Downturn pushes exporters to eye Cambodia

Sai Gon Giai Phong Newspaper
As the wheels of Vietnam’s export machine to the U.S. and Europe begin to slow, local shippers are turning their attention to the often overlooked neighboring market of Cambodia.

Nguyen Thi Hong, deputy chairwoman of the Ho Chi Minh City’s People’s Committee, told Sai Gon Giai Phong (Sai Gon Liberated) newspaper, the city’s total export turnover last month fell by 13.9 percent from the same period last year.

But it was a very different story in impoverished Cambodia. During the same stretch, exports from Vietnam soared 44 percent over July last year, she said.

Cambodia, home to 14 million people and one of Southeast Asia’s poorest countries recorded average economic growth of ten percent from 2004 to 2008. Much of that progress can be tracked back to the UN-backed Paris Peace Accord between the government and Khmer Rouge in 1994.

The country has opened up a great deal since then and today the free market is king.

Between Vietnam and Cambodia - which have often had a turbulent relationship - two-way trade has risen on average by 40 percent annually over the past few years, from US$935 million in 2006 to $1.2 billion in 2007 and nearly $1.7 billion in 2008.

Made-in-Vietnam goods have also gained a foothold in Cambodia through fairs and trade events held in the country.

About three years ago, Vietnam was the third largest exporter to Cambodia after China and Thailand. At present, Vietnamese exporters are offering a wide range of products in Cambodia, from construction materials to consumer goods and household appliances.

Tran Huu Duc, public relations director of Vietnamese food producer Dong Tam Nutrition Food Joint-stock Co. (Nutifood), said his company’s dairy products for the elderly are hugely popular in the country.

But in a possible case of the chickens coming home to roost, most Vietnamese exporters are still unable to gain a better foothold in the market as distribution networks in the country are firmly in the hands of Cambodian firms.

Red tape and fierce competition from Chinese and Thai imports are also among the obstacles for Vietnamese businesses to further explore the neighboring market.

Ho Chi Minh City-based multi-service Saigon Trading Group (SATRA) is working on a plan to build a duty free supermarket chain at the Moc Bai and Tinh Bien border gates between the two countries, Hong said.

A number of warehouses designed for Vietnamese goods will also be set up at Vietnam-Cambodia border gates to help Vietnamese exporters save transportation costs.

Satra is also teaming up with Cambodian business conglomerate Sokimex Group to build a supermarket for Vietnamese products in the country and provide Cambodian language courses for Vietnamese businessmen.