Prime Minister Hun Manet (right) holding talks with Santo Darmosumarto, Indonesian Ambassador to Cambodia at the Peace Palace in Phnom Penh. Prime Minister’s Office.
The Republic of Indonesia and the Kingdom of Cambodia are both located in the strategic position of Southeast Asia which allows the two countries to connect economic flow since the establishment of diplomatic relations in 1957 and the Treaty of Friendship agreement in 1959, leading to the establishment of embassies in both capitals, Phnom Penh and Jakarta.
Marking the 65th anniversary of diplomatic relation with Cambodia this year, Indonesia has proved as a potential trade partner with the Kingdom by leaping from 12th position in 2022 to sixth in 2023, leaving behind Canada, Singapore and some European countries on the list.
Indonesia agreed to forge an early relationship after Cambodia departed from the French protectorate within French Indochina on November 9, 1953, which marked the National Independence Day for all Cambodians.
Since then Indonesia has been a great partner to Cambodia in providing support to maintain peace and stability during the Popular Socialist Community, a political organisation known as ‘Sangkum Reastr Niyum’ in the Khmer language from 1955 to 1970.
The country was renamed the ‘Kingdom of Cambodia’ with the motto of ‘Nation, Religion, King’ in 1993 after its successful recoverys from the civil war from 1975 to 1979, killing about 25 percent of the total population.
Under the leadership of former Prime Minister Hun Sen – now President of the Senate – who reigned for nearly four decades, Cambodia has built a strong foundation of peace, creating a favourable investment and commercial environment nationwide.
Last year on August 22, Prime Minister Hun Manet became the new leader of Cambodia and focused on attracting foreign direct investment (FDI) and connecting trade within the region and globally.
As peace and stability became a permanent feature in Cambodia, Indonesia expanded its bilateral trade in 2023.
Indonesia climbed from 12th to sixth position, counting among 20 potential countries that partnered with the Kingdom, as the bilateral trade volume between the two countries touched $1.1 billion last year.
According to the General Department of Customs and Excise (GDCE), the bilateral trade in the first six months of 2024 stands at $579 million, a decrease of 2.5 percent compared to the same period in 2023, which recorded $594 million.
However, Cambodia exported a total of $57 million in the first half of this year, an increase of 170 percent compared to $21 million last year, while the imports from Indonesia dropped about 8.9 percent compared to the first six months of $573 million in 2023 and $521 this year.
Solar panels, rice, cashews and tobacco are new products that the Kingdom is exporting to Indonesia. Hence the export of panels and other electronic devices has touched $19.9 million, a rise of 2,181 percent in the first six months of 2024, the GDCE latest report showed.
During a meeting with Prime Minister Hun Manet on January 10, Santo Darmosumarto, Indonesian Ambassador to Cambodia emphasised a framework to enhance bilateral relations between Cambodia and Indonesia.
Based on a joint press release, the Indonesian Ambassador expressed satisfaction with the range of achievements with the Royal Government of Cambodia. “Marking the 65th anniversary of diplomatic relations, the Indonesian Ambassador committed to elevating relations the relations and cooperation of both countries to another level,” the statement stated.
Six months later when the Indonesian Ambassador paid a courtesy visit to Senate President Hun Sen, the latter suggested to him to set up the rice production system, storage and milling process that can be packaged for export to Indonesia as well as overseas markets.
Writing on social media, Mr Hun Sen said that the “direct investment will be mutually beneficial which could help local farmers have a market, while Indonesia will have the resources to ensure long-term food security”.
Indonesia began importing rice from Cambodia in 2023. “Currently, the trade volume of Cambodia-Indonesia is about $1 billion,” Santo underlined, however, “it has not reached its full potential yet as the two countries have more potential cooperation to boost trade volume”.
Speaking to Khmer Times, Dr Sam Seun, a policy analyst from the Royal Academy of Cambodia said, “The Kingdom and Indonesia have been strengthening the trade relations over the years, with bilateral trade volumes showing an upward trend as both countries are members of ASEAN that facilitates trade and economic cooperation.”
“Indonesia advanced from Cambodia’s 12th to number six on the list compared with the largest trading partner in 2023, with trade volume between the two countries reaching nearly $1.1 billion, marking an increase of almost 15 percent compared to 2022, as reported by GDCE.”
Seun emphasised that Prime Minister Hun Manet and Indonesia have signed two major agreements: first, a memorandum of understanding (MoU) on trade and investment cooperation. “This agreement aimed to simplify trade procedures, reduce barriers and promote mutual investment opportunities,” he added.
“Second on the Preferential Trade Agreement (PTA), efforts were made to negotiate a PTA to provide preferential tariff rates for certain goods, further boosting trade between the two countries.”
The Premier has pushed rice export initiatives as Cambodia has worked with Indonesia to increase exports to the Indonesian market. “The joint initiatives were taken to meet Indonesian quality standards and increase the competitiveness of Cambodian rice,” he said.
On agro-processing projects, Indonesian companies have invested in agro-processing facilities in Cambodia, enhancing the value chain of agricultural products and creating jobs.
Seun believed that the trade relations between Cambodia and Indonesia are expected to grow further with continued cooperation, new initiatives and the commitment to create a conducive environment for business and investment, ensuring sustainable economic development.
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