Cambodia and Vietnam Relation

Posted: November 26, 2013 in Cambodia and Vietnam Relation

Cambodia and Vietnam Relation

Note: The following composition is written by Dara Saoyuthnea, Cheng Mengchou, Yav Sokhim and Hun Keoveasna. The writing process is done under my supervision.

ACRONYMS:

ACFTA: ASEAN-China Free Trade Area / APEC: Asia Pacific Economic Cooperation / ASEAN: The Association of Southeast Asian Nations / ASEANFTA: Asean Free Trade Area / CAFTA: China-ASEAN Free Trade Agreement / CDC: Council for Development of Cambodia / FDI: Foreign Direct Investment / FTA: Free Trade Area / GDP:               Gross domestic product / GNP: Gross national product / IPR: Intellectual property rights / LDCs: Least Developed Countries / MFN: Most Favored Nation / MOC: Ministry of Commerce / NTR: Normal trade relations / SEATEs:         The Southeast Asian Transitional Economies / SME: Small and medium enterprise / TIFA: Trade and Investment Framework Agreement / TPP: Trans-Pacific Partnership Agreement / UNDP: United Nations Development Programme / UNTAC: United Nations Transitional Authority in Cambodia / WTO:World Trade Organization

Introduction:

The ASEAN is a geo-political and economic organization of ten countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, Philippines, Singapore and Thailand. Since then, membership has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam. Its aims include accelerating economic growth, social progress, and cultural development among its members, protection of regional peace and stability, and opportunities for member countries to discuss differences peacefully (association of southeast asian nations 2011). After Cambodia and Vietnam have been members of ASEAN, these two countries have close relations. Vietnam is already Cambodia’s 10th largest foreign investor, as well as Cambodia’s third strongest trade partner within ASEAN, and the sixth largest amongst all of Cambodia’s current trading partners. Cambodia and Vietnam enjoy very complementary economies, along with similar consumer demands and habits, which combined with 1,137 km of border area, results in an incredible potential for substantial bilateral trade growth with vast possibilities for increased mutual benefits. Two ways trade between Cambodia and Vietnam has enjoyed strong growth in the last few years, but only recently has economic relations between the two countries received a significant boost. The signing of key bilateral agreements along with Cambodia’s faltering trade with Thailand during the last few months provided a recent push to trade between Cambodia and Vietnam, with figures reaching $1.7 billion in 2008. Recent investments and agreement between both countries are expected to further expand bilateral economic relations and trade in the next following years (Asia Economic Institute n.d.). Therefore, the paper is going to compare the economic development of Cambodia and Vietnam in a few remarkable areas:

1)      The similarities between Cambodia and Vietnam.

2)      Compare domestic and foreign economic development of Cambodia and Vietnam in terms of agriculure productions.

3)      The challenges facing agricultural development in Cambodia.

Moreover, this paper is going to illustrate the trade relationship of these two countries with other nations:

1)      Cambodia and China

2)      Cambodia and US

3)      Vietnam and US

The similarities between Cambodia and Vietnam:

To begin with, of the 10 regional countries, Cambodia belongs to the lowest income group, known as SEATEs. The SEATEs include four countries, namely Laos, Myanmar, Vietnam and Cambodia. In other words, Cambodia and Vietnam belong to the same lowest income group back to last 17 years. In 1995, the SEATEs had a per capita gross national product (GNP) of between $200 and $350. In the same year, the so-called ASEAN-6, namely Brunei, Singapore, Thailand, Malaysia, Indonesia and the Philippines, had a per capita GNP of between $1,000 and $27,000 (Chan Sophal 1998).

