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Vietnam now is Cambodia's 2nd largest trade partner, sales rocket

As a country with shared borders and strong diplomatic ties, Vietnam emerged as Cambodia’s second-largest trading partner in the first month of 2024, with the exchange of goods between the two nations reaching over $670 million, according to the General Department of Customs and Excise (GDCE).

In January 2024, their trade volume hit $677.62 million, a 41.5% increase from $478.76 million in January 2023. Vietnam now ranks second, following China and ahead of the US, in Cambodia’s list of most significant trading partners.

Exports to Vietnam totalled $373.06 million for the month, a substantial rise of 116.6% from $172.23 million in the same period of 2022. Vietnamese exports to Cambodia slightly decreased by 0.6%, from $306.53 million to $304.57 million. 

The surge in exports resulted in Cambodia’s trade surplus expanding to $68.49 million for the month, from a deficit of $134.3 million in January 2023.

Lim Heng, vice-president of the Cambodia Chamber of Commerce (CCC), told The Post on February 14 that enhanced diplomatic relations have accelerated trade, particularly in exports to Vietnam. 

He said that agricultural products form an important part of the exports, as during harvest seasons, numerous local and Vietnamese traders purchase crops from Cambodian farmers for processing in Vietnam.

He noted that trade between the two ASEAN neighbours is expected to continue growing, bolstered by agreements on cross-border trade flows. 

“The increase in the value of Cambodia’s exports reflects a growth in domestic production capacity. The current balance between exports and imports of Cambodian goods with all partner countries is closer, a departure from the past when import values greatly exceeded exports,” he explained.

“Vietnam is a vital market for Cambodian agricultural products,” he stressed.

To read full article, please click here.



Author: Hin Pisei

Source: The Phnom Penh Post

Singapore and Malaysia strengthen ties with MOU on special economic zone with Johor

[JOHOR] Singapore and Malaysia achieved several bilateral milestones on Thursday (Jan 11), with significant progress on the Johor Bahru-Singapore Rapid Transit System (RTS) Link and a memorandum of understanding (MOU) inked for a special economic zone between Singapore and Johor.

All this took place during Singapore Prime Minister Lee Hsien Loong’s working visit to the southern Malaysian state, which was also his first overseas trip in 2024.

Noting that Singapore and Malaysia will celebrate 60 years of bilateral relations in 2025, PM Lee said in a Facebook post that he looks forward to both countries “charting new areas of cooperation, including in trade and investment, tourism, innovation, and the digital and green economies”.

His first stop on the day-long visit was the RTS Link Marine Viaduct site at the Strait of Johor, for a ceremony commemorating the completion of a connecting span that links the Malaysia and Singapore ends.

PM Lee and Malaysian Prime Minister Anwar Ibrahim signed commemorative plaques to symbolise their shared commitment to deliver the RTS Link, which will further improve connectivity between Singapore and Malaysia.

“The completion of the RTS Link will certainly strengthen the friendship between Malaysia and Singapore, and drive economic growth and prosperity for both countries,” said Anwar in a Facebook post written in Malay.

The cross-border project reached 65 per cent completion as at Dec 31, and is on track to begin operations by December 2026, both transport ministries announced on Thursday.

Singapore’s Acting Transport Minister Chee Hong Tat, who was part of PM Lee’s delegation, told reporters that the RTS Link “will make travel between the two countries more convenient and benefit both Singaporeans and Malaysians”.

Noting that 350,000 people cross the Causeway daily for work, education and social visits, Malaysian Transport Minister Anthony Loke said the RTS Link will reduce congestion on the Causeway by 35 per cent.

“We must ensure that our infrastructure meets the demands of one of the world’s busiest border crossings,” he added.

When completed, the 4 km cross-border rail shuttle service will connect Bukit Chagar station in Johor Bahru and the RTS Link Woodlands North station in Singapore, with a journey time of about five minutes.

The service will have the capacity to carry 10,000 passengers an hour in each direction, with Malaysia’s MRT Corp estimating first-year ridership at 41,400 passengers per day.

