Should Cambodia Join ASEAN Free Trade Area?

Should Cambodia Join ASEAN Free Trade Area?

  Every International Organization is created for various reasons, for example economic cooperation or reducing the regional conflicts. In Asia, we have Association of Southeast Asia Nations (ASEAN), which was found in 1967. To promote regional economic growth, ASEAN Free Trade Area (AFTA), part of the three ASEAN’s pillars, was created at ASEAN Summit in Singapore in 1992. The main objectives of the AFTA are to create a single market and an international production base, to attract foreign direct investments, to expand intra-ASEAN trade and investments and eliminate of non-tariff barriers. While some people say Cambodia will get negative effects, especially on domestic products, by taking part in AFTA, others believe Cambodia will get benefits. Because of the opposite ideas, a question “Should Cambodia join ASEAN Free Trade Area?” is commonly asked. For us, we strongly support that Cambodia should join the AFTA due to the reasons as follows. 

         

First, the flow of trade of Cambodian products in the regional area will highly increase. Most of products' tariff will be reduced, according to the agreement. Therefore, the products made in Cambodia will be more needed since the price is accepted with no or low tax. For example, a can of beer of Cambodia is cheaper than a can of beer of Korea in ASEAN market because, as a member of AFTA, the Cambodian product can be imported by other countries in ASEAN with low tax or freely, whereas the Korean product has to pay full tariff.  Therefore, exporting goods of Cambodia such as clothes and agriculture products will make Cambodia's GDP grow higher. 

The second benefit that Cambodia will earn from the AFTA is international investment. When Cambodia implements ASEAN Free Trade Area, the products will be sold not only in Cambodia's markets but also to the whole ASEAN members'. Nowadays, many huge factories and industry are not willing to establish in Cambodia due to the fact that Cambodia's markets are too small. However, while we have a lot of resources, Cambodia will attract many investors to settle companies because ASEAN markets are open – single market – for the ten members, meaning that the products produced in Cambodia are not only bought by the locals but also easily exported without tariff to the ASEAN members. Cambodian economy, therefore, is expected to increase rapidly because Cambodia is going to export more products, so the gap between export and import will be equal. Moreover, a number of employers will be highly hired, so that this can reduce national poverty.  Clearly, the flow of trade of Cambodia will increase smoothly that it can give a great positive effect to the economy and the GDP of Cambodia.

The final and most important achievement that Cambodia will enjoy after joining AFTA is infrastructure development. The land used for settling down the companies, industries and factories will be necessarily needed. However, the price value of land in the central city is absolutely high. Therefore, the outskirt city is the best choice. The cities will get bigger that it may give multiple advantages to people. The area where there are many factories settled down get more expansive, and the labor is more required. Moreover, there are workers, so the flow of selling goods, getting services, and public services will be increased. Another advantage from the infrastructure is public and private services improvement. Banks, hospitals, schools, recreational places, and so on will be much more improve to serve the people in the area. Another development is transportation. In order to transport goods or do the commercial activities, Cambodia must develop the roads and bridges because roads highways and bridges are the most important things to export and import products from one country to other countries. Therefore, the government of Cambodia and local and foreign investors will invest on those things. Furthermore, aids from other countries will be higher. Due to the fact that many factories and industry of China have been installed in Cambodia, for example, China is willing to develop transportation in order to transport products. In the 21st century, China wants to promote the “One Belt, One Road” policy, which means that China wants to build the roads that connect with countries around itself and all ASEAN nation members (Lucio, 2015). 

Some people argue that domestic products will face problems since Cambodian products’ quality are very limited because there are no many modern technologies and skillful workers. However, it is not a big deal. This problem can be solved. Cambodia may suffer for the first few years, but the country will be better for long term because it will be the best chance for Cambodian people to learn from the others and practice in doing with them at the same time. Entrepreneurs may have forums to exchange experiences. Moreover, technology can be imported while skillful workers can be trained. For example, now the people are not able to design and build a fifty-story building, so it is necessary to hire some knowledgeable designers and skillful workers to do one while the local people learn practically as well.

In conclusion, we strongly encourage Cambodia to join ASESN Free Trade Area since Cambodia is going to gain the benefits from it and since many opportunities are waiting for. Participating in the AFTA, Cambodia will develop more on trade sector because its products will be smoothly flowed and more needed by the other countries. Also, when the trades across the border work better, Cambodian economy is going to grow as fast as it is planned. The investments from outsiders will be more and more that can create many jobs for local people. As industries and factories grow larger, the infrastructure will be needed and developed. Therefore, Cambodia will become one country that has fast-economic growth in the region 

Written by: Uk Dararath

                    Lee Sang Min

                    Cheouk Samady

                    Ing Sopheak

References

N.n. (2014). ASEAN FREE TRADE AREA (AFTA): AN UPDATE. Retrieved from http://www.asean.org/communities/asean-economic-community/item/asean-free-trade-area-afta-an-update

Phnom Penh Post. (1997). Step by step toward AFTA and ASEAN. Retrieved from www.phnompenhpost.com/national/step-step-toward-afta-and-asean

Cambodia Home. (2014). Retrieved from http://www.worldbank.org/en/country/cambodia

Lucio. (2015). ASEAN Connectivity and China’s ‘One Belt, One Road’. Retrieved from thediplomat.com/2015/03/asean-connectivity-and-chinas-one-belt-one-road/