PHNOM PENH, June 2 (Xinhua) -- Two decades after its inclusion on the list of the least developed countries, Cambodia met the graduation criteria for the first time in 2021, with plans to graduate as early as 2027, said an Asian Development Bank (ADB) report on Friday.

"This is a major achievement, as graduation from the least developed country status means that a country has achieved significant economic and social development goals," the report said.

However, the least developed country graduation also presents challenges, it said, adding that graduation means the loss of preferential trade benefits, including duty-free status and favorable "rules of origin."

The report said Cambodia is one of the few least developed countries that has dramatically increased its exports to the European Union through preferential treatment and lenient rules of origin, allowing its products to enter Europe duty-free.

"If not carefully managed, the loss of these preferences may hurt Cambodia's export performance," it said. "Cambodia must work to ensure that alternative market access is available after graduation and further improve its competitiveness."

The report said Cambodia has benefited from multilateral and bilateral free trade agreements (FTAs) such as the Regional Comprehensive Economic Partnership (RCEP), the Cambodia-China FTA, and the Cambodia-South Korea FTA.

It added that the Southeast Asian nation should consider forging new trade agreements with its major partners while improving the implementation and utilization of existing ones.

Cambodian Ministry of Commerce's undersecretary of state and spokesman Penn Sovicheat said the RCEP, together with other bilateral FTAs, has not only given a boost to the kingdom's sustainable trade growth, but also become a magnet to attract more foreign direct investments.

"This RCEP agreement will help Cambodia graduate from its least developed country status, likely by 2028 and to achieve its goals of becoming an upper-middle income country in 2030 and a high-income nation by 2050," he told Xinhua.

The RCEP agreement comprises 15 Asia-Pacific countries including 10 ASEAN member states -- Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam -- and their five trading partners, namely China, Japan, South Korea, Australia and New Zealand.