Agriculture:

Another similarity between Cambodia and Vietnam on domestic economic development is dominated by subsistence agriculture. Cambodia has succeeded in generating high economic growth in its recent history; nearly a decade long of rapid growth had a significant impact on income per capita with more than a doubling from $288 in 2000 to $900 in 2009. As a result, Cambodia is one the few countries that have achieved sustained rapid growth: of 194 countries with data, 46 have achieved 7 percent annual growth on average for 14 consecutive years (Sok Siphana 2011). We have noticed that from 1998 to 20007 Cambodia’s growth performances ranks 6th in the world.  With vast flat agricultural lands and access to a number of big rivers and their tributaries, Cambodia has potential to be a significant agricultural net exporter to foreign countries. From food self-sufficient to food export: Cambodia has developed its economy based on agriculture as a core sector. Starting from surviving Khmer Rouge regime in 1979, the country had to produce foodstuff to feed its population. The basic policies for development of agricultural, forestry and fisheries sectors from 2001 to 2005 are: to continue to focus on food security, especially at community and household level, and reduce poverty of the poor, the highest rate in agricultural sector, to increase food production, especially rice production and subsidiary crops, to contribute to the national economy growth through the exportation of surplus agricultural products, to improve the quality of agricultural products and increase value added by promotion of development of agri-industrial processing including the creation of new jobs for rural areas, to increase family income and reduce poverty through diversity crop production, high yield, and low production cost, to manage the natural resource through regulation and technical measures for sustainable exploitation (Sok Siphana 2011).

At the same time, agricultural reform is the most significant to the cause of economic development and poverty reduction of Vietnam- a country with 75% population and 90% the poor living in rural area. From a country that was always short of food and had to import 0.5- 1 million tons of food to meet the peoples demands annually (Nguyen Thi Ngoc Huyen n.d.). Vietnam has become a food exporter. It is now the world’s second biggest rice exporter. It is now the world’s second biggest rice exporter, right behind Thailand. Moreover, in Vietnam, food gain production development, agricultural restructuring towards developing high-value industrial and fruit tree like coffee, rubber, cashew, litchi, longan, etc, as well as strong development of agriculture, including domestic animals, fowls and forestry have been paid special attention in Vietnam. Vietnam now is the world’s biggest peppercorn exporter, and the third biggest coffee and rubber exporter (Nguyen Thi Ngoc Huyen n.d.)

Even though, agriculture in Cambodia has improved much better than it was in the past but it still lack far behind Vietnam in few remarkable areas which led Vietnam the world’s biggest exporter in key main items discussed above.  There are different inter-related challenges facing agricultural development in Cambodia which prevent Cambodia less developed in term of economic like Vietnam. These are poor performances in regional trade, speculative land price distortions, un-performing economic land concessions, brain drain, finance, market information, and infrastructure.

The challenges in Cambodia:

Poor performance in regional trade: Cambodia has not benefited as it should have from regional markets (only 13 percent of its trade is intra-regional, against an average of 49 percent) (Sok Siphana 2011). A tremendous potential to integrate further into the Asia region with preferential market access to development partner countries like China, India, Australia, New Zealand, Japan, and South Korea.

Weak cross border trade facilitation: In the World Bank “Doing Business” rankings for 2010, Cambodia are ranked 22nd out of 24 East Asia and Pacific nations in the overall index and 21st out of 24 in the “trading across frontiers” index.
Speculative land price distortions: Cambodia still suffers from the perverse effects of the land price distortions arising from the speculative bubbled of the pre-global financial crisis years, which is diluting Cambodia’s perceived comparative advantages of a country with a relatively abundant land, natural assets, and inexpensive labor.
Underperforming Economic Land Concession (ELC): The ELC approach has no delivered the expected results. Out of some 60 ELC, but only a small fraction of these are have actively invested in the concessions, and many of others still entangled in numerous conflicts with indigenous communities over traditional use of land and forest and, by law, a right to this use.

Reversing the brain drain: In the labor market, the major challenge is to ensure that those educated labor market which have benefited in recent years from the exposure to higher labor productivity jobs outside of agriculture, i.e. in industry and services, be reallocated back to agriculture, a phenomenon which can have a significant impact on growth and provide the necessary incentives for reverse migration back to the rural areas.