RTS Operations, a joint venture by Singapore rail operator SMRT and Malaysian public transport firm Prasarana, will run the rail shuttle.

Both countries have agreed that the fares, which are not yet finalised, will be determined by RTS Operations.

In determining fares, said Chee, the operator will have to take into account factors such as demand, the costs of providing an “efficient and reliable service for commuters on a financially stable basis”, and the fares charged by alternative travel options. Loke said the fares will “definitely be competitive”.

Cross-border flows

Later in the day, both prime ministers witnessed the signing of an MOU between Singapore and Malaysia for the Johor-Singapore Special Economic Zone (JS-SEZ), which aims to improve cross-border flows of goods and people, and increase investment.

“Together with the RTS Link, the SEZ will enhance cross-border links, support businesses, and create jobs on both sides of the Causeway,” said PM Lee in his post.

The MOU was signed by Singapore’s Trade and Industry Minister Gan Kim Yong and Malaysia’s Minister of Economy Mohd Rafizi Ramli at the DoubleTree Hilton hotel in Johor.

Both countries have agreed to work towards a “full-fledged” agreement on the JS-SEZ, with an update to be given at the next Malaysia-Singapore leaders’ retreat.

A framework will be developed to iron out details for this legally-binding agreement, such as the economic sectors of mutual interest for cooperation, as well as the zone’s geographical coverage.

“The JS-SEZ underscores what Singapore and Malaysia can achieve when our governments and business communities work closely together,” said Gan.

Rafizi said the JS-SEZ is an “unprecedented opportunity to… elevate the economic attractiveness of both Johor and Singapore”.

Under the MOU, both sides will promote a more “seamless and expedited” flow of goods, said Singapore’s MTI in a separate statement. At the leaders’ retreat last October, PM Lee said this may mean special tax arrangements and bonded warehouses.

For people, the aim is to enable freer movement – for professionals, managers, executives and technicians, for example – to support investments and business operations.

Meanwhile, strengthening the business ecosystem within the JS-SEZ could mean talent and vocational training for workers, and economic support for businesses.

The MOU also established a joint committee to oversee its implementation, co-led by MTI and Malaysia’s Ministry of Economy. The committee will report to the Joint Ministerial Committee for Iskandar Malaysia, co-chaired by Singapore’s National Development Minister Desmond Lee and Malaysia’s Rafizi.

Singapore and Malaysia will also explore several other initiatives that will “build towards the JS-SEZ”.

A one-stop business and investment service centre could be set up in Johor to facilitate applications for the approvals and licences necessary for Singapore businesses to set up there.

Land checkpoints on both sides could adopt passport-free QR code clearance for travellers, or digitised processes for cargo clearance.

Both countries are looking at holding a co-organised investors’ forum to gather feedback from Singapore and Malaysia businesses on the JS-SEZ, and joint promotion events to encourage trade and investment in the zone.

Both will also explore facilitating renewable energy cooperation in the JS-SEZ, and curating training and work-based learning initiatives to address talent and skills gaps for relevant industries there.

The JS-SEZ rides on the strong growth of Johor and significant investments in the region by Singapore, said the ministries.

In 2022, Johor recorded RM70.6 billion (S$20.2 billion) in investments across sectors such as electrical and electronics; medical equipment; food manufacturing; and data centres.

Singapore was Johor’s second-largest foreign investor from January to June 2022, and contributed to about 70 per cent of Johor’s total foreign direct investment in manufacturing.

Malaysia and Singapore are each other’s second-largest trading partners, with bilateral trade growing 18.9 per cent year on year to S$153 billion in 2022.

In 2022, Singapore was also Malaysia’s top source of foreign direct investment, making up 20.5 per cent of the total.


Source: The Business Times. 

Link: Here

Rising global costs a top concern for majority of SMEs: ACCA study

SMALL and medium-sized enterprises (SMEs) in Singapore and elsewhere are likely to grapple with escalating costs, challenges in talent acquisition, and regulatory changes in the environmental, social and governance (ESG) landscape, a new study has found.

