Philippines and Cambodia Strengthen Economic Bonds with Double Taxation Pact

In a significant step towards deepening economic ties, Philippine President Ferdinand Marcos Jr. and Cambodian Prime Minister Samdech Moha Borvor Thipadei Hun Manet signed a landmark agreement on Tuesday to eliminate double taxation on income tax. The pact, signed during Hun Manet’s two-day visit to Malacañang Palace, is accompanied by a series of memoranda of understanding (MOUs) covering agriculture, tourism, and cultural preservation, marking a new chapter in bilateral relations between the two Southeast Asian nations.

The double taxation agreement (DTA), formalised by Philippine Department of Finance chief Ralph Recto and Cambodian Deputy Prime Minister and Foreign Affairs Minister Prak Sokhonn, aims to prevent individuals and businesses from being taxed twice on the same income in both countries. “On trade and investment, we welcome our formal cooperation on the avoidance of double taxation,” Marcos said during a joint press conference. He expressed optimism that the agreement would encourage more Filipinos to invest in Cambodia and vice versa, fostering cross-border economic activity.

Negotiations for the DTA began in 2018 in Manila, with follow-up discussions in Siem Reap, Cambodia, in 2019. Initially slated for signing in October 2024, the agreement was postponed at the request of Phnom Penh officials, according to the Philippine Department of Finance. The successful conclusion of these talks signals a mutual commitment to economic collaboration, with Marcos noting that over 7,000 Filipinos currently live and work in Cambodia, contributing significantly to its socio-economic development. Hun Manet echoed this sentiment, pledging to maintain a “supportive environment” for Filipino workers in his country.

Beyond Taxation: A Broader Partnership

The DTA is just one of eight agreements signed during Hun Manet’s visit, reflecting the breadth of cooperation between Manila and Phnom Penh. “Mr. Marcos and I just concluded productive discussions and witnessed the exchange of eight arrangements and MOUs serving as a concrete arrangement to increase our interactions,” the Cambodian leader stated. These agreements span critical sectors, including agriculture and tourism, which are pivotal to both nations’ economies.

In agriculture, a key MOU on Agricultural and Agribusiness Cooperation was signed by Philippine Agriculture Secretary Francisco Tiu Laurel and Cambodian Minister Dith Tina. The agreement seeks to bolster trade and investment in the sector, with Hun Manet highlighting Cambodia’s readiness to supply rice and other food products to the Philippines. “Cambodia stands ready to contribute to Philippine food security through rice supply as well as many other food products,” he affirmed. Marcos, in turn, described Cambodia as an “important partner in ensuring food security” and urged agricultural stakeholders in both countries to engage actively in collaborative programmes.

This focus on agriculture comes at a crucial time for the Philippines, which has faced challenges in securing stable rice supplies amid fluctuating global prices and domestic production constraints. Cambodia, with its robust rice export industry, could play a vital role in stabilising Manila’s food security framework if the partnership yields consistent supply chains. However, the success of such initiatives will depend on effective implementation and addressing logistical hurdles, which remain unconfirmed at this stage.

Tourism and Cultural Ties

Tourism, another pillar of the agreements, saw the signing of an MOU on tourism cooperation for 2024-2028 between Philippine Tourism Secretary Ma. Esperanza Christina Garcia Frasco and Cambodian Minister Hout Hak. With Cambodia’s rich cultural heritage, exemplified by iconic sites like Angkor Wat, and the Philippines’ renowned beaches and historical landmarks, both nations stand to benefit from enhanced tourism exchanges. The agreement aims to promote joint marketing initiatives and facilitate tourist flows, potentially boosting local economies in both countries.

Additionally, a renewed MOU on the Prevention of Looting and Illicit Trafficking of Cultural Properties was signed by National Commission for Culture and the Arts Chairperson Victorino Mapa Manalo and Cambodian Minister Phoeurng Sackona. Marcos underscored the importance of this agreement, stating, “We have renewed our commitment to safeguard our highly-regarded cultural items, to facilitate expert exchanges, and to promote collaboration that can enable future generations to appreciate the remarkable representation of our history and our identity.” This pact reaffirms a shared dedication to preserving cultural heritage, a critical aspect of national identity for both nations with histories of colonial influence and post-independence reconstruction.

Economic Implications and Regional Context

The agreements signed on Tuesday carry broader implications for Southeast Asian economic integration. The DTA, in particular, aligns with the Philippines’ broader strategy to renegotiate similar pacts with other regional partners, including Indonesia, Malaysia, and Singapore, as noted by the Department of Finance. By reducing fiscal barriers to cross-border investment, Manila aims to position itself as an attractive destination for regional capital while encouraging its businesses to expand abroad.

For Cambodia, the agreements reinforce its efforts to diversify economic partnerships beyond traditional allies like China, which has heavily invested in infrastructure projects under the Belt and Road Initiative. Strengthening ties with the Philippines offers Phnom Penh an opportunity to tap into new markets and bolster sectors like agriculture and tourism, which are vital for its economic growth. If successful, this partnership could serve as a model for Cambodia’s engagement with other ASEAN member states, fostering greater intra-regional cooperation.

However, challenges remain. While the DTA and MOUs signal intent, their impact hinges on practical execution. Tax agreements, for instance, often face bureaucratic delays in implementation, and their benefits may not be immediately felt by businesses or individuals. Similarly, agricultural cooperation, while promising, requires robust infrastructure and policy alignment to ensure smooth trade flows. Analysts suggest that both nations will need to prioritise capacity-building and transparency to translate these agreements into tangible economic gains, though such outcomes remain speculative at this juncture.

A Step Towards Mutual Growth

The visit of Prime Minister Hun Manet to Manila underscores a shared vision for mutual growth between the Philippines and Cambodia. With over 7,000 Filipinos contributing to Cambodia’s development and a growing interest in Cambodian investment in the Philippines, the personal and economic ties between the two nations are deepening. Hun Manet’s assurance of a supportive environment for Filipino workers reflects a commitment to sustaining this human connection, which underpins broader bilateral relations.

For President Marcos, the agreements mark a diplomatic win, showcasing his administration’s focus on regional partnerships to address domestic priorities like food security and economic diversification. Yet, the long-term success of these pacts will depend on sustained political will and the ability to navigate regional geopolitical dynamics, including ASEAN’s complex interplay of interests.

As both nations move forward, the agreements signed on 12 February 2025 offer a foundation for collaboration that could reshape their economic landscapes. Whether this translates into measurable benefits for citizens—through increased investment, stable food supplies, or enriched cultural exchanges—remains to be seen. For now, the Philippines and Cambodia have taken a decisive step towards a partnership that, if nurtured, may yield significant dividends in the years ahead.