The intractable sanitary and phytosanitary issues: Cambodia does not have a compliant basic sanitary and Phyto-Sanitary management system in place at the moment, which allows its exports of livestock and the fisheries products to key markets like the EU and China, for example.

Finance Shortage: There are four main challenges for the rice export of Cambodia: lack of capital to buy unmilled rice surplus from farmers is the most important issue, lack of rice storage capacity, low level of unmilled rice drying capacity, and not enough middlemen. For the year, 2010, Cambodia’s local middlemen could buy only 0.5 million tons while 3 million and 8 thousand tons of rice were exported to Thailand and Vietnam for further processing and packaging. According to some experts, it needs additional $800 million in order to buy all unmilled rice surplus from the local farmers (Sok Siphana 2011).

Lack of market information: Cambodian farmers do not get access to updated accurate market price data for their products. For instance, with 166,600 productive rubber plantations, Cambodia produces about 60,000 tons per year. But Cambodia’s rubber is being undersold at about $4,500 per ton, about ten percent less than other rubber producing countries like Malaysia (Sok Siphana 2011).

Weak production infrastructure:

  • Lack of irrigation facilities: Approximately 7 percent of cropland is irrigated, the lowest in all Southeast- East Asia. The dependence of the agriculture sector on rainfall subjects the sector to weather vulnerability.
  • Inadequate fertilizer usage: Fertilizer usage in Cambodia is significantly lower than in neighboring countries like Vietnam at about 5-6 kg/ha, much lower than the average in the region. Only 27 percent of rain-fed farms use inorganic fertilizers, compared to 70 percent of dry season farmers who have access to irrigation (Sok Siphana 2011).
  • Weak collective actions: Currently no credible private sector organization for collective action exists in the agriculture sector as a whole or at the sectoral level, like rice or cashew, although there is numerous rice milling associations whose membership is diffuse both geographically and politically.

Cambodia and Vietnam Trade:

Cambodia earns less from trades and investments than Vietnam does between the two countries. Cambodia has for long become a good market for Vietnam because Cambodian people prefer Vietnam’s goods and products to those of Thailand (AKP 2009). Cambodia opens for international investment in some important factors such as: hydropower, mining, cultivation of industrial plants, and telecommunication; as a result, Vietnam has been enjoying a good chance to invest in Cambodia (AKP 2009). For instance, the trade between the two countries in 2008 was worth $1.7 billion of which Vietnam’s export to Cambodia was around $1.47billion. Moreover, Vietnam invests in many factors in Cambodia. Vietnamese investments generally focuses on major fields in Cambodia such as transportation, banking, tourism, agriculture, power, rubber, aviation, health, oil, and gas (VBN 2011), while seafood, corn, tobacco and rubber are Cambodia’s key export to Vietnam (Kunmakara 2012). Additionally, rank of Vietnam’s market share of exports in Cambodia becomes after Thailand, but Cambodia ranked 13th among Vietnam’s list of 200 export markets (VBN 2011). The investment of the two countries gives more benefits to Vietnam than Cambodia.

Remarkably, Cambodia and Vietnam have emerged from a vulnerable to a more secure stage of development. If compared to twenty years ago, Cambodia and Vietnam were different from this present stage in a number of ways. For what we see, Cambodia and Vietnam have been in a good stage of development and especially the Domestic Economic Development in these two countries has been very pleased. They have developed their economic affairs well and so far both countries have produced tangible results for the sake of their citizens’ well-beings.

Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development (Panitchpakdi 2006) states that “SMEs are a source of employment, competition, economic dynamism, and innovation; they stimulate the entrepreneurial spirit and the diffusion of skills. Because they enjoy a wider geographical presence than big companies, SMEs also contribute to better income distribution.” Besides, in Cambodia, according to Ministry of Industry, Mines and Energy, it has been stated in SME Development Framework of 2005 that “Firms employ between eleven and half a hundred staff and have resources of $50, 000 to a quarter of million dollars are considered as small whereas businesses with 51-200 workers and fixed assets of a quarter of million dollars to a half million dollars are categorized as medium sized.” In contrast, in Vietnam, they definite SME that “SMEs are independent production and business establishments that are duly registered according to the current law provisions, each with registered capital not exceeding VND 10 billion or annual labor not exceeding 300 people.

To start with, Cambodia so far has been developed its domestic economic well. It means that there have been seen smart and medium enterprises taken places along Cambodia countryside. In recent year, especially since the economic reform after the Cold War in 1990s, Economics in Cambodia as well as other countries in South-East region have met a turning point (Garry Rodan, Kevin Hewison, and Richard Robison 2001)

For many years, SMEs have been helping the economics well and are being developed widely in Cambodia and Vietnam. to start with, let’s get to know about SMEs in Cambodia:

In Primary Industry, SMEs have been developing since the colonial era. For example, French introduced Rubber tree to Cambodian land and since that Cambodia started to have its own exportation of rubber. In addition, since the late of 1989s, the time when the communism started to die out, Cambodian understood the important of free market and the efficiency of SME. Businessmen in Cambodia realized how important of the SME and with the newly reform of economic strategies SME were introduced widely to Cambodian and that result a huge successful day for Cambodian nowadays (Garry Rodan, Kevin Hewison, and Richard Robison 2001). For example, there are many small and medium primary industries, especially those in agriculture. Recently, Cambodia has just launched its plan to export rice to the neighboring countries and the world. This proves that Cambodia aim to develop its primary industry by using and combing SMEs. Besides, other crops enterprises, which considered as SME, have been growing as well. To elaborate, in Kampot, there has been such a bank, “Crab Bank[1]”, which helped fishermen to have better life in sea especially with crab. So far, since the creation of this bank, fishermen are really happy and gleeful to have this bank within their community.

Moreover, in Cambodia, tertiary Industry has been developed and motivated by such we call SME too. For instance, there have been huge successful developments in this sector, especially hotels, motel, tour service and other service. Since Cambodia still rely much on Tourism. SMEs are helping to promote Cambodia’s tourism. To elaborate, along the beach in Cambodia territories lie many hotels and motels and huger and bigger ones are being built. In Bokor Mountain, SMEs are built up there. For example, hotels and vacation house are built up there. Besides, in Phnom Penh and other town SMEs are also better and better than many years ago. In the capital city, one is able to find food service such as restaurant – those restaurants lead a growth in employment rate and help fighting poverty. Beside those restaurants there are place such as Dream Land where people can find service provided by SME there and Koh Pich is also one of the most enjoyable place where produced good service by those SMEs. In addition, schools and universities in Cambodia have grown and many were listed. For example, now in Phnom Penh there are many universities such as International School of Phnom Penh, Zaman University and Limkokwing University and some are very modern and highly accepted by other countries. Before there were not many SME in tertiary industry, unlike now we can see that domestic development in Cambodia is on the right track.

Foreign Economic Development between Cambodia and Vietnam

A country’s foreign economic development is considered by focusing on increase of its outward FDI. Theoretically, a country can participate in outward investment only when it has reached a particular level of economic development.  Even though outward foreign direct investment of a developing country remains minimal compared to developed ones, its tendency to gain earnings from outbound investment has been increasing lately which Cambodia and Vietnam can be raised to compare as examples.