Amid global supply chain and trade disruptions being linked to sharp increases in the prices of utilities and supplies, nearly six in 10 businesses (58 per cent) cited higher costs as their top concern, according to the study done by the Association of Chartered Certified Accountants (ACCA).

A quarter of respondents shared that utility prices had gone up by more than 20 per cent.

The professional accountancy body said that SMEs need to have effective cost-management practices as well as innovative financial strategies.

ACCA recommended that companies adopt digital technologies that would enable them to streamline operations, reduce costs and enhance productivity.

“As we enter the new year, SMEs are grappling with a wide spectrum of challenges, but our findings are also a clarion call for SMEs to embrace strategic innovation,” said ACCA’s head of SME Aleksandra Zaronina-Kirillova.

“By addressing these challenges head-on, SMEs can unlock new growth avenues and strengthen their market position,” she added.

In addition to the pressure of rising costs, the study revealed an increase in job vacancies and challenges in filling specific roles.

Job vacancies for professional workers were reported by 31 per cent of businesses. Fourteen per cent said they were unable to find suitable candidates for roles such as clerical workers, technicians, and service and sales workers.

This calls for a renewed focus on talent acquisition, skill development and retention strategies, said ACCA. The implementation of continuous learning and development opportunities can be used to retain top talent in companies, the body said.

In line with regulatory changes in the ESG landscape, nearly 50 per cent of SMEs are now required to provide ESG information.

This highlights the growing importance of sustainable practices for SMEs to retain their competitive edge. However, the report identified a gap in the ability for some SMEs to generate and manage this data, which presents both a challenge and opportunity for them.

ACCA noted the importance of embracing sustainable practices – not only as a regulatory compliance measure, but also as a strategic move to attract new business and customers.

“In these testing times, SMEs must pivot towards innovative strategies to navigate the complexities of cost pressures, talent retention, and sustainable practices,” said Zaronina-Kirillova. “Our research not only identifies the critical hurdles but also offers a roadmap for SMEs to emerge stronger and more agile.”


Source: The Business Times

Link: Here

Amro maintains 2024 growth forecast for Asean+3 at 4.5% on robust domestic demand

THE Asean+3 Macroeconomic Research Office (Amro) expects the gross domestic product of the region to grow 4.5 per cent this year, underpinned by resilient domestic demand.

The macroeconomics surveillance organisation on Thursday (Jan 18) maintained its earlier October 2023 projection for the 10 Asean member states, as well as China, Japan and South Korea.

Robust domestic demand continued to anchor the region’s growth, supported by the improving external sector, said Amro.

Other growth drivers included the gradual recovery of China’s property sector and the anticipated return of tourism to pre-pandemic levels.

Domestic demand main growth engine

In its latest quarterly update, Amro highlighted that private consumption in the Asean+3 region remained firm, on the back of favourable labour market conditions.

The ongoing recovery of the travel industry kept retail sales and services spending strong. As investment approvals increase, investment activity of Asean economies also picked up pace, said Amro.

Conversely, due to modest exports performance, capital expenditure in machinery and equipment in Japan and South Korea remained weak.

Improving external sector

The region’s export performance is improving gradually, noted the report, although the pace of recovery varied widely across economies.

The chip industry’s rebound, especially in advanced semiconductors, benefited exports of the plus-3 economies – South Korea in particular – but not the Asean economies as much.

Exports from South-east Asian nations were dampened by lower global commodity prices and weak demand for non-tech products, such as textiles, the report found.

“The recovery in the global tech cycle is starting to be felt in the region’s export performance, especially for electronics,” said Amro’s chief economist Khor Hoe Ee. “But non-tech exports are lagging in terms of recovery, which is why recent manufacturing sentiment surveys are relatively mixed.”

Meanwhile, tourism continued to lift the region’s service exports, which – as at Q3 2023 – have already exceeded end-2019 values in most Asean+3 economies, excluding tourism-reliant countries such as Thailand and Cambodia.

Amro’s economists anticipate a full recovery to pre-pandemic levels materialising later this year.

