The recent visit to India by Cambodia Prime Minister Hun Sen has only served to highlight the tiny kingdom’s rising allure. Long feted by China, India’s Prime Minister Narendra Modi made it clear during a recent visit by the Cambodia PM that India also has an increasing interest in Cambodia.
During the visit, conducted as part of the Asean-India Commemorative Summit held in New Delhi between January 25th-26th, India and Cambodia inked four agreements, including a US$20 million concessional loan for the construction of an electricity transmission line in Cambodia.
Additionally, the two country signed a memorandums of understanding (MoU) relating to a concessional loan agreement to build the Steng Sva Hab Water Resources Development Project in Kampong Speu Province worth some $36.92 million; a mutual legal assistance on criminal matters; a cultural exchange programme running through until 2022; and a cooperation on the prevention of human trafficking.
In a clear sign of the strengthening relationship between the two country’s, Prime Minister Hun Sen invited India to field election monitors during the country’s general election scheduled for July 29, and invited Prime Minister Modi to visit Cambodia.
Increasing Cambodia-India Two Way Trade
While the four deals themselves are not particularly significant in isolation, they come atop other increasing interactions between the two countries.
In 2016 two-way trade between Cambodia and India topped $132 million, comprising $89 million in Indian exports to Cambodia, while Cambodia exports to India between 2012 and 2016 have increased by an average annual rate of 51 per cent, last year topping $43 million.
In the days and weeks following the visit accounts associated with Indian government sources and India’s prime minister’s office deluged social media channels with photos and details of the visit and the deals signed.
India-Cambodia trade is currently only a fraction of the two way trade between Cambodia and China, which topped $4.759 billion in 2016.
However, while India is increasingly pursuing the ‘Act East’ policy of Prime Minister Modi, it coincides with a general ‘act west’ policy of Asean, as relationships with Washington are continuously strained.
With total projects accounting to more than 29 per cent of total foreign investment in Cambodia in 2016, China remains Cambodia’s largest investor and is unlikely to feel threatened by India, whose foreign investment in the kingdom, according to the Council for the Development of Cambodia (CDC), account for only about 0.55 per cent.
A Valuable Hedge Against China
However, while India may be far behind China in terms of economic investment, it has other things to offer; such as its advanced information technology (IT), agricultural technologies, and democracy development, all of which Cambodia is in need of.
At the same time, with a population of some 1.324 billion people as of 2016, India offers a growing consumer class, providing a valuable hedge against China, where the population is now rapidly ageing and where the work force has reached its peak.
India’s burgeoning population has an increasing need for agricultural products, in addition to apparel, two things that Cambodia has the capability of supplying. Between 2012 and 2016 rubber exports to India rose by an annual average of 24 per cent, while knitted or crocheted apparel and clothing accessories grew by 49 per cent.
It appears Prime Minister Hun is comfortable with the increasingly close relationship between the two countries. In addition to inviting India to send election monitors, Cambodia has asked India to set up an IT centre, and to provide technical support on agriculture.
The India Embassy in Phnom Penh did not respond to questions as to when PM Modi might visit Cambodia, or what other areas of collaboration the two countries are looking at.
Feature video WION
- Cambodia’s Special Relationship With India (The Diplomat)
- India, Cambodia pledge to scale up relations, sign 4 MoUs (United News of India)
- Redefining Relations : India and Cambodia (The Indian Wire)
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