UAE tightens Southeast Asia ties with Cambodia pact

WAM

• Cepa aims to double non-oil bilateral trade to $1bn in five years
• Talks started with ASEAN members Vietnam, Thailand and Malaysia
• UAE wants to be ‘essential bridge between East and West’, minister says

The UAE has signed a trade deal with Cambodia as it accelerates efforts to strengthen economic ties across the Association of Southeast Asian Nations.

The comprehensive economic partnership agreement (Cepa) aims to more than double non-oil bilateral trade from $407 million in 2022 to $1 billion within five years.

Similar talks have been launched with Vietnam, Thailand and Malaysia – all members of the association. Brunei, Indonesia, Laos, Myanmar, the Philippines and Singapore make up the 10-nation bloc, known as ASEAN.

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Dr Thani bin Ahmed Al Zeyoudi, the UAE’s minister of state for foreign trade, said: “As Asia’s growth accelerates there is a great opportunity for the UAE to consolidate our position as a global crossroads and become an essential bridge between East and West.”

The UAE accounted for 70 percent of Cambodia’s trade with the Arab world last year.

It invests just $3 million in Cambodia at present, compared to $1 million in direct foreign investment in return.

However, both countries have identified opportunities in tourism, logistics, infrastructure and renewable energy.

The agreement, which is set to come into force before the final quarter of 2023, guarantees improved access for UAE products to the Cambodian market, covering 92 percent of customs tariff lines and over 93 percent of the value of non-oil trade. 

'A key strategic market for us'

The Cambodia Cepa is just one strand of the UAE's trade and investment push into Southeast Asia.

Al Zeyoudi held talks with Pham Minh Chin, the prime minister of Vietnam, earlier this month in Hanoi, where they announced the beginning of negotiations towards a Cepa.

Non-oil trade with Vietnam totalled $8.7 billion in 2022. Al Zeyoudi said the proposed deal would open up further opportunities, particularly in the green economy and food security.

In May Cepa talks were also launched with Malaysia. It had non-oil trade with the UAE of $4.6 billion in 2022.

The UAE accounts for 32 percent of Malaysia's trade with Arab countries. 

Zahim Mohd/NurPhoto

Negotiations were started with Thailand last month on the back of a 21 percent jump in non-oil trade to $6.1 billion in 2022.

The Dubai International Chamber opened a representative office in Jakarta, the capital of Indonesia, last week. Mohammad Ali Rashed Lootah, president and CEO of Dubai Chambers, described the country as a “key strategic market for us”.

Indonesia and the UAE signed a Cepa in July 2022. It aims to raise bilateral trade to $10 billion annually within five years.

According to the Future of Trade 2030 report by Standard Chartered, Vietnam will be one of the UAE’s fastest-growing trade corridors for exports and imports over the remainder of the decade.

It estimates that exports will grow by more than 7 percent each year to reach AED2.2 billion ($600 million) by 2030. Imports are forecast to grow by 7.4 percent to hit $9 billion.

The same report also highlights Singapore as a high-growth market, with imports and exports totalling $20 billion and $9 billion over the same period.

Freddie Neve, senior Middle East associate at think tank Asia House, said he expected GCC-ASEAN trade to become more important as Southeast Asia's middle classes expand.

“There are also natural synergies between ASEAN and Gulf visions for economic growth, with governments in both regions investing in digitalisation, manufacturing, and logistics infrastructure to boost exports,” Neve said.