China’s recovery

The report highlighted that economic activities in China appeared to be stabilising, with industrial production rebounding to expand at the fastest rate since February 2022 and the services sector growing in Q4 2023.

Private consumption in Asia’s largest economy remained robust, with retail spending strengthening.

Amro expects additional policy support for infrastructure investment to bolster China’s near-term growth momentum.

US, Europe growth moderation loom large

The report raised adverse spillovers from the run-up to the US presidential election in November as a new risk that could impact baseline forecasts.

Amro’s economists cautioned that heated populist debates during the election campaigning in the US could set off stronger protectionist sentiments and measures, resulting in turbulent financial markets.

“The lead-up to the US election in late 2024 could exacerbate policy uncertainty and volatility in financial markets,” said Dr Khor.

Other threats include a spike in global commodity prices, a recession in the US and Europe, and weaker economic growth in China.

In the medium term, geopolitical tensions between the world’s two major powers, China and the US, continue to be the main risk factor for the Asean+3 region.

Longer-term risks include climate change, natural disasters, the emergence of new infectious diseases, and growing cyber threats, said Amro in its report.


Source: The Business Times

Link: Here

OCBC’s SME sustainable financing loan book doubled to over S$7 billion in 2023

IN THE last year, OCBC more than doubled the sustainable financing that it provides to small and medium-sized enterprises (SMEs) to over S$7 billion, up from S$3.3 billion in 2022.

Cumulatively, there are now more than 1,200 SMEs in Singapore and elsewhere in Asia that have taken up sustainable financing with OCBC. Of these, more than 80 per cent are from the built environment, clean transportation, energy efficiency and renewable energy sectors.

The bank also aims to at least double the number of sustainability-linked loans (SLLs) that it has extended to regional enterprises, up from 24 as at 2023, and just one in 2022.

SLLs differ from other forms of sustainable financing in that they require sustainability performance targets to be met at different stages of the loan.

There has been “good momentum” for SMEs to adopt sustainable practices and tap financing to do so, said OCBC head of global commercial banking Linus Goh on Monday (Feb 5).

“Typically, if SMEs watch their peers in the industries start to make a move, they will want to equalise, because they don’t want to be differentiated negatively,” he said at a media briefing for the third anniversary of the bank’s sustainability framework.

For SMEs that are part of a wider supply chain, there is also urgency to adopt sustainable practices as larger companies and multinational firms begin to track Scope 3 emissions, Goh said. These are emissions arising from a company’s entire value chain, including those from suppliers, customers and employees.

Yet, education and awareness remain key barriers for many SMEs in going green, said Goh. In particular, SMEs may lack people with the know-how to implement – and sustain – sustainability-related changes.

OCBC aims to help them on this front, he said. “Our conviction is that at some point soon, the (sustainability) tidal wave will come, and if they are caught straggling with everybody else, they may miss that opportunity.

“So we are reaching out, (and) we’re reaching out in a big way.”

This includes partnering more consultants and third-party verifiers to support SMEs under the bank’s sustainability framework. OCBC also organises webinars and information-sharing sessions for its SME clients, where companies share their experience in taking on green financing.

The framework was launched in Singapore in November 2020 and extended to Malaysia, Hong Kong and Indonesia from 2022.


Source: The Business Times.

Link: Here

Production and sales of EVs to rise again this year: FTI

The Federation of Thai Industry (FTI) expects the production of electric vehicles (EV) to soar to almost 2 million units this year and sales of EVs to reach 190,000 units.
According to Surapong Paisitpattanapong, vice president and spokesperson of the FTI's automotive industry club, the EV vehicles production target for this year is 1.9 million vehicles, up from 1.8 million vehicles in 2023.
The increase in production will be driven by strong demand from both the domestic and export markets. This is based on expectations that the Thai economy will grow by 3.5% in 2024, which will boost domestic demand for vehicles, while the export market is also expected to remain strong, as demand for Thai-made vehicles continues to grow in key markets such as the United States, Europe, and ASEAN.
The FTI also expects EVs to continue to grow in popularity this year. The association has set a sales target of 190,000 EVs for this year, up from 160,000 EVs in 2023.
The growth of EVs is being driven by government incentives, such as tax breaks and subsidies for EV purchases. The government is also investing in the development of EV infrastructure, such as charging stations.
It is anticipated that more jobs will be created in the Thai automotive industry, which currently employs more than 1 million people and generates billions of baht in revenue.

