Trade facilitation remains a challenge for Cambodia

Chheang Vannarith / No Comments Share:
Sihanoukville Autonomous Port handles 70 percent of Cambodia’s import and export market. Though Cambodia has notably improved customs administration in the last few years to facilitate international trade, there is still room for improvement.​ KT/Mai Vireak

Cambodia has adopted an open, liberal market economy since mid-1990s with technical and financial support from various development partners, bilaterally and multilaterally. Since then Cambodia’s economic performance has been relatively dynamic. Over the past two decades, Cambodia has enjoyed a 7.7 percent growth rate, with the poverty rate dropping to below 10 percent.

Economic reforms and further opening up of the economy will continue to be robust as the Cambodian government introduces policy instruments to further industrialise and modernise the economy.

Under the five-year development strategy 2018-2023, the government has set key priority areas of reforms with the emphasis on governance reform – referring to institutional reform and capacity building – strengthening accountability and integrity in the public administration, strengthening of work effectiveness, and strengthening of private sector governance.

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Concerning trade policy, Cambodia has worked closely with development partners such as the World Bank, Asian Development Bank, World Trade Organization, and Japan International Cooperation Agency to improve the capacity of trade-related government agencies. Trade liberalisation and facilitation have been the key areas of focus.

After becoming the member of the World Trade Organization (WTO) in 2004, Cambodia has taken steps to reform its trade policy both in trade liberalisation and facilitation. Cambodia ratified the Trade Facilitation Agreement (TFA) in 2016. TFA enables developing and least-developed countries to build their capacity and receive assistance needed to reap the full benefits of the agreement.

Cambodia ratified the WTO TFA in February 2016 and later in the year it completed an assessment of its trade facilitation framework in the light of TFA requirements and developed a road map to implement the agreement. In August 2017, Cambodia submitted to WTO its category A, B and C notifications, as well as the indicative dates for the implementation of the various provisions of the TFA.

In terms of implementing WTO TFA, as of November 2018, Cambodia has notified 60.9 percent under Category A, 19.3 percent under Category B, and 19.7 percent under Category C.

Cambodia has requested assistance and support for capacity building for nine measures including (1) information available through internet, (2) notification, (3) pre-arrival processing, (4) electronic payment, (5) authorised operators, (6) perishable goods, (7) border agency cooperation, (8) single window, and (9) transit. These nine measures are the areas that Cambodia needs international assistance for capacity building and institutional reforms.

In terms of customs reforms, the General Department of Customs and Excise (GDCE) introduced the Single Administration Document (SAD), and with support from the World Bank in 2009 introduced the automated customs processing system called Automated System on Customs Data (ASYCUDA).

ASYCUDA helps facilitate export, import, and goods in transit. The ASYCUDA WORLD system has been implemented at 81 major customs branches and offices, which covers all of the SAD and trade volume.

In 2018, Japan proposed replacing ASYCUDA, with the made-in-Japan NACCS (the Nippon Automated Cargo Clearance System). This proposal was made after the Cambodian government requested Japan to conduct a feasibility and suitability study of introducing NACCS in Cambodia. NACCS, a system dedicated to electronic processing of air/sea cargo will enable faster and more efficient customs clearance and movement of freight.

In addition, the Customs-Private Sector Partnership Mechanism (CPPM) was established in 2009 and launched in 2010 to encourage participation from the private sector in promoting compliance with law and regulations as well as effectiveness of trade facilitation. Also, the Government-Private Sector Forum (GPSF) was established in 1999 to address trade and investment climate issues and to institutionalise inputs, complaints, and recommendations from the private sector into policy making, legal and regulatory reforms, and operational aspects of implementation.

The National Single Window (NSW) has also been established to allow parties involved in trade and transport to lodge standardised information and documents with a single entry point to fulfil all import, export, and transit-related regulatory requirements.

However, implementation is an issue. Some of the lingering issues are a lack of genuine political will and leadership in accelerating institutional reforms, a lack of policy coordination and inter-agency collaborations, low competitiveness of the private sector, poor infrastructure, certain anti-competitive practices, regulatory uncertainty, and a lack of human capital to effectively and expeditiously implement a trade facilitation strategy.

Therefore, Cambodia needs to develop a comprehensive strategy to remove barriers to trade, including the implementation of TFA.

Some specific policy recommendations include the establishment of the National Committee on Trade Facilitation in order to coordinate trade-related policies, facilitate intra- and inter-agency collaborations, enhance accountability and transparency of trade-related government agencies, strengthen the capacity of both the public and private sectors on trade-related issues, develop a feedback system to receive complaints and document all obstacles, and monitor and improve actual implementation of the TFA.

Some key components of customs reforms that Cambodia needs to speed up in line with the revised Kyoto Convention include (1) transparency and predictability of customs actions, (2) standardisation and simplification of goods declaration and supporting documents, (3) simplified procedures for authorised persons, (4) maximum use of information technology, (5) minimum necessary Customs control to ensure compliance with regulations, (6) use of risk management and audit based controls, (7) coordinated interventions with other border agencies, and (8) trade partnership.

International development partners should continue to provide technical support to strengthen institutional capacity and leadership of trade-related agencies, particularly in customs reforms. Diagnostic trade integration study and knowledge sharing of best practices from different parts of the world should be expanded. Public-private dialogue on trade facilitation needs to be encouraged in order to better develop policy reforms and design inclusive and holistic solutions.

Chheang Vannarith is president of Asian Vision Institute to be launched this month.

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