Trade deficit widens on increased imports

via Khmer NZ

Tuesday, 24 August 2010 15:00 May Kunmakara

CAMBODIA’S trade deficit has widened to nearly US$800 million during the first seven months of the year, and Ministry of Commerce data show imports are increasing faster than the country’s exports.

The Kingdom imported $2.613 billion this year to the end of July, up more than 20 percent from $2.199 billion for the same seven months last year, while exports increased an annualised 16 percent to $1.826 billion for the first seven months of 2010.

Ministry of Commerce Secretary of State Chan Nora said demand for imports was growing rapidly in line with increased domestic income.

“Consumption is bouncing back. Rising incomes are leading us to import more,” he said.

Ministry of Commerce Foreign Trade Department Director General Sok Sopheak has said large import numbers could be beneficial – provided they fuel future exports.

“Whenever our exports increase, our imports will also increase because we need to import raw materials for future production,” he said last month.

Bretton Sciaroni, senior partner at Sciaroni and Associates, wrote yesterday that he was not surprised that exports had grown during the latest period.

“For the past decade, much emphasis has been placed on creating a legal and policy framework for exports, and this is serving Cambodia very well, as we now see the rebound of exports this year.”

However, the secretary general of the Garment Manufacturers’ Association of Cambodia said the country’s garment industry still faced a number of challenges, including expensive electricity rates, low production and lack of infrastructure.

“These make us lose competitiveness,” he said last week.

Cambodia’s garment exports increased 13.4 percent to $1.628 billion in the first seven months of the year, from $1.436 billion from the same period last year, according to ministry statistics.

Overall, imports and exports grew 18.63 percent to $4.440 billion from January to the end of July, from $3.743 billion for the same period last year.

Cambodia’s trade declined about 17 percent to $8.827 billion in 2009, from $10.633 billion in 2008, according to figures from the National Bank of Cambodia.

Chan Nora also pointed to improvement in the country’s agricultural sector.

“Our agricultural sector is attractive right now because we have increased production in a lot of markets, while seeing improvements in farmers’ planting,” he said.