Cambodia to benefit from RCEP in income, export: World Bank

The report, titled ‘Estimating the Economic and Distributional Impacts of the Regional Comprehensive Economic Partnership’, said the two countries that stand to gain more than Cambodia are Laos and Thailand.

Vietnam and Malaysia are other countries that are set to benefit from the pact. RCEP was signed in November 2020 and came into force in January this year.

Exports and imports are expected to rise for all RCEP member countries, it said. Under the full scenario, Cambodian exports are set to surge by 6.5 per cent. Vietnam is expected to register a 11.4 per cent export growth, while Japan is scheduled to report an increase in exports of 8.9 per cent.

In terms of total exports, the sectors that expand the most for Cambodia are wood and paper products (34.8 per cent), chemical, rubber and plastics (25.3 per cent) and electrical equipment and machinery (24.2 per cent).

The tariff reduction is expected to benefit chemical and plastics (2 percentage point reduction, between 2035 and 2020). Meanwhile, the wood and paper sector is scheduled to gain due to non-tariff measure reduction (14.8 percentage points decrease between 2035 and 2020).

According to the country and productivity kick scenario of the study, the top expanding sectors in Cambodia are chemicals, rubber and plastics (14.3 per cent), wood and paper products (13.8 per cent), and textiles (6 per cent).

The study also pointed out that countries such as Cambodia, Brunei, Malaysia, Myanmar, New Zealand, Singapore, and Thailand have just one tariff schedule for all other members, while others have variations by partners.

The study predicted a substantial increase in agricultural and manufacturing exports from RCEP countries. Among them, meat products, food and beverages, textiles, chemicals, and wearing apparel are the sectors registering the fastest growth rates of exports.

“This is linked to both the reduction of tariffs, which takes place mainly in meat products, motor vehicles, food and beverages, wearing apparel, crops, nonmetallic minerals and textiles, and reductions of non-tariff measures,” it observed.

Exports of some services are also set to benefit. They are tourist services, trade, and public administration increase exports, linked to the fall in non-tariff measures. The paper noted that the imports of all commodities show a big boost, largely explained by the fall in non-tariff measures.

“In value terms, the sectors that expand the most are mainly manufacturing products: Trade in Electrical equipment and machinery; Chemicals, rubber and plastics; Motor vehicles and parts; Metals; and wearing apparel expands significantly among RCEP member countries. Trade creation in the region largely exceeds trade diversion away from the rest of the world, which takes place in the manufacturing sectors,” the report added.

Fibre2Fashion News Desk (DS)