As the government reviews a European Commission preliminary report on whether Cambodia should retain its Everything-but-Arms preferential trade status, Prime Minister Hun Sen has said that the Kingdom has strong financial foundations to sustain itself with or without the EBA.
“Someone said we will suffer if the EBA is withdrawn,” Mr Hun Sen said at a graduation ceremony in Phnom Penh. “There will be no suffering because we do not depend on the EBA, most of our income comes from tax collection.”
He said the government has managed to earn extra income from taxing various sectors, such as tourism and visa fees.
“Currently, we have $3 billion in our national budget. The most difficult job for a Prime Minister is when we do not have money in hand,” Mr Hun Sen said. “We have already passed that difficulty.”
“In the past, some civil servants did not receive payments on time. It took 60 days before you can receive a salary,” he added.
The EU is Cambodia’s biggest market for textile and garment products with duty-free access under the EBA.
The EU market accounts for about 40 percent of Cambodia’s exports. Between 2011 and 2016 exports to the EU rose by 227 percent, reaching $5.77 billion in value in 2017.
The Kingdom’s preferential trade status with the European bloc is currently under review by the EC over perceived setbacks to human rights and democracy following the dissolution of the opposition CNRP.
The EC in a statement last week said the preliminary report, which outlined findings that triggered an investigation in February, was finalised and sent to the government. The government now has one month to respond before a final decision is made in February 2020.
Cecilia Malmström, the EU commissioner for trade, also tweeted that there are still concerns regarding human rights issues in the Kingdom as the report was handed over to the government.
“We are very concerned about the human rights situation there,” she said. “Cambodians now have one month to respond and we will make our final decision next year.”
Government officials argue no rights were violated during the dissolution of the former opposition party and have accused the EU of attempting to meddle in the Kingdom’s internal affairs by threatening to withdraw the EBA.
Koy Kuong, spokesman for the Foreign Affairs Ministry, previously said the EC’s preliminary report is currently under review and the government will respond by December 12.
“Our officials need time to go through the report in detail and see what the areas of concern are before we respond and explain,” Mr Kuong said.
Moeun Tola, executive director of the Centre for Alliance of Labour and Human Rights, yesterday said the Kingdom would suffer without the EBA because it allows “golden opportunities” for Cambodian imports.
“The EBA helps us compete in the EU market. Without it, prices would severely increase, making penetrating the EU market more difficult for investors,” Mr Tola said. “The EBA helps by reducing base prices while saving about $700 million per year in taxes.”
“The ones who would suffer are garment workers; most of our garment workers took loans from microfinance institutions, so if they lost their job, they would be faced with trouble,” he added.