Moody’s Sees Cambodia Benefiting as Trade Becomes More Regionally Focused

AKP Phnom Penh, August 11, 2020 —

Moody’s Investors Service said Tuesday that Cambodia stood to benefit from the diversification of global supply chains — notwithstanding the partial withdrawal of EU trade privileges.

“As the global trade system becomes more regionally focused, each major region – Asia, Europe and the U.S. – will likely have its own suppliers for strategically important products,” it said in a statement released in Hong Kong.

“As these trends accelerate, some localisation and reshoring of supply chains outside of Asia to Europe and the U.S. will be likely,” the U.S. rating agency said.

“The negative impact will be most acute for Asian producers, including Chinese producers, in strategic sectors such as pharmaceutical products, medical instruments and high-end technology goods, where supply security is the biggest concern.”

But countries such as Cambodia, India and Indonesia “stand to benefit from their preferential access to the EU and U.S. markets for certain goods under the Generalised System of Preferences and the Everything but Arms initiative to support low- and middle-income economies,” it said.

In February, the European Commission announced plans to withdraw part of the tariff preferences granted to Cambodia under the Everything But Arms scheme.

The withdrawal for alleged human rights violations is scheduled to take effect on Wednesday. It affects selected garment and footwear products, travel goods and sugar — a fifth of Cambodia’s annual exports to the EU.

By Sao Da