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Better borders critical to regional trade: ADB


Development bank urges more haste on long-running efforts to boost transport infrastructure and smooth customs flows

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Streamlining trade processes at border crossings like this one linking Cambodian and Vietnam is critical to boosting intraregional trade, the ADB will tell Mekong region commerce ministers today.

COMMERCE ministers from the Mekong region will be warned today at a major conference that countries must  boost trade and transport sector reforms if they hope to boost intraregional trade and reduce reliance on ailing external trade partners.

Arjun Thapan, director general of the Southeast Asia department of the Asian Development Bank (ADB), which is organising the 15th Greater Mekong Sub-region (GMS) Ministerial Conference in Cha-Am, Thailand, said the economic crisis had highlighted the importance of  intraregional trade in the wake of falling demand  from major trade partners.  

"The current economic downturn has probably put growth back at least a couple of years," he told the Post Thursday from Thailand. "The whole question of creating domestic demand - not in complete substitution of external demand but at least in partial substitution - [is now critical]."

In Cambodia garment exports, which make up around 98 percent of Cambodia's total merchandise exports, fell 26 percent in the first quarter of the year, based on Commerce Ministry figures.

The US takes 64.9 percent of the country's total garment exports and the European Union 20.3 percent.

According to the World Bank, intra-GMS trade involving Cambodia is almost nonexistent, with even the garment sector sourcing the bulk of its fabric from outside the region due to trade barriers.

GMS member countries inked a Cross-border Transport Agreement (CBTA) in 1999 in an effort to ease the customs burden by fast-tracking procedures at border-crossings by allowing some goods shipments to be certified as "low risk". The agreement was part of a much-wider program to invest in the region's transport infrastructure, but Thapan said it was "very much" delayed.

"We want the ministers to understand that it is behind schedule, and we want them to take note of the fact that their prime ministers have been demanding that at every summit they make progress on implementing the CBTA," he said.

Sjaak de Klein, country manager for transport company TNT, which added Cambodia into an Asia-wide express services road network in May, said experience showed that removing barriers to trade had a positive impact on trade volumes.

"We have seen it in Laos where better connectivity for the country has led to an increase in trade," he said, referring to a new highway linking the country to Vietnam.

That has been accompanied by a CBTA inked last week after 10 years of negotiations allowing trucks from Vietnam and Thailand to transit through Laos without having to be unloaded and re-loaded.

Thapan said work was progressing at half-a-dozen pilot border crossing sites under the transport agreement, but none were fully operational and it was still taking around four hours, and up to 10 in some cases, to clear shipments.

"This is not helping trade and it is not helping investment because of the high costs involved," he said. "We think it's time for the countries to take an integrated view of both transport and trade facilitation."



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