Cambodia, one of the LDCs, has become an increasing economic growth country by seeing its rising growth rate from year to year. As a country standing at the early stage of developing, Cambodia has been seeking market access for its overseas investment possibilities in many countries by establishing good relationship with some possible countries, especially with its neighboring countries such as Laos and Vietnam, and it has been trying to integrate its domestic enterprises into the international level meanwhile. For instance, at the third Vietnam-Cambodia investment promotion conference held on June 25, 2012, Vietnamese Prime Minister Nguyen Tan Dung promised his Cambodian counterpart, Prime Minister Hun Sen, that Vietnam will create favorable conditions for Cambodian companies to invest in the country. However, there has been absence of Cambodia’s outbound investment report so far. Therefore, it can be concluded that Cambodia, with its early born economic growth, has not gained significant earnings from its overseas investments, but primarily, Cambodia has been making efforts to promotion of its export capacities. Cambodia, indeed, has joined some international trade bodies such as WTO in 2007, ASEANFTA in 1999 and a number of agreements between ASEAN and third countries including the ASEAN and Australian and New Zealand (ANZCERTA) FTA, the ASEAN-China FTA, the ASEAN-India FTA, ASEAN-Korea FTA, and ASEAN-Japan FTA, also. These have become so active since 2010.

Unlike Cambodia, by February 2011, Vietnam started its outbound investment for 20 years already (F. I. planning 2011). When Vietnam’s foreign economic growth is considered, there are three phases which have been divided in order to find out its progress clearly. Based on statistics of Vietnam’s outbound investment released by Foreign Investment Agency of Ministry of Investment and Planning, its phase 1 during 1989-1998 had a small quantity. By February 1999, Vietnamese enterprises had invested in only 18 projects abroad with total capital of more than 13.6 million USD, with average capital of 0.76 million USD per project and with reason of enterprises’ imperatives. They started taking advantages of investment abroad with purpose of exploiting its neighboring countries’ natural resources on the basis of bilateral cooperation agreements with Cambodia and Vietnam after exploitation of its own had been prohibited. At phase 2 of its progress during 1999-2005, the number of its overseas projects increased up to 131 with total registered capital of over 559.89 million USD, with average capital of 4.27million USD per project. At the last phase from 2006 till February 2011, it had been booming remarkably by its soaring up to 426 projects conducted overseas with total capital volume of 23,126,510,000 million USD and average capital of 5.429 million USD per project. Only in 2011, Vietnam’s outward investment accounted for 10 billion USD for 601projects in 53 countries including Cambodia where 100 million USD of Vietnam’s capital was invested in Cambodia Angkor Air. Most of them are focused on energy, oil and gas, electricity, mining, handicrafts, forestry agriculture, production and communication (Businesstimes.com.VN n.d.). For example, Vietnam’s second largest outbound investment market is Cambodia, with total investment worth 2.36 billion USD including Vietnam Rubber Group who has implemented 23 projects worth 18 trillion VND in Cambodia. This report was released during the third Vietnam-Cambodia investment promotion conference held on June 25, 2012 (tuoitrenews.vn 2012).

To sum up, foreign economic development between Cambodia and Vietnam is seen far different in terms of their outward investment. Cambodia has not had a remarkable performance in overseas investment like Vietnam has. Therefore, compared to Vietnam, Cambodia has been lagging behind Vietnam in foreign economic development.

Cambodian and Vietnamese Relationship with other nations and regional organizations

Many organizations and investors are gathering into Cambodia and Vietnam because of her better economic condition; especially environment which is the attractive and leading cause for those investors as well as regional and international organizations to switch their attention business attention to this strategically economic country.

In respect to the development and investment opportunity in Cambodia, the foreign diplomacy and policy between the country and the regional organizations is very important. Secondly, legal system has to be put in place to ensure justice and legitimacy during trades and other forms of transactions between the nations. Besides investment, environment which mainly refers to climate change has been seen as one of the most important parts in pre-observing process in each country before starting the investment. On this note, Cambodia and Vietnam share some similarities and differences in three main sectors namely Economy and market system, law, and environment in respect to the relationship with other nations as well as organizations in the region.

