing skills development, innovation, and investment promotion. CDC Cambodia
By aligning national policies with RCEP objectives, Cambodia aims to transform into a more competitive and diversified economy, fully integrated into regional and global supply chains.
Conclusion
Cambodia’s participation in RCEP presents a significant opportunity to enhance its role in regional supply chains. While challenges exist, proactive government policies and ongoing reforms position the country to capitalize on the agreement’s benefits. Continued efforts in infrastructure development, regulatory improvement, and capacity building will be crucial for Cambodia to realize its full potential within the RCEP framework.