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Time to act

Trade expert Sok Siphana explains how Cambodia can position itself as a player in the global logistics chain.

Embracing competitiveness while avoiding protectionist policies are central to the region benefiting from investment and the free movement of goods, labour and capital.

As the 2015 deadline approaches for Cambodia and the rest of Asean to become a part of the global logistics chain, both authorities and the private sector have to step up their game.

Often cited as a major burden for businesses in Cambodia by industry insiders (see Foreign Business Leaders Survey, page 12), informal fees demanded at customs and excise is one area the government is hoping to improve, according to Sok Siphana, a former trade specialist at the World Trade Organisation and current advisor to the Cambodian government. “We are making tremendous progress in terms of customs automation,” he said of the role technology can play in reducing facilitation fees at Phnom Penh, Sihanoukville and other arrival points. “We’re not paperless yet, but custom automation would be the beginning… The less human contact the better.”

The findings of the Foreign Business Leaders Survey suggest another hurdle for Cambodia is opaque business practices. While the blueprint for the Asean Economic Community states that members must enhance the level of transparency for non-tariff measures, 41% of businesses in the Foreign Business Leaders Survey found access to information in the Kingdom below average. However, Sok Siphana insisted “most information is very readily available on various websites”, and that the onus is on the private sector to tap into these sources. “If we have to make a criticism of Asean, it is that so far it is more Asean diplomacy rather than Asean business. So the private sector itself has to make more effort to engage the government.”

A key component to facilitating free flow of goods, investment and capital on Cambodia’s part is the construction of Neak Loeung Bridge. The crossing point at this part of the Mekong River has bottle-necked the transportation of goods and people between Cambodia and Vietnam, and the bridge, expected to be completed in 2015, will become an important part of the southern economic corridor. “We want to be a part of the supply chain,” said Sok Siphana. “If we facilitate the value chain approach, foreign companies that actually produce goods somewhere else could move some of their components here. The bridge is a game changer.”

Bilateral trade is important for the region, said Sok Siphana, given trading among Asean member-states only accounts for 25% of total trade flow. “Two-way trade would be the prelude to full economic integration.” However, Asean aside, he also mentioned the importance of Cambodia tapping into its resources to become a part of the global logistics chain. For example, Cambodia, with its rubber plantations, could become the assembly destination of choice for numerous companies dealing with latex. “For a small country such as Cambodia, we just want to have one or two links to the supply chain to make a big difference.”

While some observers have voiced concern that Asean countries could adopt a protectionist attitude with the arrival of 2015, Sok Siphana has faith the region wants to move forward. “Protectionism is always an innate primal fear. When you run into a crisis, the first thing you do is retract because the instinct is to protect jobs. But it’s clear that in the Asean context, the mood of different work plans and agendas is all about not going backwards… It will take a while before people adhere to the rules, but there is a charter. Even if some people want to go back, they will be prohibited; there will be so much peer pressure.”

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