Cambodia's imports and exports of gold leave many questions unanswered. Photo: AFP / Emilie Chaix / Photononstop

Cambodia imported about US$2.8 billion worth of gold in the first four months of 2021, accounting for roughly 30% of all imports, according to Asia Times’ analysis of central bank data.

In March alone, gold imports were worth $1.1 billion – 39% of all Cambodia’s imports that month.

The surge in gold imports comes curiously on the heels of a major surge in gold exports last year. In 2020, Cambodia’s gold exports rose by 676%, from $388 million in 2019 to about $3 billion, the Asia Development Bank (ADB) reported in its recent Asian Development Outlook study. 

The statistical surge has led to questions about whether Cambodian authorities are now having to formally list gold exports and imports because restrictions due to the Covid-19 pandemic have put a stop to the illicit trade in the precious metal.

Sources assert that billions of dollars worth of gold was smuggled through Cambodia from Singapore to Vietnam in previous years.

By officially recording gold exports last year, Cambodia was also able to boast positive growth in exports, also raising questions as to whether formally including gold exports in 2020, when they weren’t in previous years, has been a way for authorities to massage and burnish economic figures.  

Cambodia’s overall merchandise exports officially increased by 16.5% last year. But, the ABD reported, “private gold sales were the main reason for the rise in exports [in 2020]. Excluding these sales, merchandise exports declined by 1.1%.” 

In the first eight months of 2020, gold exports increased by 716% to $2.2 billion, noted the Ministry of Economy and Finance in a report published last year. The ministry has excluded gold exports from its latest export updates in 2021, though.  

Cambodia has long been a haven for gold smuggling. In past years, it is believed that this multi-billion dollar trade involved purchasing the commodity in Singapore, a hub for the Asian gold market, and illicitly transporting it back to Cambodia before smuggling it into Vietnam.

The precious metal fetches hefty prices among Vietnam’s growing middle-classes, with many looking for a hedge against the country’s traditionally volatile dong currency. 

Customers buy and sell gold at a gold shop in Hanoi. Photo: AFP / Hoang Dinh Nam

However, official data shows that gold exports from Cambodia averaged only about $200 million per year between 2016 and 2018, according to reports.

Yet, as the Cambodia-based Voice of Democracy news organization recently reported, on the UN Comtrade database Singapore reported $2.1 billion worth of gold exports to Cambodia in 2017, $3.9 billion in 2018 and $1.1 billion in 2019. 

A source in the Cambodian government, who asked not to be named, said Singaporean authorities diligently record gold exports, but Cambodian authorities are either unable to track imports because of smuggling, or because Customs and Excise officials turn a blind eye. 

Many of Cambodia’s powerful tycoons have been accused of having connections with this profitable, illicit trade. 

A compilation of Singaporean data by the nongovernmental organization Mother Nature – which has faced constant harassment from Phnom Penh authorities in recent years – asserted that Cambodia imported more than $15 billion worth of gold between 2012 and 2017 from Singapore, but most of this was not officially listed by Cambodia’s authorities.

Analysts are divided on the reasons for Cambodia’s surge in officially documented gold imports and exports. 

There have been claims that Cambodians, who for decades have trusted gold as the safest way to park their savings, simply sold more gold in 2020 because of the economic devastation wrought by the Covid-19 pandemic. 

Because gold prices increased in 2020, it has been argued, Cambodians who had been hoarding the commodity simply sold it off in greater quantities to profit from the inflated prices or to raise much-needed capital for themselves during a time of job losses and uncertain income.

However, these two reasons do not explain why $3 billion worth of gold was exported last year while at least $2.8 billion worth of gold was officially imported by Cambodia in only the first four months of 2021.

According to a source with knowledge of Cambodia’s gold trade, who wanted to remain anonymous, the statistical discrepancy is most likely because of border restrictions imposed by the Cambodian and Vietnamese governments due to the pandemic. 

Chinese tourists walk across the Cambodian and Vietnam border at Bavet city in Svay Rieng province on May 16, 2014. Border restrictions have tightened since Covid-19 arrived. Photo: AFP / Tang Chhin Sothy

The officially recorded export of gold last year would not have shown up on ministry records in ordinary years, as it would have been smuggled across the border into Vietnam. But Hanoi’s stringent border restrictions made the illegal trade near impossible. 

“With Covid-19 resulting in much stronger border controls, it became much harder to put this gold in a suitcase on a bus, so they had to be declared to the Cambodian authorities,” the source said. 

“Similarly, gold used to come into Cambodia smuggled in carry-on bags through the airport – but officially declared in Singapore,” they added.  “Again, with Covid-19’s impact on flights, [it is] pretty hard to smuggle gold that way.”

If that’s the case, it is possible that the “black market” sale of gold from Cambodia to Vietnam is actually worth billions of dollars each year, rather than the paltry $200 million or so officially recorded by the Cambodian authorities before 2020. 

Vietnamese authorities have also sought to crack down on gold smuggling from Cambodia in recent years. In November, several Cambodians were detained inside Vietnamese territory for allegedly smuggling 51 kilograms of gold. 

In 2017, a Cambodian national was sentenced to six years in a Vietnamese prison by an An Giang provincial court for smuggling 18 kilograms of gold into Vietnam. 

Because smuggled gold is not registered with border agencies nor the Department of Customs and Excise, Cambodian exporters pay no tax or duties on the trade, potentially depriving state coffers of millions of dollars in revenue each year. 

In fact, gold wasn’t the only commodity that boomed among Cambodian exports last year. In the first six months of 2020, some $1.3 billion was generated from the export of jewelry and precious stones to the international market, an increase from just over $415 million in 2019, according to official data. 

Cambodian models wear jewelry during the Cambodia Gems and Jewelry fair 2013 in Phnom Penh on June 13, 2013. Photo: AFP / Tang Chhin Sothy

Sources say this strong growth is, again, because of border restrictions that made illicit exports into Vietnam much more difficult amid the pandemic. 

The Cambodian government certainly benefited from a public relations standpoint by officially listing the $3 billion worth of gold exports last year. 

Cambodia’s overall merchandise exports would have hit negative growth if it wasn’t for a surge in listed gold exports, which the ADB reckons allowed the economy to go from having a potential 1.1% decline in merchandise exports to 16.5% growth. 

Another ADB report from last year noted: “Official reserves increased moderately during 2020 and continue to provide ample import cover.”

Indeed, despite a near collapse of Cambodia’s tourism industry, one of the nation’s main sources of foreign currency earnings, the country’s gross international reserves stand at a record-high of $20.8 billion, more than 10 months of import cover, according to a central bank report published this week. 

However, the ADB added in a footnote: “This is partly due to large asset sales (ie, privately held gold), which generated foreign currency receipts equivalent to 10.9% of GDP during Q2 and Q3 and helped offset the large decline in receipts from international visitors.”