Cambodia

Cambodia is member of ASEAN which means that this country started its relationship with other nations in Southeast Asian region. Investors from different countries in the region started to seek for business opportunities in Cambodia. Even though so far Cambodia has been a member of the association, not many companies and organizations have come to this country for gigantic business firms due to Cambodia’s poorly structured market system until Cambodia became a member of WTO in 2004 and opened the country to global marketplace (Guide to Business in Cambodia 2010) which allows international investors to come and invest in this agrarian country. Moreover, after switching to be global market system Cambodian government has one more important role to approve both national and international projects in Cambodia, and the approval was made through the MOC and the CDC ibid. Moreover, Cambodia has joined international and regional investment organizations, signed a number of multilateral conventions and bilateral treaties, and established business-friendly regulations and incentives to generate productive business operations in the country which help boost the speed of development in the nationwide in terms of strengthening such relationships with other nations ibid. Additionally, Cambodia became a member of ACFTA after the initial framework agreement on Nov 4, 2002 in Phnom Penh which the tendency of the ACFTA is to facilitate financial sector of countries in region by extracting benefit from the regional trade agreement (Time 2012). After becoming a member of ACFTA, Cambodia enjoys duty-free privileges for exports and MFN treatment (Guide to Business in Cambodia 2010). There has been some more international cooperation showing good relationship between Cambodia and other nations such as, ASEAN Free Trade Area, ASEAN-China Comprehensive Economic Cooperation Agreement, ASEAN-Japan Comprehensive Economic Partnership, ASEAN-Korea Comprehensive Economic Cooperation Agreement and a dozen of other multilateral agreements ibid.

The so-far relationship with other nations and regional organizations not only help to speed up economic growth in Cambodia, but it also influences Cambodian law enforcement. In the ancient time, Cambodian law was influenced by Buddhist tradition and other beliefs ibid. From the time when there were participations from other nations in Cambodia, the way people think about the law is different. For example, in 1979-1989, Vietnamese-Based Communist Model was conducted in Cambodia. During the period, legal system was potentially influenced to Cambodia by Vietnam and their advisors helps to draft Cambodian law. Meanwhile, there was no separation of powers among the executive, judicial and legislative branches of government ibid. From 1991 to 1993, Cambodia was intervened by UNTAC. Following a United Nations-brokered peace agreement in 1991, certain agencies and ministries of the State of Cambodia government was under the supervisory control of UNTAC. Moreover, a number of laws were enacted at that time including a criminal and judiciary law. From 1993 to present, Cambodia becomes Royal Government of Cambodia which the current system combines aspects of the pre-1975 French Civil Code system with legal principles from common systems ibid.

Environmental factor is the problem that all countries in the world are facing and seeking for prevention. Cambodia is one of the most vulnerable countries to climate change in Asia (UNDP Cambodia 2012). The environmental problem happens from many sources including rapid development and climate change. UNDP works with the Royal Government of Cambodia to strengthen policy, legislative and regulatory mechanisms on biodiversity conservation, sustainable forest management, responses to climate change impacts including adaptation and mitigation and promoting clean and renewable sources of energy ibid. This would be an efficient and practical solution to prevent Cambodia from any disaster happened by climate change because Cambodian people; especially the poor, would be difficult to adapt with the environmental problem happening nowadays. UNDP also supports Cambodia to mobilize funds from the Global Environment Facility to address critical threats such as biodiversity loss, climate change and ozone depletion (UNDP Cambodia 2012).