Source : THE NATION

Cambodia trade volume with Indonesia reaches $1.1 billion in 2023

Indonesia advanced from Cambodia’s 12th to 6th largest trading partner in 2023, with trade volume between the two countries reaching nearly $1.1 billion, marking an increase of almost 15% compared to 2022, as reported by the General Department of Customs and Excise (GDCE).

Bilateral trade between the two nations stood at $1.09 billion for 2023, rising 14.6% compared to $948.53 million year-on-year, representing 2.32% of Cambodia’s total international trade, which totalled $46.83 billion. 

Exports to Indonesia amounted to $92.74 million, surging by 151.7%, while imports of Indonesian goods stood at $994.6 million, an increase of 9.1%.

Hong Vanak, director of International Economics at the Royal Academy of Cambodia, told The Post on February 6 that as members of ASEAN and the Regional Comprehensive Economic Partnership (RCEP), trade between the two countries is expected to grow, particularly with the improvement in global economic conditions. 

He noted, however, that the country’s significant trade deficit necessitates greater efforts from the government and private sector to produce goods that meet Indonesian demand. 

“The increase in trade volume signifies enhanced diplomatic and trade relations between the two nations, but Cambodia needs to exert more effort to bridge the export value gap. Given Indonesia’s large population, it would be beneficial if our goods could penetrate their market more effectively,” he said. 

Vanak anticipates that, through the efforts of the public-private sector, the country’s exports to Indonesia will continue to increase in 2024.

For full article, please read here


Reporter: Hin Pisei
Source: The Phnom Penh Post 

Cambodia: Investment allure bolstered with surge in industrial sector projects

Investment projects in Cambodia's industrial sector have been on the rise, comprising over 90% of all ventures approved by the Council for the Development of Cambodia (CDC) in 2023. 

A total of 268 investments were approved in 2023, comprising 247 new undertakings and 21 production expansion projects, according to a CDC press release. 

The financing, valued at $4.9 billion, is expected to create more than 300,000 jobs. 

The CDC noted that the sector accounted for approximately 92.54% (248 projects) of the total number, contributing about 46% of total capital investment. 

The projects include the establishment of a cement factory in Battambang province, a motorcycle assembly expansion project and a solar panel manufacture and assembly factory.

Hong Vanak, director of International Economics at the Royal Academy of Cambodia, told The Post on February 12 that the country’s favourable geographical location, political stability, economic growth, investment laws, transport infrastructure, labour, markets and preferential tariffs from major countries are key factors in attracting national and international investors to establish factories and enterprises. 

He stated that free trade agreements (FTAs), such as those with China (CCFTA), South Korea (CKFTA), the Regional Comprehensive Economic Partnership (RCEP) and the Cambodia-United Arab Emirates Comprehensive Economic Partnership (CAM-UAE CEPA), also play an important role in drawing financers.

"Cambodia is increasing its potential to lure investors, particularly in recent years, with the emergence of numerous large-scale factory initiatives. These include the automobile assembly-manufacturing industry, tyre production and the manufacture of components, machinery and electrical equipment, with more factories using advanced technology," Vanak said.

For full article, please read here


Reporter: Hin Pisei
Source: The Phnom Penh Post 

Thailand and Sri Lanka ink free trade agreement to enhance bilateral commerce

Thailand and Sri Lanka signed a FTA to boost trade, expand to South Asia, and cooperate on clean energy and more.

Thailand and Sri Lanka Sign Free Trade Agreement to Enhance Bilateral Trade

Thailand and Sri Lanka signed a free trade agreement aimed at enhancing market opportunities and fostering economic growth for both countries.

