Positive outlook for Cambodia’s bicycle exports

Positive outlook for Cambodia’s bicycle exports

PHNOM PENH: Although economic activities have taken a hit around the world during the ongoing Covid-19 pandemic, Cambodia has continued to pedal forward with record numbers of bicycles being exported.

The country exported almost half a million bicycles worth about US$119 million (RM512 million) in the first quarter of this year, more than US$10 million (RM43.63 million) over the same period last year.

Cambodia Chamber of Commerce vice-president Lim Heng told The Phnom Penh Post that exports of locally assembled bicycles can only gain traction as traffic and health concerns force people to reconsider their primary means of transportation.

“The market can only expand and unfold its potential in the future, as more countries around the world think about developing lanes for bicycles.

“Bicycle exports will continue to increase in the second quarter, buoyed by a heightened aversion to public transport. Cycling as a workout option is also not likely to decline anytime soon,” said Heng.

Steadfast in his positive outlook of the market, he highlighted the opportunity to invest in bicycle assembly in Cambodia for export.

Royal Academy of Cambodia economic researcher Hong Vanak said though the Covid-19 pandemic continues to snarl exports around the world, the nation’s increasing bicycle exports would also see bicycle parts demand increase accordingly.

“Though some orders were cancelled during the first quarter due to Covid-19 concerns, bicycle exports from Cambodia remained in the green.

This growth is a vital contributor to national economic development,” he said.

There were fears that Cambodia would be adversely affected when in February, the European Union Commission announced the partial withdrawal of the Everything But Arms (EBA) scheme for Cambodia.

It affects one-fifth or €1 billion (RM4.75 billion) of Cambodia’s annual exports to the EU’s 27 nation bloc.

The decision would take effect on August 12, unless the EU Parliament objects, would affect selected garment and footwear products, and all travel goods and sugar.

For years, Cambodian bicycle manufacturers have enjoyed continued growth to the European market owing to their duty-free export status under the EBA, which exempts their shipments from the EU’s 14 per cent import duty. That figure is six per cent for electric bicycles.

Last year, Ministry of Commerce spokesman Seang Thay said bicycles need to comprise of a minimum of 40 per cent local components to qualify for duty-free status in the EU, although components sourced from other Asean nations can also count as local materials in certain cases.

Thay said if EU tariffs are imposed on bicycles, exports will slow, but it does not mean Cambodia will completely lose its market.

“Exports will see a tiny decline, but I don’t think it is a major problem. The government has introduced several reforms making production costs lower. This will allow exporters to continue shipping goods to the EU market,” he said.

Netherlands-based bicycle industry specialist website Bike Europe reported that Cambodia has been the leading supplier of bicycles to the EU since 2017, overtaking Taiwan, which held the position for over two decades.

Cambodia exported to the EU more than 1.42 million bicycles in 2017, up nine per cent from 1.29 million in 2016, it reported.

It exported a total of 1.52 million bikes to the European market in 2018, worth US$331 million (RM1.44 billion), said a World Bank report.

This makes bicycle exports to the EU market the third most important product of Cambodia after garment and footwear.

Credited: Straits Times