Vietnam

Vietnam has been in transition from a centrally-planned to a ‘socialist oriented market economy’ since the introduction of the Doimoi reforms in 1986. Poverty rates are now less than 20 percent, down from almost 60 percent in the early 1990s because of GDP growth in the country which is about7.5 percent per year since 2001, reaching a high of 8.5 percent of 2007 (Australian Government n.d.). Goods and services export now is approximately 70 percent of Vietnam’s GDP up from a 30 percent share recorded in the mid 1990s ibid. The GDP growth rate indicates that Vietnam is goods-and-services-export country. The major export destinations in 2009 were the United States, Japan, China and Switzerland, and the top three sources of imports in 2009 were China, Japan and the Republic of Korea ibid. This proofs that Vietnam relationship with other nations mainly refers to business relationship. Besides the financial benefit from business, remittance is also an important factor boosting Vietnamese economic growth. The State Bank of Vietnam estimates remittances from overseas Vietnamese in 2008 exceeded US$7.8 billion. Although remittance plays an important part with the great amount of money, it has fallen in 2009 with the global economic slowdown (Australian Government n.d.). Vietnam is a member of a growing network of free trade agreements, both individually and as part of ASEAN. Vietnam is participating in TPP negotiations with Australia and seven other APEC economies (Brunei, Chile, Malaysia, New Zealand, Singapore, Peru and the US), which began in March 2011 ibid. As part of these negotiations Australia held a Trade Negotiations Capacity Building Seminar in Hanoi on 24-25 November 2010 in conjunction with New Zealand ibid.

Vietnam also suffers from the impact of climate change. Prof. Nguyen Xuan Hoc, Deputy Chairman of the National Committee for Climate Change, said the Mekong River Delta in southwest Vietnam, which has a population of nearly 17.5 million living, is one of the most vulnerable regions to climate change in Vietnam (VOV ONLINE n.d.). However, Vietnam now has 543 small-and-medium-sized businesses operating in some manufacturing sectors such as bricks, ceramics, and paper, as well as food processing. They are receiving technical and financial support from an energy conservation project which helps them install energy saving technologies in their facilities. The project has saved a total energy amount equivalent to 232,000 tons of oil ibid.

Cambodia and China Trade:

It’s true that Vietnam is the third largest investor of Cambodia but Chinese is number one when talking about trade and aid to Cambodia and to Southeast Asia as a whole. Since the CAFTA went into effect on January 1, 2010, China and the Southeast Asian nations have gradually expanded their areas of cooperation. The Southeast Asian nations that have been least effective in diversifying their economic dependencies—namely Cambodia and Laos—have been particularly receptive to Chinese patronage. Cambodia, which has always maintained close historical and trade relations with China, was one of the first to fall to the Chinese charm (Chen 2010). The bilateral trade between Cambodia and China reached 498 million U.S. dollars in the first quarter of this year, 216 percent rise from 157.5 million U.S. dollars in the same period last year, according to statistics from the ministry of commerce (Xinhua 2011). In the first quarter, Cambodia’s exports to China worth 42 million U.S. dollars, up 342 percent from 9.5 million U.S. dollars in the same period last year, and imports from China reached 456 million U.S. dollars, up 208 percent correspondingly. Cambodia’s main imports from China are garment raw materials, machinery, foodstuff, electronics, furniture, light products, medicines and cosmetics. Cambodia’s main exports to China are agricultural products, rubbers, fish, timbers, some garments and textiles (Xinhua 2011).

Cambodia and U.S. trade:

The United States and Cambodia maintain strong ties through aid and trade. Despite foreign aid restrictions, Cambodia is the third largest recipient of United States assistance in Southeast Asia after Indonesia and the Philippines. Most U.S. assistance has been channeled through the many non-governmental organizations that are active in the country. Also, the United States is the largest overseas market for Cambodian goods, mostly textiles and apparel. Cambodia and other least developed countries are pressing the United States to grant their garment exports preferential treatment. In 2005, the aggregate value of exports of the Cambodian garment and textile industry increased considerably. The value of exports increased to $2.175 billion in 2005, which is 9.66% higher than the previous year. From the beginning of January 2005 to late April 2006, nearly 30,000 new jobs were created in Cambodia’s industry. To illustrate, the total number of employees in the industry sector in April was 293,600. Furthermore, previously in 2005, the U.S. was the main market for Cambodian garment exports. Just over 71% of exports were shipped to the U.S. and 22% to Europe (International Labor Organization 2006).

