Illustrative image (Source: Internet)

 

Hanoi (VNA) - Cambodia's exports to the European Union (EU) could see an estimated decline of 513 - 654 million USD a year if the EU suspends the Everything But Arms (EBA) trade preferences for the country, said a World Bank's report released on May 6. 


The comment was made in the Cambodia Economic Update, based on last year’s data on the value of Cambodia’s three key EU exports, including clothing, footwear and milled rice.

A bank official said the figure would have been even higher if bicycle exports to the EU, which were valued at 331 million USD last year, had been included in the study.

Early this year, EU tariffs were introduced on Cambodian and Myanmar milled rice imports to the bloc at 200 USD per tonne in the first year. The measure intends to protect local rice producers following complaints from Italian and Spanish farmers that they are being undercut.

WB Country Director for Cambodia Inguna Dobraja said improving Cambodia’s investment climate and reducing the cost of doing business, along with building a skilled labour force, are the key priorities to sustain strong economic growth in the medium-term.

The WB report predicts that the Cambodian economy will grow by 7 percent this year, driven primarily by the rapid expansion of exports and robust international demand for the Kingdom’s goods.

In the risk assessment section of the report, the bank highlighted the potential withdrawal of the EU’s EBA scheme as a major factor impacting Cambodia’s economic outlook, in addition to the inflow of foreign direct investment – which is currently financing many sectors in the country.

The report revealed that Cambodia’s garment exports to the EU were valued at 3.65 billion USD last year, while footwear and milled rice shipments reached 508 million USD and 177.5 million USD, respectively.

If the EU withdraws Cambodia’s EBA preferential trade status, and thus introducing tariffs on a number of key exports into the bloc, apparel will face a 12 percent tax, footwear 16 percent and bicycles 10 percent.

Speaking at the report announcement ceremony, Deputy Governor of the National Bank of Cambodia Neav Chanthana said the government has prepared a strategy to negate the impact should the EU decide to withdraw Cambodia’s EBA status.

In late March, Cambodian Prime Minister Hun Sen announced large-scale economic reforms with a 17-point strategy to stimulate Cambodian economic growth which, according to him, could save the private sector up to 400 million USD per year.-VNA