Poor practices hurt Kingdom's competitiveness, experts say
CAMBODIA risks falling behind its regional partners in trade if it does not adapt to the highly-competitive world of global commerce, officials said Wednesday at the close of a two-day trade-facilitation workshop, where the UN’s Economic and Social Commission for Asia and the Pacific (ESCAP) pledged to help identify cost and time bottlenecks that could mean the difference between commercial success or lost contracts.
While acknowledging the garment industry’s importance as a source of exports, Bangkok-based ESCAP Trade Facilitation Chief Shamika Sirimanne singled out the Kingdom’s agriculture sector as being “key to trade”, but an example of how exposed Cambodia is to barriers to commerce.
“Seventy-five percent of Cambodians are farmers and that’s largely where the poor also are,” Sirimanne said.
“We’ve heard how difficult it is to do [cut down costs and time], but trade facilitation is necessary – there is no choice. It looks really big but we can break it into smaller pieces – pick the key products and break it down into bite-size problems,” she added.
Sirimanne said concrete initiatives resulting from the workshop included a capacity-building session to be held next month where ESCAP would “train the trainers” to identify cost and time obstacles to trade.
Secondly, she said, ESCAP would sponsor a study tour for government officials to observe trade procedures in neighbouring countries. That announcement followed presentations from India, Thailand and Malaysia, whose officials discussed what policies worked and what did not.
She underscored Cambodia’s position in a “trading region” surrounded by fierce competition by referring to an earlier presentation from the Garment Manufacturers Association of Cambodia (GMAC), which has been battling a steady decline in business and factory closures after the global economic crisis took hold of one of Cambodia’s most crucial economic drivers.
GMAC Secretary General Ken Loo told the workshop that profit margins had dropped 20 percent per annum for the last five years, and that demand for quality and shorter lead times were only getting stronger.
“The major challenge of our industry is buyers no longer ask for a quote – they dictate the lead time and the price, and there’s very little room for negotiation,” he said.
“They base the price on other countries, and if you can match it or better it, they give you the business, if not, they don’t.”
He told the delegates it was not enough to think business practices were acceptable because it was how things had been done for 10 years.
“Sometimes half our production time is spent producing nothing,” he said. “We cannot afford the leakages anymore.”