Vietnam and U.S. trade:

After more than two decades of virtually no economic contact, the United States and Vietnam reestablished trade relations during the 1990s. Since then, Vietnam has rapidly risen to become a significant trading partner for the United States. Bilateral trade has risen from about $220 million in 1994 to $15.7 billion in 2008. Much of this rapid growth in U.S.-Vietnam trade has been attributed to U.S. extension of initially conditional and then later permanent NTR status to Vietnam (F.Martin 2009). The United States and Vietnam concluded a TIFA in 2007. Since then, the United States and Vietnam have held frequent meetings and dialogues under the TIFA to review Vietnam’s implementation of its WTO commitments and consider additional initiatives to further enhance trade and investment opportunities between the two countries. In addition, under the TIFA, the two sides seek to resolve bilateral issues and agree on cooperative activities of mutual interest. Among the key issues discussed in recent meetings have been customs cooperation, Vietnam’s new import licensing regime, telecommunications, environmental issues, sanitary measures inhibiting exports of U.S. beef to Vietnam, and new biotechnology policies being developed by the Vietnamese government. The two sides also discussed IPR enforcement under an IPR working group established under the TIFA to expand further the already close cooperation and coordination efforts between the two countries. The two sides also consulted closely on Vietnam’s plans to reform its labor laws. Vietnam is currently the U.S. 30th largest goods trading partner with $18.6 billion in total (two ways) goods trade during 2010. Goods exports totaled $3.7 billion; Goods imports totaled $14.9 billion. The U.S. good trade deficit with Vietnam was $11.2 billion in 2010 (Office of the United States Trade Representative 2010).

Exports

Vietnam was the United States’ 45th largest goods export market in 2010.U.S. goods exports to Vietnam in 2010 were $3.7 billion, up 19.8% ($613 million) from 2009. The top export categories (2-digit HS) for 2010 were: Machinery ($466 million), Vehicles ($307 million), Food Waste/Animal Feed ($266 million), Iron and Steel Products ($255 million), and Cotton/Yarn/Fabric ($254 million).U.S. exports of agricultural products to Vietnam totaled $1.3 billion in 2010, the 15th largest U.S. Ag export market. Leading categories include: cotton ($253 million), red meats fresh/chilled/frozen ($163 million), dairy products ($158 million), and feeds and fodders ($152 million) (Office of the United States Trade Representative 2010).

Imports

Vietnam was the United States’ 27th largest supplier of goods imports in 2010.U.S. goods imports from Vietnam totaled $14.9 billion in 2010, a 21% increase ($2.6 billion) from 2009.The top imports categories (2-digit HS) for 2010 were: Knit Apparel ($3.4 billion); Woven Apparel ($2.4 billion); Furniture and Bedding ($1.8 billion); Footwear ($1.6 billion); and Electrical Machinery ($808 million).U.S. imports of agricultural products from Vietnam totaled $970 million in 2010. Leading categories include: coffee (unroasted) ($360 million), and tree nuts ($352 million) (Office of the United States Trade Representative 2010).

In conclusion, Vietnam and Cambodia have been developing in a relatively similar way yet Vietnam seems to be ahead forward, especially in terms of trade and market competitiveness since Vietnam has built up a strong economic better tie with the other countries in the region as well as around the globe. Even though Cambodia maintains strong tie trade relationship with the U.S. but her economic cannot compete with Vietnam. According to nation master, the number exports products by Cambodia to US are only $324,800,000.00 and raked 63rd while Vietnam cost two times than Cambodia and ranked 36th. In other words, Vietnam exports products two times to the U.S.  if compared to Cambodia  (NationMaster.com 2006). More importantly, Cambodia’s GDP was $38,890,000,000.00 which ranked 94th in 2006 unlike Vietnam who had GDP six times more than Cambodia in the same year (NationMaster.com 2006).

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[1] Crab bank: a bank where fishermen put their crab in and as they are the member, they can have a loan.

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