Cambodian Prime Minister Samdech Techo Hun Sen on Tuesday lowered the country's economic growth forecast to around 6 percent this year from its earlier projection of 6.5 percent, due to external shocks.
"It's impossible to achieve the earlier forecast of 6.5 percent (this year) based on the real situation, but we can achieve around 6 percent," he said in a speech during a university graduation ceremony here.
The kingdom's economy traditionally relies on garment exports, tourism, real estate and construction, and agriculture.
The European Commission (EC)'s recent decision on the partial withdrawal of Everything But Arms (EBA) trade preferences from Cambodia is a factor contributing to the growth slowdown this year.
The EC decided on Feb. 12 to withdraw part of the tariff preferences given to Cambodia under the EBA trade scheme due to the alleged violations of human rights. The partial withdrawal of tariff preferences will affect selected garment and footwear products, and all travel goods and sugar.
The withdrawal amounts to around one-fifth or 1 billion euros (1.09 billion U.S. dollars) of Cambodia's yearly exports to the EU, and the decision will take effect on Aug. 12 unless the European Parliament and the Council object, according to the EC's statement.
With this partial suspension, Cambodia will be required to pay 20 percent tax for exports to the European market with 80 percent of the items still being exempt from tax, Hun Sen said on Monday during a press conference.
He said the assessment of 20 percent tax on exports amounts to about 100 million U.S. dollars a year.
The EU is Cambodia's largest trading partner, accounting for 45 percent of Cambodian exports in 2018.
As a Least Developed Country, Cambodia has, for two decades, enjoyed exports of all products, except arms and ammunition, to the EU market with duty-free and quota-free.
Cambodia's export to EU was valued at 5.86 billion U.S. dollars in 2018, an EU data showed, adding that garment and footwear products represented around three quarters of EU imports from the country.
Source: China ASEAN Business Council