The FTA covers trade in goods, investment, customs procedures, and intellectual property rights, providing tremendous business opportunities for the private sectors of both nations.

The agreement is expected to benefit Thailand’s exports of automotive parts, textiles, electrical appliances, machinery, steel products, paper, processed food, and animal feed, while also promoting liberalized air services between the two countries.

Thailand and Sri Lanka officially signed a free trade agreement (FTA) in Colombo, with the aim of strengthening bilateral trade. Prime Minister Srettha, who was present at the signing, stated that this FTA is the second of its kind between the two countries.

In his Facebook post, he also mentioned that the Free Trade Agreement (FTA) will enable Thailand to broaden its trade to other markets in South Asia, while offering Sri Lanka the opportunity to utilize Thailand as a base for enhancing trade with other ASEAN countries.

Opportunities for Thai Companies to Utilize Sri Lankan Infrastructure and Tax Privileges

Given that many Thai companies are already operating in Sri Lanka, the prime minister highlighted that the FTA will create the opportunity for these companies to make use of Sri Lanka’s infrastructure and tax benefits to expand their trade to other nations. Additionally, the agreement on air travel services and the potential for visa-free travel between the two countries are expected to promote air travel and further enhance trade relations.

Government Relaxes Golden Visa Rules for Foreign Investors at IKN

Director general of immigration at the Law and Human Rights Ministry (Kemenkumham), Silmy Karim, said that the golden visa requirements have been eased for investors, especially foreign companies, wishing to invest in the new capital city Nusantara (IKN). Requirements for foreign companies wishing to invest in IKN have been lowered from a minimum investment of 25 million US dollars to US$5 million for a stay of 5 years while for a stay of 10 years, it has been lowered from US$50 million to US$10 million. In addition, foreign companies seeking to open branches or subsidiaries in the new national capital will be exempt from turnover requirements (sales value) at their parent companies — a requirement for foreign companies opening branches or subsidiaries outside IKN. The applications for visas with the E28F index can be submitted online via the website evisa.imigrasi.go.id.. A passport with a minimum validity of six months and a photograph will need to be attached with the application. The other documents that will need to be submitted include a statement of commitment to build a company at IKN with an investment value of at least US$5 million (for a stay of five years) or at least US$10 million (for a stay of 10 years). In January 2024, 62 golden visas were issued, Karim said. The director general expressed the hope that the policy could increase the quantum of investment entering IKN.

Source: click here

ASEAN-EU Agree to Intensify Trade and Investment Relations

The 24th ASEAN-EU Ministerial Meeting, held in Brussels, Belgium, on Feb 2, agreed to further intensify trade and investment relations between countries as the EU being ASEAN’s third-largest foreign investor and third-largest trading partner in 2022.During the meeting, ASEAN re-emphasized the importance of finding solutions to long-standing market access problems. Both parties also welcome opportunities to increase trade and investment through bilateral free trade agreements, strengthen connectivity and economic relations between the two regions, and increase sustainable development for both parties, such as through the ASEAN-EU Joint Working Group on Trade and Investment (JWG). ASEAN and the EU also reaffirmed the shared values and common interests that underlie the 47 years of ASEAN-EU Dialogue Relations and expressed satisfaction with the comprehensive and diverse nature of dynamic partnerships. Furthermore, ASEAN reaffirmed its ongoing commitment to support Timor-Leste joining ASEAN that is in line with the Roadmap for its full membership in the ASEAN. The meeting also noted that the EU's support for Timor-Leste joining the World Trade Organization (WTO) will help its integration into the global economy and regional architecture.
 
Source: click here

ASEAN for Business Jan 2024: ASEAN Sets Course for a Carbon Neutral Future

Learn more about the recently adopted ASEAN Strategy for Carbon Neutrality and the eight adopted strategies to accelerate ASEAN's journey to a carbon neutral future in the ASEAN for Business Bulletin January 2024 edition.

The bulletin also features the Opinion-editorial from Aparna Badharwaj and Marko Lackovic, Partner and Managing Director of Boston Consulting Group, on the strategy.

View and download the bulletin here.

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