Vietnamese goods accelerate to penetrate the Cambodian market

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Fresh fruit is a key exporting commodity of Vietnam to Cambodia. Photo: N. Hien

Export value increases by more than 31%

Data from the Ministry of Industry and Trade shows that, in the period 2016-2020, bilateral trade between Vietnam and Cambodia achieved an average growth of 17% per year, from 2. USD$92 billion in 2015 to $5.32 billion in 2020. Recently, in spite of the pandemic- hit economy, the export turnover between Vietnam and Cambodia still achieved positive results. Specifically, in 2021, Vietnam's goods exports to Cambodia reached $4.8 billion, up 15.7% compared to 2020. In the first 5 months of 2022, Vietnam's goods exports to Cambodia scored $2.6 billion, up 31.2% year on year.

Mr. Le Hoang Tai, Deputy Director of the Department of Trade Promotion (Ministry of Industry and Trade) said: “Export items to Cambodia include: iron and steel of all kinds; chemical products; plastic product; electrical machinery and equipment; processed foods, confectionery and cereal products. In the opposite direction, Vietnam mainly imports from Cambodia items including: rubber, cashew nuts, agricultural products.”

Mr. Le Hoang Tai explained more about recent positive results: “Currently, both countries are members of ASEAN and both benefit from commitments in the region. According to the commitments and tax reduction roadmap of the ASEAN Trade in Goods Agreement, most import-export goods between Vietnam and Cambodia (except for some reserved items) are entitled to a tax of 0-5%. In addition, both share many similarities in terms of culture, market demand, and consumption habits which are very favorable factors for Vietnamese goods and services to be well received in the Cambodian market.”

Some comments assessed that, the implementation of bilateral agreements, agreements and agreements in the ASEAN region enables to tighten the two economies which opens more opportunities to access each other's markets be greater and makes it easy for Vietnamese investors to further penetrate in Cambodia. Cambodia and third-party countries take advantage of each other's potentials to expand investment and business activities to develop products; at the same time, develop regional value chains for export to ASEAN countries and other markets around the world.

Ms. Nguyen Thi Thu Thuy, Deputy Director of the Center for Export Support (Trade Promotion Department) analyzed that currently, Vietnamese enterprises have had a long and large presence in Cambodia. This is also a favorable condition for Vietnam to take advantage of sticking with and cooperating to bring Vietnamese products and goods to penetrate deeply and widely in the Cambodian market. Along with that, Vietnam and Cambodia also have a lot of potential for further cooperation in specific areas such as consumer goods production, energy, electricity, mineral exploitation, agriculture forestry and fishery processing, cultivating and aqua-culturing.

Do not neglect

In-depth analysis of the Cambodian market, especially regarding agricultural products and processed foods, Mr. Phan Van Truong, First Secretary in charge of the Vietnam Trade Office in Cambodia, revealed: “Cambodian agricultural products share a lot of similarities with Vietnam, typically rice, rubber, corn, cassava, cashew nuts, pepper, dragon fruit, jackfruit, and mango.”

However, the processing industry here has not yet developed, and the workers are not highly skilled. The raw material areas have not been planned, are mainly scattered, except for some concentrated planting items such as pineapple. Along with that, the relatively high logistics costs also affect enterprises' participation in investment and processing in Cambodia.

Therefore, Cambodia has to import most of the processed agricultural products to meet domestic consumption demand. Processed foods are mainly consumed at supermarkets for households with a good income.

"With increasing consumer demand and changing trends, especially among young people, processed products in supermarkets are becoming more and more popular," Truong said.

According to the First Secretary in charge of the Vietnam Trade Office in Cambodia, businesses must deeply take note that distribution channel in Cambodia is still quite primitive, many small items are distributed through wholesale markets, especially agricultural and aquatic products. On the other hand, importers in Cambodia have not yet been concentrated.

“Moreover, Cambodia's import-export policy has not been shaped in detail and has changed a lot, especially when Vietnam-Cambodia trade is mainly done through border gates which is mainly followed by custom. Inspection activities of interdisciplinary delegations on food hygiene and safety are only applied at a few central border gates. In addition, they often set up working groups to randomly inspect small border gates, which makes the inspection of agricultural products as well as processed foods imported into Cambodia inconsistent and even different at border gates," Truong emphasized.

However, according to Mr. Truong, importing and exporting enterprises to Cambodia should not be negligent due to Cambodia's ease of inspection, but must strictly comply with state regulations instead. In recent years, especially before the Covid-19 pandemic, the Trade Office sometimes had to deal with the case that Vietnamese export enterprises were inspected and kept agricultural products at border gates, causing congestion and damage to goods, especially fresh goods.

As shared by representatives of some successful exporters of agricultural, aquatic products and processed foods to Cambodia, those who manage to promote exports to Cambodia should take note that, while Cambodian traders do business quite seriously, incomplete competitive environment in Cambodia and many disturbances can also negatively affect the export activities of Vietnamese enterprises.

At the same time, on June 8, 2022, Cambodia promulgated the Law on Food Hygiene and Safety. Although the basic regulations in Cambodia are usually not strict which are basically equivalent to or may be even lower than Vietnam’s ones, Vietnamese businesses also need to promptly grasp the new regulations and ensure compliance.

"For each specific item, businesses can look up the list of goods management in Cambodia to know which agency needs to apply for a license, whether it needs to be checked before customs clearance or not," Mr. Truong added.